National Insurance Contributions (Secondary Class 1 Contributions) Bill

Daisy Cooper Excerpts

Committee of the whole House & 3rd reading
Tuesday 17th December 2024 Commons Chamber

[Graham Stuart]

Will the hon. Lady give way?

[Daisy Cooper (St Albans) (LD)]

Will the hon. Lady give way?

[Dr Luke Evans]

Will the hon. Lady give way?

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[Yuan Yang]

I thank the right hon. Gentleman for his point. I always welcome conversations with the OBR, whose representatives came before the Treasury Committee only a few weeks ago. In that Committee discussion, we had a full debate on its forecasts. It found that the long-term infrastructure and capital spending in the Budget, which is made possible by the different tax announcements the Government have set out, means that the economy will, in the long run, be 1.5% larger. I would add that the forecasts in the OBR’s assessment of the Budget have not yet taken into account all the various details of the measures that will be announced in the forthcoming months. I expect those forecasts to improve.

To return to the bill that the Government are now paying, we need to build back our economy and public services. That task requires at least a decade of national renewal. That is why in the Budget we set out credible long-term funding commitments and plans for where the money comes from.

On small businesses, I recently spent Small Business Saturday out and about visiting local employers across my constituency of Earley and Woodley. I agree very much that those small businesses are the backbone of our local economy; they bring character and jobs to our high streets. One such shop I visited is called UnderTwoK, a shopfront on Wokingham Road. I asked the owner, Mark, what the Government could do to help small businesses like his. He said:

“keep going with the focus on economic stability and clean energy. That’ll bring more people our way.”

Small businesses know that the Government are on their side. They know that, because the Chancellor increased the employment allowance from £5,000 to £10,500, ensuring that the rise in employers’ national insurance contributions will not hit the smallest businesses. Those employing four members of staff on the minimum wage will not be hit by the measure. That means that 865,000 employers will not pay any NICs at all next year and over 1 million will pay the same or less than they did previously. The changes have been very much welcomed by the Federation of Small Businesses.

The top concern I heard about from those retail businesses is not about NICs, but about shoplifting and crime on our high streets, which all too often goes unpunished. The funds raised in the Budget allow us to employ over 13,000 additional neighbourhood police officers, police community support officers and special constables by 2029. They will also fund 1,200 new police officers. Introducing the specific offence of assaulting a shop worker and attaching prison time to that offence is backed up by the commitment to put £2.3 billion towards prison builds over the next two years. That is an example of how we are helping small businesses: not just by talking the talk, but by walking the walk fiscally.

[Daisy Cooper]

Will the hon. Lady give way?

[Yuan Yang]

I have taken two interventions, which was the number I set for myself, and we do like sticking to numbers on the Government Benches.

I am proud that the Labour Government are asking the wealthiest individuals and largest businesses to pay a little more, so we can rebuild the foundations of our broken economy. That means: more money into the NHS, with £25 billion in NHS funding over the next two years, which is sorely needed in my constituency and across the country; and £7 billion for education in the next financial year, including £1 billion for SEND. Those are the kinds of decisions that would not be possible under the March 2024 forecast. Opposition Members may look at the OBR assessment of that forecast if they are in any doubt about that. Those decisions would not be possible if the Government were not taking important and serious decisions. That is why I stand, very happily, to support the Budget that we set out.

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[Daisy Cooper]

Part-time workers, especially in the hospitality sector, will be very badly affected. Before these changes a person could work 14 hours a week without incurring employers’ national insurance contributions, but that has now been reduced to eight hours, which will be very disruptive to weekend shifts in particular. Does the hon. Lady agree that that is an especially negative consequence of the changes?

[Aphra Brandreth]

That is another important point, about yet another group who will be badly impacted by these ill thought-through changes. I urge the Government to think again, and to back these very necessary amendments.

[Chris Curtis (Milton Keynes North) (Lab)]

I support the measures in the Budget. Given the speech that we heard from the shadow Minister, before we get into the policy I want to pause and acknowledge the extraordinary contribution of small businesses in my constituency and throughout the country. Every single day, countless individuals take on the challenge of building and running these vital organisations. The task is not always easy, but it is a labour of love, involving long hours, personal sacrifice and financial risk. These businesses are the heartbeat of our communities and the backbone of the British economy, and we all owe them our deepest gratitude. I have had the privilege of working for small businesses and witnessing at first hand the dedication that it takes. Members of my family have run small businesses, so I know how personal it is. It is not just a job; it is a way of life, and a commitment to local community. We must celebrate and support the work of those businesses at every turn.

Since becoming an MP, I have made it a priority to listen to small business owners. Their stories, their challenges and their hopes drive, and will continue to drive, my work in this Chamber, and let make it clear that this Government stand firmly behind them and will continue to do so. That is why I am proud that the Chancellor has agreed to raise the employment allowance to £10,500, a move that ensures that the smallest half of businesses will see either no increase or a reduction in their national insurance bills. It is a lifeline for the businesses that need it the most—and let us dispel the myths we have heard from Opposition Members: 75% of the funds raised from this policy will come from the largest 2% of businesses. But my plea to every single member of the Government is this: please keep engaging and listening to small businesses, because they continue to need our support.

