Finance Bill

Daisy Cooper Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

It is an honour to follow the hon. Member for South Derbyshire (Samantha Niblett), and I congratulate her on her very heartfelt maiden speech. I commend her for her commitment to the NHS, and for her desire to be a role model for the next generation of women, who will follow up the ladder behind us. Her skills in data and tech will be incredibly helpful in this House as we grapple with the challenge of online harms, and the threats and opportunities of AI, and I wish her well in her career in this House.

There is no doubt but that the Government have received a terrible inheritance. Under the former Conservative Government, our economy flatlined, people’s living standards plummeted and our public services were left on their knees, so inevitably the incoming Government have had to make some difficult decisions. [Interruption.] Conservative Members might like side B. [Interruption.] Steady on. Some of those decisions we Liberal Democrats agree with. To start with, the Government have decided to borrow for productive investment, and in principle we agree with that. They have raised the levy on the oil and gas giants and closed the loophole, and we agree with that. They have decided to invest in the NHS, and we also agree with that. However, we cannot support the Bill, for many of the reasons set out in our reasoned amendment.

The first question is who should pay for fixing our NHS and social care. We Liberal Democrats have always said that it should be those with the broadest shoulders. Unfortunately, the Government’s Finance Bill does not reverse the tax cuts given to the big banks by the Conservatives; it does not raise the digital services tax on the big tech companies; and it does not increase the remote gaming duty. Those three measures, outlined in our reasoned amendment, would have raised billions of pounds to help fix our NHS and social care, and that money could also have been used to reverse the cut to the winter fuel payment.

The inheritance tax measures are not included in the Finance Bill, but it does pave the way for them. I must say that it is a bit rich of the Conservatives to pretend suddenly to be the friends of the farmers when they ushered in the very trade deals that have undermined so many farmers. However, I urge the Government in the strongest terms to think again about the family farm tax. That measure is badly thought through and leads to the worst of both worlds. It does not close the loophole that results in big equity companies and investors buying up land—it is still more tax-efficient for them to do that than to place their money elsewhere—yet family farms are being caught up as collateral damage. There are rumours that the Government may be thinking again, and I urge them to do so. It is possible for them to look at introducing a genuine family farm test, as exists in France and Ireland. If the Government look at this issue, the Liberal Democrats will, in the spirit of constructive opposition, work with them to get this right and to protect family farmers.

Our reasoned amendment also outlines our opposition to the increase in alcohol duty, because it will hit not only consumers, but small businesses—and not just any businesses. The businesses in this sector are bastions of new craftsmanship and innovation in our small-batch distilleries.

In summary, we know that the Government had an awful inheritance and had to make difficult decisions, but we Liberal Democrats would have made different choices.

[Kanishka Narayan (Vale of Glamorgan) (Lab)]

Has the hon. Member reflected on the fact that the Liberal Democrats, instead of being just the party of no, were the party who enabled the coalition Government, which she is criticising?

[Daisy Cooper]

I think we can all say that a lot of water has passed under the bridge since those times. Since 2015, we have seen what the Conservatives did when they were left in government on their own. I hope that people will have seen at the most recent general election that we Liberal Democrats put health and social care front and centre; that led us to become the largest third party in the last 100 years.

To conclude, we Liberal Democrats would have made different decisions from the Government, and for that reason, we will not support the Bill.

--- Later in debate ---

[Graham Stuart]

I am extremely grateful to you for your guidance, Madam Deputy Speaker. I will try not to refer too much to the impact of national insurance contributions, because we will have that opportunity next Tuesday. None the less, my hon. Friend was right to talk about the impact of this Budget overall, and the effect on hospices and charities in particular.

Yesterday I met the chief executive of HICA, a large not-for-profit provider of social care homes and in-home care. HICA is a brilliant organisation, which has made real progress over the last few years. It finally managed to make a surplus last year, so it can pay its staff more than the minimum wage and invest in its stock. Now it is facing a £3.5 million impact on its £40 million turnover as a result of this Budget and this Finance Bill.