I am sorry, but I will not take any lessons from the Conservatives on supporting small businesses when they have spent 14 years making their lives miserable. When their Government came to power I was working in the kitchen of a small business, the Dolphin pub in Newport Pagnell High Street; admittedly there was a bit of nepotism there, as my uncle Trev was the landlord. Back then the high street was alive, but today it tells a very different story. Many buildings are shuttered, pubs have closed, and a number of our small businesses have been lost. Under the last Tory Government, 10 pubs closed every single week—including, I have just read, many in the shadow Minister’s constituency. In 2022 alone, 345,000 small businesses shut their doors. Members can walk up and down any high street in the country today and observe the toll. This Government are determined to turn the tide.

Too many shelves are empty after being raided by out-of-control shoplifters. The revenue raised through the national insurance changes means that the country can afford our manifesto commitment to 13,000 more police officers and staff who can crack down on the shoplifters who are affecting many small businesses—and, as an aside, we will reverse the outrageous Conservative decision not to pursue shoplifters for thefts of goods worth less than £200. Too many businesses, including some that survived world wars and a global pandemic, were put at risk by the spiralling costs and interest rates caused by the Liz Truss mini-Budget. The revenue raised from this Budget will close down the £22 billion pound black hole that the Conservatives left to us, so we will not see a repeat of those disastrous events.

Too many small companies saw their energy bills skyrocket because of the disastrous energy policies of the last Government. We are setting up Great British Energy, a publicly owned energy company that will invest in clean energy here in the UK and end our reliance on foreign oil and gas.

Too many small businesses are being crippled by staff shortages, often because workers are stuck on NHS waiting lists for months. Because of the NICs changes, we can afford to put a record amount of investment into our NHS to get those waiting lists down.

[Daisy Cooper]

Does the hon. Member agree that because the previous Government gutted public health and primary care, there is now a crisis in the NHS? Although it is right that the Government want to move care away from hospitals and back into the community, does he understand the concern of some of us on this side of the House that the move to increase national insurance contributions on GPs, dentists and pharmacists will actually undermine that drive?

[Chris Curtis]

I thank the hon. Lady for her contribution. I refer her back to the comments made by my hon. Friend the Member for Earley and Woodley (Yuan Yang). Our tax system has got even more complicated, particularly after the last 14 years, and we do not want to see the level of complexity, which costs businesses and organisations, continue to spiral out of control. It is important that we make these changes in a simple way, but extra money is going into our NHS and will be flowing through the system. At the moment, the Department of Health and Social Care is looking at how to make sure that the extra funding is spent as effectively and efficiently as possible. I look forward to hearing soon from the Health Secretary about how that money will benefit all elements of our national health service, but I do not think that that is a reason to add extra complexity to an already complex tax system.

We do not want to raise taxes, and I appreciate that decisions like this are never easy—[Interruption.] The Conservatives laugh, but they raised taxes to record levels, broke our public services and left us with a £22.6 billion black hole. The reality is that they left us with no choice. Our goal is to lay the foundations for a thriving, resilient economy, where businesses can grow, communities can prosper and future generations can thrive.

What we have heard from the Opposition today is a repeat of what got us into this mess time and again. Liz Truss promised unfunded tax cuts and crashed the economy. The last Tory leader promised unfunded tax cuts and left a £22 billion black hole. The Tory party is promising unfunded tax cuts again, and will not say where the money is going to come from. That is what got us into this mess, and it is ludicrous to think that it will get us out of it. However, the mess that the Conservatives got this country into is about more than basic arithmetic; it was a complete failure to achieve any economic growth.

If growth in the UK had simply matched the OECD average, workers would have £5,000 more in their pay packets and the Treasury would have £50 billion more in tax revenues, without having to raise a single penny in tax. Just imagine how much better families would feel with that money in their pockets. We would not need to raise any taxes today if we had the extra tax revenue that was stolen from us by the Conservatives’ failure. Instead, they trapped us in a cycle of low growth, low productivity and low investment. That is the grim legacy of a Government who failed to create conditions for businesses to thrive. From a chaotic planning system to a revolving door of four Chancellors in five years, they have sown uncertainty at every single turn. Let us not forget the economic self-harm of Brexit, which was executed without a clear plan.

The Budget, including the NICs changes—

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[Ms Creasy]

Let me reach the hand of co-operation across the House to the hon. Gentleman, if he wants to finally work on what would be a genuinely affordable and accessible childcare system in this country. However, I will temper his enthusiasm, because his party made things worse. Under the previous Government, there was a 50% reduction in childcare place. We saw nurseries closing time and again because of the changes his Government made. We are starting from a foundation where the places simply do not exist. For the places that are there, too often it is those who can well afford childcare who are taking them.

If we are to get to a position where we have the childcare places we need, so that every child can get the best start in life in this country, we need to invest. We need to ensure that we save what is there and encourage those nurseries that can expand to do so. If we do that, we will reap the rewards, both in the Exchequer and in society. That is why early years provision matters to the future of this country.

Research by the Education Policy Institute shows that 40% of the disadvantage gap at the age of 16 has already emerged by the age of five. Equally, investment in early years means we could save £16 billion a year later, according to the London School of Economics. It also means we will get more money, because more people—mothers, fathers and carers—can make the choice to work and pay tax.

[Daisy Cooper]

The hon. Lady is making a compelling case about the need to invest to save. When we invest upstream in our public services, that often saves money for the taxpayer further down the line. Does she agree with the Liberal Democrats that that could be equally applied to investing in GPs, dentists and pharmacists to relieve pressure on the NHS?

[Ms Creasy]

I have worked with the hon. Lady on various issues, and I hope she will give me the latitude to expand my argument and set out my proposals, which we could move forward on together as a House. I do not doubt her sincerity, but I also recognise the fiscal destruction of the previous Government that we need to deal with, which means we need to tell the British public the truth about what needs to happen. Making unfunded promises is as bad as not promising to act.

Parent surveys show that a real difference is made when 30 hours of childcare is offered. That amount of childcare enables families to make choices about getting back into work. If we want to get to 30 hours by September next year, we need 60,000 additional childcare places and 29,000 extra members of staff. If we do not have fundamental root and branch reform of how we fund the provision of childcare, that will cost about £72 million extra a year on hiring staff alone. That is the challenge we face if we want to get this right.

I know how hard the Minister is working to get the economy growing again. I know he is going to hear pleas from every single sector about the impact of the national insurance changes; nobody should be under any illusion that they are not difficult changes. I make a plea for the childcare sector because I believe that in the end, it will pay for itself. If we are able to get more people back to work, especially mums, who all too often end up bearing the burden of childcare, we will be able to raise more taxes and there will be more investment as a result.

That is particularly true of the childcare sector because it is a people-intensive industry. Staffing costs make up 75% of a nursery’s running costs, compared with 30% for the average restaurant. Because the previous Government systemically failed to invest in childcare, the majority of childcare has been provided by the private sector. Some 85% of places are delivered outside the state sector. There is little flexibility on numbers in the sector, because ratios—the number of people looking after little people—matter. These are not businesses with small numbers of staff; an average nursery has 14 members of staff, which means the additional costs will be about £36,000 to £39,000 a year. Around £14,000 of that will be national insurance.

Many Members agree that we need to invest in that childcare and will be pleased to see this Government trying to address the balance. The damage done under the previous Government meant that 83% of nursery providers said the funding they received did not cover their costs. That is why closures increased by 50% in the last couple of years. This Government have already increased the funding for our nurseries, but while that takes account of increases in wages costs, it does not take account of the increases in national insurance.

I tabled new clause 4, which is about having a review of one element of all that, to ensure that we do not cut off our nose to spite our face when trying to get more people into work. We recognise that extra national insurance costs may have consequences, be they recruitment freezes, reduced staff training or even closures, at a time when we want the sector to expand. Indeed, the majority of nurseries have staff vacancies, so they need extra people already.

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[Gareth Snell]

Again, if my hon. Friend bears with me, I will get to that point, but I absolutely agree in principle that taxation in this country should fall on those most able to make that contribution. There is also a question about how we spend that money and use it in preventative services. Again, there is an argument to be had about how much of the money given to, for instance, the Staffordshire and Stoke-on-Trent integrated care board is spent on reactive services that treat people, as opposed to preventative services that keep people well in the first place. There is definitely a discussion to be had in our communities about whether the commissioning bodies that have the money are commissioning the preventative services necessary to reduce acute demand.

Last Friday I listened to the charities convened by Voluntary Action Stoke on Trent, and they themselves said that their biggest challenge before the national insurance increase was even mooted was the fact that they cannot get recurring funding year on year from health bodies, councils and the public sector. When they manage to get to the end of a project, they are told, “You’ve done that project. Come up with something new.” They are asked to redesign their service to chase a pot of money in order to deliver what essentially is the preventative service that stops the more acute services from facing greater demand. Again, we as a nation need to have a conversation—in part it is brought to a head by this Bill—about what role we see for charities in this and how we fund those services.

[Daisy Cooper]

For a long time we in this place have had debates about ensuring that the shift happens upstream in the sector, to support public health and primary care. Does the hon. Member accept that this measure will undermine the effort to put more investment upstream, and that it will force many charities to do even more fundraising to backfill the gap created by the national insurance contributions hike?