As well as farmers, oil and gas have been touched on today. When I was the Minister for Energy Security and Net Zero, it always struck me as absurd to look at the production of oil and gas rather than the consumption. It is the consumption that is the problem. We must change our factories, our vehicles, our buildings, so that they no longer need oil and gas if we are to move away from them. Attacking production when it is driven by demand is attacking the wrong end. In this measure, the Labour Government are raising the energy profits levy, on top of refusing to issue new licences. The net effect of that, notwithstanding the Liberal Democrats’ saying that they support the policy—I do not know why or how they can do so—

[Daisy Cooper]

Will the right hon. Gentleman give way?

[Graham Stuart]

I will in a moment.

This does not make the slightest difference to how much we consume, but it means that we import more from abroad, and, in the case of liquefied natural gas, those imports have embedded emissions four times higher than the emissions of what we produce domestically. We are going to bring this in from places that are less careful than we are in its production. We are going to lose tens of thousands of jobs and £13 billion of tax revenue, and we are going to lose the engineering expertise and companies that we need for the transition. There is literally no way to make that make sense, and I hope the hon. Lady will now do a U-turn and see the logic of my argument.

[Daisy Cooper]

I will resist that invitation. Does the right hon. Gentleman understand the nature of a windfall tax? It raises money on the windfall that a sector was not expecting. We know that the big oil and gas giants base their investment plans on the profits that they were expecting, but clearly they raised a lot more money because of Russia’s illegal invasion of Ukraine. Windfall taxes have been placed on the big oil and gas giants for the profits over and above what they were expecting to receive.

[Graham Stuart]

The hon. Lady did not actually refer to the measure in front of us. I know it is the Liberal Democrats’ policy to have a windfall tax on anyone who does not sound popular—big banks, big tech, and oil and gas. That is their answer. If anyone says, “How would you do it?”, they trot that out and lose not a single vote, because the very definition of not taking a tough choice is suggesting that there is easy money.

The measure in front of us, which the hon. Lady specifically said she supported, is not a windfall tax. It is a further tax, in tandem with the removal of any new licences, which effectively destroys investment in the North sea. I point to Apache—which says it is looking to withdraw by 2029, risking 500 jobs—Harbour Energy, JAPEX and Chevron, to name just a few. They are pulling out, and there is no environmental benefit. We are losing all that tax, all those jobs and all that expertise, which is exactly what we need for carbon capture, and for hydrogen, for the green economy. It is utterly insane.

I note that there are very few Labour Members present. I watched them as they came in for the Budget, full of cherry-cheeked enthusiasm and reading out their Whip-prepared rote remarks about the disaster left behind, which, as we know, was the fastest-growing economy in the G7, with inflation at target, debt coming down and the economy coming up. They are not all mad, socialist loons, and day by day we can see them losing spirit in the Tea Room and in the corridors as they realise that the deceit that their Front Benchers practised not only on the people, but on them, is coming home to roost.

The Government will pour all of the £22 billion into the NHS in the next year—it is in the figures—and we are supposed to believe that public services will rise by 1.3% or 1.4% in the rest of the period up to the next general election. Is that credible? It is not. I think Labour Members know that, which is what they have signalled by their absence, because they realise, as we do, that this Finance Bill and the Budget are ruinous for this country. My right hon. Friend the Member for Central Devon (Mel Stride) was absolutely right to say that they make this country more vulnerable to the shocks that may and most likely will come, and it will be the Labour party that owns the mistakes that are being sown today.

--- Later in debate ---

[Tulip Siddiq]

We will set out plans in due course. The Bill does, however, extend the scope of agricultural property relief from 6 April 2025 to land managed under certain environmental agreements. That supports the UK Government’s wider environmental objective of supporting farmers and land managers so that they can deliver, alongside food production, significant and important outcomes for the climate and environment. The measure is intended to prevent the loss of APR being a barrier to the involvement of agricultural landowners and farmers in land use change under environmental agreements including, but not limited to, the environmental land management schemes in England and equivalent schemes elsewhere in the UK.

I want to address something the hon. Member for St Albans (Daisy Cooper) talked about: family farms. This is not in the Finance Bill, but I will still refer to it. Individuals can pass on a sum of up to £325,000 inheritance tax-free; £500,000 if that includes a residence being passed to a direct descendent; and £1 million when a tax-free allowance is passed to a surviving spouse or civil partner. There is also a full exemption from inheritance tax when passing assets to a spouse or civil partner.

[Daisy Cooper]

I am grateful to the Minister for giving way. Madam Deputy Speaker, I beg for your patience as I retread some of the remarks I made earlier. It is my view that the family farm tax gives us the worst of both worlds at the moment. It does not prevent equity companies from buying up land, but it does treat family farms as collateral damage. I urge her to think again on this measure and think about introducing a genuine family farm test. If she were to do that, she would certainly have the Liberal Democrats’ support.

[Tulip Siddiq]

It was a difficult decision, and I understand the point the hon. Lady is making, but the reforms to agricultural property relief mean that farmers can access 100% relief for the first £1 million and 50% relief thereafter, meaning an effective 20% tax rate. It was a difficult decision, but we had to do it to fund public services.

My hon. Friend the Member for Bolton West (Phil Brickell) talked about tax avoidance and fraud. To stop people taking unfair advantage of our system, the Government announced in the Budget the most ambitious ever package to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30.

Finance Bill

Daisy Cooper Excerpts

Committee of the whole House
Tuesday 10th December 2024 Commons Chamber

[The Chairman of Ways and Means]

As colleagues will notice, the Speaker’s Chair is vacant, so I remind Members that the Chair should be addressed as Madam Chair or Madam Chairman. I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I commend the Government for looking at capital gains tax as a potential source of revenue to get public services back on their feet, but we Liberal Democrats believe there was a better way of doing it. Right now, capital gains tax is unfair for everyone. Most people already pay too much capital gains tax when they sell a property or a few shares because the system does not account for inflation over the time they have owned them. At the same time, a tiny number of super-wealthy individuals—the top 0.1%—are able to exploit the capital gains system as effectively one giant loophole to avoid paying income tax like everyone else.

According to the latest HMRC statistics, 12,000 multimillionaires used the loophole to pay less than half the top rate of income tax on their combined £50 billion of income. Instead of raising capital gains tax across the board, we Liberal Democrats would have liked to see the Government properly reform CGT to make it much fairer. To provide a comparison, under the Labour Government’s proposals, the main rate of capital gains tax for basic rate taxpayers is being increased from 10% to 18% and, for higher and additional rate taxpayers, from 20% to 24%. According to the Government’s own statistics, the change will raise about £2.5 billion per year by 2029 to 2030. Under the Liberal Democrat proposal, we would have separated out capital gains tax from income, raised the tax-free allowance, provided a new allowance for inflation and had three different rates of capital gains tax. That would have raised £5.2 billion, more than twice the Government’s proposals.

As colleagues will hear, key to our proposal is the reintroduction of indexation—effectively, an allowance keeping people from paying tax on gains that are purely the result of inflation. That would be fair for ordinary people selling a family home or a few shares, but it would also incentivise long-term investment by ensuring that taxpayers are not penalised due to inflation if they hold their assets for a long period of time.

To summarise, the Liberal Democrat proposals for reforming capital gains tax would be fairer and would raise twice as much. The Institute for Fiscal Studies said our proposals would move CGT in a “sensible direction”. Our new clause 1 is incredibly simple. It would require the Government to produce a report setting out the impact of the changes to capital gains tax under the Bill on investment and on the disposable income of people in different income brackets. The objective behind the new clause is to illustrate to the Government that there is a fairer way to reform capital gains tax and to encourage the Government, in the spirit of constructive opposition, to look at our proposals in future years.

[Jim Dickson (Dartford) (Lab)]

It is a pleasure to serve under your chairship, Madam Chair. I am grateful for the opportunity to take part in Committee of the whole House on a crucial Bill that underpins the new Government’s aim of fixing a tax system that has become less fair and less sustainable over 14 years of Conservative government. We will ensure that the wealthiest pay their fair share, and we will increase funding for public services. I will not detain hon. Members long as we have debated the measures at length already, but I want to make a few brief comments on the portions of the Bill that relate to capital gains tax.

As other Members have pointed out, we need to remind ourselves of our starting point. As the director of the Institute for Fiscal Studies, Paul Johnson, said in his response to the Budget:

“It does bear repeating that the fiscal inheritance”

—that this Government face—

“is truly dire.”