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[Graham Stuart]

There are so many places where the Government have spent it. Having claimed this £22 billion black hole, they promptly agreed a £10 billion pay rise for their trade union backers. Train drivers on more than £60,000 a year are getting £10,000 pay rises while in talks about a four-day week. Those train drivers are not available for the holiday season, because they are so awash with that backdated pay increase that nobody wants to do any overtime. There are so many other areas. We have GB Energy to invest in renewable energy. I was the Energy Minister until April, and there was no shortage of investment available for renewables in this country. Before anyone points to last year’s failure to get offshore wind, that was because of the price window that we imposed. We did not want to overpay for it. There was no shortage of appetite, as was shown this year. One reason why we moved to an annual programme was precisely to ensure that we did not overpay, but could bring on all the renewables we wanted. There are so many areas where the Government could instead not spend the money that they have chosen to spend.

Fundamentally—we need this conversation, including in my party—one of the things that makes the Conservatives the most successful democratic political party in the history of the entire western world, I am proud to say, is that we believe in proper analysis and deferred gratification. We have to make sure that we have a growing private economy, because that is where wealth comes from. If we allow money to fructify in the hands of those who create wealth, it will duly come back to the Treasury with interest, as the Financial Secretary of Hong Kong said many years ago, in rather more pithy terms. The most important thing is to live within our means, and to recognise the importance of feeding the private sector economy, because it is only wealth from that sector that allows us to deliver the public services that we all want.

I support new clause 1. The hon. Member for Stoke-on-Trent Central made it clear that he has concerns about the Bill’s impact, and I hope that the Minister can acknowledge that impact. At the very least, we should look back and check that the impact is, as I hope it will be, more akin to the growth-producing, foundation-fixing, black hole-removing vision of the Government. However, if by any mischance the combined Opposition parties are right about the Bill’s disastrous impact on the most vulnerable, the people furthest from the labour market and the rest, we should find out the truth, and whether the Minister or his colleague the hon. Member for Stoke-on-Trent Central is correct.

I also support amendments 13 to 18. The NHS is the centrepiece of the tax-raising and spending elements of this Budget, and this rise in national insurance contributions will contribute £22 billion—or £20 billion; I hear different numbers at different times, but I will stick to £22 billion—to the NHS. There are a couple of ways to sort out the problems, because the system is entirely dependent on social care provision, the hospice system and ancillary services, including primary care—the things that make up the NHS. In my area, when an ambulance goes to Hull royal infirmary, it may take an hour to get the patient in. That is because patients in the hospital cannot be got out of their bed—even though they are ready to leave—and into social care provision. The Bill will make that worse. Perhaps funding can be vired over to social care. Through the amendments suggested by my hon. Friend the Member for Grantham and Bourne (Gareth Davies), we are probing the Government and the Minister, who is a decent, honourable man. We are asking them to look at the issue creatively and ensure that the misgivings of those such as the hon. Member for Stoke-on-Trent Central are listened to.

[Daisy Cooper]

It is music to my ears to hear a Conservative Member of Parliament finally recognise the connection between the NHS and social care. The right hon. Member will remember that former Prime Minister Boris Johnson stood on the steps of 10 Downing Street and promised to fix social care for good. Could he let us know why he did not?

[Graham Stuart]

The hon. Lady has not been in the House quite as long as I have. I was first elected in 2005, and in that Parliament I spent a lot of time—mostly in Westminster Hall, as I recall—in debates with then Labour Ministers talking about the importance of having a joined-up, coherent approach to the national health service and social care. It is clearly fiendishly difficult. The coalition Government, of which the hon. Lady’s party was a part, and the Conservatives kept working at it. We changed the name of the Department of Health to the Department of Health and Social Care precisely because of that. It is challenging, because social care is delivered through local authorities, but the opportunity is there. Before the Government get all that wiring and complexity fixed—we were working devotedly at that—they could vire funding over to the sector, or exempt from the Bill the sectors on which the NHS depends. Pouring money into the Hull royal infirmary while it is unable to unload the ambulances coming in, or get the healthier patients out, is a crazy approach. I am sure that the Minister recognises that.

I want to mention the impact on social care. Last Friday, I went to Merrywick Hall, a great example of a small, family-run, residential care home. Its 31 residents are not all elderly, but they all have learning disabilities. Some of them are elderly, making them doubly disadvantaged. The home charges a basic rate of just £699 a week to care for those people, and its staff are stretched. I met Katie, who runs the home, and her husband Carl, who oversees the finances, although the home is owned by another. It was quite clear that that they were not running a business in the way that I would recognise as a former businessman; they were running an institution that was absolutely committed to the welfare of the people in it. Between this jobs tax, which the Minister is foisting on us, and the national minimum wage increase, they have to find an extra £56,000 a year, which is equivalent to the care costs of 1.5 residents. That is the reality. That system and those places are vulnerable. If those places go, there will be a massive knock-on effect on the rest of the system.

I hope that hon. Members from across the House are less interested in the system—although it is our job to worry about it—and much more interested in the people. People cannot get much more vulnerable than the elderly who have learning difficulties.