It is in that context that the Bill and the wider measures announced at the Budget should be seen. As the IFS has set out, and Members have mentioned, capital gains tax is paid by less than 1% of the adult population—about 350,000 people. If we break that down further, around 12,000 people—0.2% of the adult population—realise gains of more than £1 million, which account for two thirds of capital gains tax. That is 12,000 people—the main contributors to capital gains tax—paying a little bit more.

Clause 7 raises the headline rates of capital gains tax to 18% for gains within the basic income band for basic rate taxpayers and to 24% for those who pay higher rate income tax. Those levels have risen to match the unchanging residential property rates. The changes are welcome and perhaps not as substantial as was widely speculated in advance. It is important that we look at comparators with neighbouring countries. Those rates, even after the changes, compare well with our European neighbours. In France, as the Minister already said, capital gains tax sits at 30%, rising to 34% for high earners. Our closest neighbour Ireland—often seen as a haven for entrepreneurs who feel that the UK is not a good place to do business—charges 33%, and in Germany it is charged at 25%, plus a 5.5% solidarity surcharge on the tax paid.

Clause 12 includes a long-needed reform in the treatment of carried interest, and I am pleased that the Government are proceeding carefully with this long-overdue measure, moving us towards a tax regime where carried interest is within the income tax framework.

These measures will, I believe, contribute to the crucial revenue that must be raised to fix the foundations of our economy and repair our public services. We need to remind ourselves of the words of George Dibb, the associate director of economic policy at the Institute for Public Policy Research, who said of the changes in the Budget:

“After at least a decade of under-investment, there is now real hope that the government can start to fix the UK’s economic foundations.”

--- Later in debate ---

[The Chairman of Ways and Means]

I call the Liberal Democrat spokesperson once again.

[Daisy Cooper]

At the heart of the debate is a stark injustice, understood by every man, woman and child on the streets of Great Britain. In the last few years, oil and gas giants have made eye-watering profits—in many cases, they are profits that they did not expect to make—and they have made them off the back of Putin’s brutal invasion of Ukraine and global supply chain issues that caused energy prices to soar. At the same time, people have seen their living standards drop and their energy prices soar. In too many cases, people have had to choose between heating and eating.

We Liberal Democrats were the first party to call for a tax on oil and gas windfall profits back in October 2021, but it was not until May 2022 that the previous Government eventually introduced the energy profits levy. It was half-hearted and woefully late. If it had been brought in when we had called for it, there would have been additional revenue to reduce people’s energy bills and launch an emergency home insulation scheme, reducing energy consumption, which would have been good for the climate, and reducing people’s bills, which would have been good for their pockets.

The previous Government effectively let oil and gas giants off the hook, by initially setting the energy price levy at just 25% and putting in place a massive loophole in the form of the investment allowance. That allowed the oil and gas giants to get away with vast sums at taxpayers’ expense, with the excuse of investments that they would have made anyway. In essence, the Conservatives gave them tax relief on polluting activity when they should have been doing everything to raise funds to reduce people’s bills and urgently insulate homes.

Thanks to the investment allowance—the big loophole—in 2022, Shell admitted that it had paid zero windfall tax despite making the largest global profit in its 115-year history: a profit of £31 billion. As some colleagues in the Committee have referred to, energy prices have come down since those record levels of 2022, but the oil and gas producers have still seen huge profits. In 2023, Shell saw its profit come down from £31 billion, but it still made £22.3 billion.

[Harriet Cross]

How much of that profit was made in the UK versus globally?

[Daisy Cooper]

To be honest, I do not know what the distinction is between global profits and UK profits. The point is that the levy is put on UK profits made out of UK operations. I hope that the hon. Lady will agree that when her constituents cannot afford to put their heating on, she should not miss the opportunity to raise taxes from the big oil and gas companies.

As I said, Shell made a profit of £22.3 billion in 2023, and BP saw profit of £11 billion, its second highest in a decade. I hope the Committee agrees that where those profits are made on UK operations, they should pay their fair share. We are glad that the current Government have listened to calls from Liberal Democrats and others and finally scrapped the unfair investment allowance loophole, but we would like the Minister to give the Committee some clarity on how much money will be raised, particularly through the abolition of the carve-out. By extension, we would be able to see how much money could have been raised under the previous Government but was gifted to the large gas giants. [Interruption.] Conservative Members may not like it, but their constituents are choosing between heating and eating. People should know just how much money could have been raised and how much will now be raised through this measure.

Finance Bill

Daisy Cooper Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[Rachel Taylor]

Increasing rates of stamp duty land tax for second properties to 5% more than those buying their home will free up housing stock for first-time buyers, and hopefully stop prices continuing to skyrocket. Before I came to this place, I was a property solicitor in a high street firm in my constituency. Part of the reason I loved that job was that I got to be part of so many brilliant projects that transformed communities, but I was always so happy when I helped first-time buyers who would come through my door, proud that they had saved up and were able to buy their first home. They would tell me their plans for the future. We would overcome mountains of paperwork. I love being part of the moment when they got the keys to their first home, and they were finally homeowners.

I got to know my clients well. Each new homeowner would talk to me about how they would become part of their local community—supporting the local football club, or working at local businesses, hospitals and schools. They were planning to have kids who would go to local schools and shops in the town centre. But the longer I worked in that role, the fewer first-time buyers came into my office. Becoming a homeowner became out of reach for most young people. There are already half a million fewer young homeowners than in 2010. Millions are stuck in expensive, poor quality and insecure rented housing. The average cost of a home is over 10 times the average income of my constituents.

The Conservative party left a legacy of the most acute housing emergency in living memory. This Government could have ignored it and let more people miss out on becoming homeowners, but they decided to act and boost the supply of affordable homes. In addition, this policy will free up more housing stock for first-time buyers. For those who can afford the luxury of a second home, it will bring much-needed income into the Treasury in the form of an increased one-off tax—stamp duty land tax—that will help to pay for the much-needed improvements in health and education that this Government promised to deliver.

The status quo is unacceptable. Our housing market is not a fair market, and I am glad that this policy will help to remedy that. It will ensure that those buying properties as investments pay a fair level of tax at the start, so I urge all Members to vote for this important change.

[Daisy Cooper (St Albans) (LD)]

We Liberal Democrats have long campaigned against what has become, in some places, the scourge of second homes. In too many cases they disrupt or destroy local communities. However, I argue, as does my party, that this is not the best way of doing it. Clauses 50 to 53 raise the stamp duty surcharge on second and subsequent homes. I can see why it is attractive—it is an easy way of raising tax revenue for central Government—but it does not tackle the root problem. I urge the Government to look at the Liberal Democrat proposals, which would do both.

The impact of holiday homes, and short-term lets in particular, has been well rehearsed in the House over the years, but without any action by the previous Conservative Government to tackle it. In my constituency we have seen an absolute explosion of Airbnbs, which have become a magnet for antisocial behaviour and noise. Properties are taken out of the rental market, increasing demand and pushing up rental costs, squeezing many people out of the market and out of our area all together.

The shadow Minister, the hon. Member for North West Norfolk (James Wild), highlighted the risk that this measure may pose of properties being moved from long-term let to short-term let. It may come as some surprise that the previous Conservative Government failed to regulate short-term lets properly. Indeed, when this House was considering the Levelling-up and Regeneration Act 2023, we Liberal Democrats tabled amendments to the Bill to give local authorities the power to regulate the number and location of Airbnbs—a power that is desperately needed. Every single corner of our country should be able to strike the right balance between tourism and homes for local people, where they can build their lives and their community.

We also called for a separate planning class to be created for local authorities, and we want local authorities to have the powers to levy higher council tax for newly bought second homes, with an additional surcharge on overseas residents. That would provide regular income for our hard-pressed councils, not just infrequent money for central Government.

We all know that we have a national housing crisis, but it is also a local housing crisis, because it presents differently in different parts of the country. We urge the Government to look at our proposals to raise regular tax revenue for our hard-pressed councils while tackling this problem at its root. I invite Ministers to speak to the Secretary of State for Housing, Communities and Local Government to ensure that we can give our local authorities the power to regulate the number and location of short-term lets such as Airbnbs, so that our communities are no longer disrupted and destroyed.

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I call the Minister.