[Graham Stuart]

I thank my hon. Friend, who is of course a doctor. In this and previous debates, such as Second Reading, it is good to encourage a discursive approach in the Chamber, if we are to be valuable. I hope that we will continue to gather in this Chamber, talking to each other and listening. No one would think less of the Government for making changes. I cannot speak for those on the Opposition Front Bench, but I would seek to give the Government some political cover if they found a way to ameliorate the impact of this measure on the system—and, more importantly, on the human beings on which the NHS relies.

In 2021, the then Leader of the Opposition, now Prime Minister, promised a plan

“to ensure that those with the broadest shoulders pay their fair share.”—[Official Report, 8 September 2021; Vol. 700, c. 295.]

Yet all the analysis available to Government Members shows that those with the least will pay the highest price for this measure. In my constituency, HICA, a large not-for-profit provider of social care homes and in-home care—a brilliant organisation that has had the same chief executive for the past five years—was finally getting a surplus to invest in its stock, some of which is almost as old as me, and to give its staff something above the national minimum wage. But following the changes in the Budget, it faces a bill of £3.5 million, more than offsetting any hope of a surplus, which it desperately needs in order to invest in its people and stock. The money will be taken away from that good social purpose in my local area, and instead will go into the Chancellor’s mythical black hole—for payment of additional sums almost greater than the total income of many pensioners, and for pay rises, for train drivers, so that they can pay their union fees; and so that Labour Members can carry on all too rarely mentioning in the Chamber their sponsorship by people who dictate so much of what they share with us—the hon. Member for Stoke-on-Trent Central aside.

Finally, it is interesting in these debates just how few of the more than 400 Labour Members—they can all cheer on the Government Benches at how many Labour MPs there are—want to come and defend these measures. The hon. Member for Hexham (Joe Morris) spoke bravely, but he looked a little world-weary. I think he has been going out and about in his constituency, so I am sure that he is hearing the same thing as me, but said a little more angrily, because he is responsible for it.

I appeal to those Members who are not here to seek change. The 2012 Budget by George Osborne, crudely and rudely called the omnishambles Budget, included a measure to bring in 20% VAT on static caravans. The Treasury civil servants love dusting these things off—they hate an anomaly more than anything. Those are the very caravans that ordinary working people use to holiday on the coast. I did not, alongside colleagues, run my campaign in the press; instead, I built up support from Conservative Members and coalition colleagues, who realised how damaging that measure would be for jobs in their area, the holiday opportunities of ordinary working people, and an industry that is 95% manufactured in the UK. People told me, “Change is impossible—this has been announced in a Budget. You cannot overturn a Budget measure.” You and I, Madam Chair, having been here some time, know that that is not true. Politics is a matter of arithmetic. If Labour Members can build enough support among colleagues on the Government Benches—they do not need to do it publicly, and they do not need to tell us about it—they have every chance of changing this. The Whips and Ministers start getting spooked when 15 Members turn up. If Labour Members can get 30 or 40, they can make a change. They should not feel powerless.

The Government could make changes. They could move £3 billion or £4 billion over to social care, hospices, GPs and the like. They could agree to our amendments. They could come up with some other solution. They have the power to do it. Stubbornness and perhaps a certain arrogance has crept in because of the size of their majority. Government Members, who go out to talk to their constituents more frequently than Ministers, will be in a great position to tell Ministers that up with this they will not put.

[Daisy Cooper]

The right hon. Gentleman is encouraging the Government to ameliorate their position. Does he agree that there is one very clear way of doing that today? Members on all Benches could vote for Liberal Democrat amendment 1, which excludes all GPs, dentists, hospices and charitable health and social care providers from this NICs increase.

[Graham Stuart]

Liberal Democrats did remarkably well at the election, pretty much on the back of sewage. Between water stunts and sewage, a record number of Liberal Democrats have been returned. I am pleased to say that the Conservative party remains His Majesty’s Opposition. Therefore, I urge the hon. Lady and her colleagues to support amendments 13 to 18, and new clause 1. She will find that exactly the same is achieved, but with the backing of His Majesty’s Opposition.

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.

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.

Employer National Insurance Contributions

Daisy Cooper Excerpts

Wednesday 4th December 2024 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

On 23 October, at Deputy Prime Minister’s questions, I warned the Government that an increase in national insurance contributions would impact not only millions of small businesses but social care providers. That was a week before the Budget. Here we are, six weeks on from that exchange, and we are still talking about the impact of those changes. The reason is that the unintended consequences are huge.

We all know the Government have received a terrible inheritance from the Conservatives. The Conservatives flatlined our economy, blew a hole in the public finances and left public services on their knees. In the wake of the Conservative Government, there is a litany of broken promises. They promised to recruit 6,000 GPs, and they did not. They promised to fix social care for good, and they did not. Every single year since 2015, they failed to meet their 62-day cancer treatment target. I have huge sympathy for the fact that the Labour Government need and want to invest in our NHS and care. However, I am concerned about the indiscriminate impact of the changes to national insurance contributions. [Hon. Members: “Ah!”] You’ve heard this before—come on. Not only will the changes undermine growth, they will undermine the efforts to get the NHS and care back on their feet.

Over the past six weeks, all of us have heard concerns about the impact the changes will have on GPs, dentists, pharmacists and social care providers—all critical organisations to getting the NHS and care services back on their feet. We have heard about the impact on the early years sector. I am concerned the changes will drive up the cost of childcare when we should be driving it down to help parents get back to work.

Over the past few weeks, I have raised examples from my constituency of the impact the changes will have, including on Citizens Advice, which gives advice to some of the most vulnerable people; Hightown Housing Association providing social homes; Quantum Care, a social care provider; Rennie Grove Peace Hospice Care; the Bedfordshire and Hertfordshire local medical committee representing GPs; DJs Play; and Ye Olde Fighting Cocks, the oldest pub in England. We know small businesses are the engine of our economy and backbone of our communities.

[Mr Perkins]

I am glad to hear that Liberal Democrats support the extra money for the health service, special needs education and social care. I apologise for my impatience, because I am sure the hon. Member is just about to get there, but can she tell us where the £25 billion should come from if not from this national insurance rise?

[Daisy Cooper]

I welcome that intervention. In the debate on the National Insurance Contributions (Secondary Class 1 Contributions) Bill yesterday, I addressed that question head on. I will try to remember my notes, which are sitting with Hansard. The hon. Gentleman will be aware that the OBR has said the £26 billion is actually reduced to £10 billion when behavioural changes and rebates to the NHS and care are factored in. On raising that £10 billion, we have said we would reverse the tax cuts that the Conservatives gave to the big banks, raising £4 billion. We could raise a further £3 billion by increasing the remote gaming duty and the digital services bill.

We set out proposals in our manifesto to reform capital gains tax in a different way from the Government. Our measures would have raised about £5 billion, so unlike the Conservatives—who did not set out the impact of the £10 billion to £20 billion of cuts that, based on their manifesto, would have been inevitable—we as a constructive Opposition have set out suggestions. I urge Labour Members to take up our ideas, if not in this Budget then certainly in the next.

We are approaching Small Business Saturday, when I am sure we will all be in our constituencies talking to small business owners. We know that small businesses are the engine of our economy and the backbone of our communities, and in many cases, they make our high streets what they are. When it comes to health and care businesses, though, I am concerned that this measure takes with one hand and gives back with another, but with no guarantee that the money that comes back will cover the costs. As such, I urge the Government to rethink these changes to national insurance contributions, but if they do not, I urge them at the very least to exclude health and care providers from these measures.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Daisy Cooper Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

This Saturday is Small Business Saturday. It is an opportunity for every single one of us to celebrate the fantastic small businesses in our constituencies—businesses that are the engine of our economy and the backbone of our communities.

We know that behind every single business there is a story. Either it is a family business that has passed through the generations and evolved, or it is a start-up that was somebody’s life’s dream, but behind every story there is blood, sweat, tears and hard work. This Saturday, as we all go around our constituencies meeting and greeting small business owners, we only need to scratch the surface of even the most successful business to know that they are very worried about the impact of the Budget, particularly the rise in employer’s national insurance contributions. We have heard from many of them already, and we know what the impact will be: they will suppress wages, freeze recruitment and, in the worst cases, shut up shop.

Rightly, the Government keep talking about growth. We all want economic growth, but this particular tax will undermine growth, not unleash it. We have all heard from GPs, dentists, hospices, social care providers, charities that are commissioned to provide health and care, and public health programmes. They are all incredibly worried. None of them has been given a guarantee that the money being taken away with one hand through the rise in employer’s national insurance contributions will be given back through the renewed contracts with the NHS. We oppose this tax, but if the Government will not reverse it, we urge them at the very least to exempt health and care providers.

[Dr Evans]

We have heard a number of times from the Prime Minister and the Chancellor, and even from the Exchequer Secretary to the Treasury today, that allocations will be made in the usual way, but we are six weeks on from the Budget and health services are trying to decide what to do now. They cannot wait.

[Daisy Cooper]

I agree with the hon. Gentleman that GP services, dentists and hospices are having to make decisions now on freezing recruitment and not providing wage increases, so there is real urgency to this measure.

The changes go beyond health and care. They will also affect early years providers and education providers, at a time when we should be reducing the costs of childcare and care services and supporting parents back into work. The measure will undermine that. I have heard from housing associations, Citizens Advice and hospitality companies that the pressure from this measure will make life incredibly difficult for them. Hospitality in particular relies on a lot of part-time workers, and the changes to national insurance contributions will have a terrible effect. Many of them tell me that at the moment—before the changes have taken effect—employer national insurance contributions liability is incurred only once a part-time worker starts earning £9,100 per annum. That is 15 hours a week on the current national minimum wage. Once the changes take effect, however, liability will be incurred at only £5,000 per annum, or the equivalent of 7.5 hours a week on the new national minimum wage. That will disincentivise small businesses from taking on part-time workers. Let us be honest: many people can only work part time because they are picking up the pieces of a broken health and social care system.

[Graham Stuart (Beverley and Holderness) (Con)]

The hon. Lady is making a powerful speech. Someone coming back from a mental health crisis who manages to get one day’s work a week—that may initially be all that they can manage—will, under this so-called Government of workers, find themselves hit by the measure and so will be less likely to be employed. Also, most of the cost of the measure will come out of their wages.

[Daisy Cooper]

I thank the right hon. Gentleman for that point. Many people work part time, for all sorts of reasons. They could be coming back from a period of poor mental health. They could be returning to work after bringing up their children. They could have a fluctuating health condition, be recovering from surgery or, as I was saying, be picking up the pieces of a broken social care system, having become a family carer. We all know these people. They live among us. They are our friends, our neighbours and our family members. Many people need to work part time in order to contribute to the economy and be productive, and it is also good for their self-esteem.

A number of Labour Members have rightly challenged the Conservatives on how they would pay for this investment in the NHS, and they are right to do so, because the Institute for Fiscal Studies gave a damning account of the Conservatives’ manifesto. It said that it contained

“giveaways paid for by uncertain, unspecific and apparently victimless savings.”

Also, the Conservatives could not say where the £20 billion-worth of cuts could come from, so Labour Members are right to point to the fact that the Conservatives have not answered that question. We should hold their feet to the fire on that point, because we heard time and again in the run-up to 4 July that everything was broken and that the Conservatives had driven our economy into the ground and left our public services on their knees.

By contrast, we Liberal Democrats have set out how we would fund many of these services. The Labour party says that its measures will amount to £28 billion for investment in health and social care, or at least in the NHS, but the Office for Budget Responsibility says that once the amount is adjusted for behaviour changes and public sector rebates, it comes to only £10 billion. We have suggested a number of measures and, in the spirit of constructive opposition, I urge Labour Members to look at them, if not for this Budget, then at least for the next.

If the Government had reversed the Conservatives’ tax cuts for the big banks, that would have raised £4 billion a year. If they had doubled the remote gambling duty, that would have raised up to £900 million a year. If they had trebled the digital services tax, that would have raised £2 billion a year. We have pointed to examples of ways that the Government could have raised funds from those with the broadest shoulders. In the spirit of constructive opposition, I urge Labour colleagues to look at those measures.

[Luke Murphy]

The hon. Lady has cited the IFS, which said of the Liberal Democrat manifesto that

“there are clear risks that their package of tax measures would not raise the £27 billion a year that they claim.”

The IFS also described some of the measures as “a bad idea economically.” Confronted with a Bill promising actual investment and delivering actual money, will the Liberal Democrats really oppose it?

[Daisy Cooper]

The fact remains that the IFS said that our proposals for capital gains tax, which would raise £5 billion, go in “a sensible direction”. I recognise that the IFS does not like our proposal for share buy-backs, but other think-tanks are available. Indeed, the Social Market Foundation and the Institute for Public Policy Research support our online gambling proposals. A broad range of think-tanks support a number of measures in our manifesto. As I said, in the spirit of constructive opposition, I urge Labour Members to look at those ideas.

I finish where I started. This Saturday is Small Business Saturday, and small businesses will shoulder a disproportionate burden from the increase to national insurance contributions. We urge the Government not to proceed with this measure, but if they do, they should, at the very least, exclude health and care providers, which are essential to getting health and care back on their feet.

--- Later in debate ---

[Daisy Cooper]

I am grateful to the Minister for addressing my earlier questions. Rather than taking with one hand and giving back with the other, would the Minister support moves to exempt all health and care providers?

[Tulip Siddiq]

The Department of Health and Social Care will confirm funding for general practice for 2025-26 as part of the usual GP contract process later in the year, through consultation with the sector. I understand the concerns about the impact on the healthcare sector, but I can assure the hon. Lady that the Department of Health will continue to engage with GPs, dentists and pharmacists as part of the usual contract process, and that changes in NICs will be taken into account in those discussions.

Let me now turn to the rant, I would say, rather than speech, from the hon. Member for South Shropshire (Stuart Anderson). I was not quite sure what question he was getting to, but he did ask very clearly whether the Chancellor understood the impact of the economic policies that she was making, and whether she would remain in her place. Considering those questions, I wondered what he thought about economics as a whole, so I decided to look into him. Not long ago, he said:

“I have worked with Liz Truss on many occasions…I believe that her economic position…and her parliamentary experience make her the best option to lead our country.”

Oral Answers to Questions

Daisy Cooper Excerpts

Tuesday 3rd December 2024 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Citizens Advice in St Albans supports some of the most vulnerable people to access public services. It says that the changes to national insurance contributions will

“hit hard because we employ mostly part-time staff and the change to the threshold means we go from paying nothing to the full amount for each staff member. The increased rebate is intended to offset the NIC for small organisations but does not for us because so many of our staff are part-time.”

Will the Chancellor look again at the impact of the national insurance contribution changes on part-time workers?

[James Murray]

We recognise that we have taken a tough decision to increase the rate and broaden the base through changes to the secondary threshold. I welcome the work done by the organisation mentioned by the hon. Lady in her constituency, but perhaps the need for advice would be less if public services were stronger. One of the reasons we are taking these difficult decisions on taxation, welfare and spending is precisely to ensure that these public services can provide the service that people need.

[Daisy Cooper]

We all want to see stronger public services. According to Hightown Housing Association, the estimated extra total cost of the national insurance contribution changes will be £860,000 per year—money that would allow the association to pay the interest on a loan of around £17 million, which would pay for around 60 social homes. Will the Chancellor say whether she will conduct an impact assessment of these national insurance contribution changes on the number of social homes?

[James Murray]

The Liberal Democrat spokesperson began her question by saying that we all want public services; the problem is that not all of us in this Chamber are prepared to pay for them. That is exactly why we have to take difficult decisions to ensure that we can fund our ambitious plans for the NHS, education and indeed housing. The impact of the impact assessment is published in the tax information and impact note, which is published alongside the legislation, which I am sure the hon. Lady will have seen. It comes down to the basic point that we have to make tough decisions on taxation if we want to fund those public services.

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.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Daisy Cooper Excerpts

2nd reading
Monday 25th November 2024 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

The Great British high street is on life support. Many bricks-and-mortar businesses are barely surviving and, where they are, it is often against the odds. Changes in our trading relationship with Europe, the covid-19 pandemic, energy prices, the cost of living and the Conservatives’ disastrous mini-Budget have all taken their toll, but for years one measure has stifled high street businesses more than any other: the broken business rates system.

The business rates system is unfair on companies, bad for our local communities and damaging to our national economy. It penalises manufacturers when they invest to become more productive and energy-efficient. It leaves pubs and restaurants with disproportionately high tax bills and it puts bricks-and-mortar shops at an unfair disadvantage compared with online retail giants. In too many places pubs, restaurants and shops are being forced to close, taking with them jobs, opportunities and treasured community spaces, and consumers are seeing the cost of this unfair tax passed on to them.

More broadly, this outdated system inhibits business investment, job creation and economic growth, holding back our national economy, yet for too long it has been allowed to continue. In their 2019 manifesto, the previous Conservative Government promised a fundamental review of business rates to ease the tax burden on smaller businesses. Yet in 2022, when I challenged the then Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), on his personal commitment to making that happen, he admitted in this place that it was

“Another of the promises I now vainly wish I had not made”.—[Official Report, 17 October 2022; Vol. 720, c. 430.]

Businesses are tired of being treated with such cynicism and of relying on a patchwork of last-minute temporary reliefs. They cannot plan, they cannot invest and they cannot grow. They are crying out for fundamental reform and a new, fairer system. Before this autumn Budget, Liberal Democrats called on the Chancellor to reform business rates completely, with a new system, and to do so no later than April 2026. We believe the new system should be based on our Liberal Democrat calls for a commercial landowner levy—a bold move that would deliver a real shot in the arm for our high streets.

Instead of pursuing fundamental reform, instead of fair reform, this Bill is just more tinkering. Rates relief has been a sticking plaster—but, boy, is that plaster being ripped off in April, with a big reduction in relief. Many small businesses now say that the increase in business rates, combined with the increase in national insurance contributions, will be too much for them to absorb.

[Andrew George]

My hon. Friend is making an excellent case. Along with the point I made in my previous intervention about the opportunity for abuse under the rates relief system, particularly by holiday homes, does she accept that the methodology used by the current rating system for parking spaces in out-of-town retail outlets such as supermarkets hands a massive advantage to those supermarkets in comparison with town centre shops, and that we need a rating system that actually levies a rate on that benefit at a level that ensures an even playing field?

[Daisy Cooper]

My hon. Friend is absolutely right that this broken business rates system is unfair in many ways and it is the big giants, online or otherwise, that are getting an easier ride.

The Bill fails to address many other problems with business rates. For example, it does nothing to support businesses outside the three sectors of retail, hospitality and leisure, meaning it excludes key sectors such as manufacturing that are particularly negatively affected by the current system. It does not address the £51,000 cliff edge. Properties with a value over that threshold are not eligible for the small business multiplier, even though they are small businesses, and with rates relief going down, business rates bills for small businesses will go up. From next April, business rates relief for retail, hospitality and leisure will be cut from 75% to 40% and this Bill does nothing to avert that blow.

The Minister said he wants to rebalance business rates. I welcome that direction of travel, if it turns out to be true, but in the absence of an impact assessment, I am particularly worried about unintended consequences. I say this in the spirit of constructive opposition: it appears as though the Government are moving from a system of temporary relief to a lower multiplier. At the moment, a small business enjoys 75% business rates relief, but a very large chain has its relief capped at £100,000. If I have understood it correctly, independent shops will see their relief drop from 75% to 40%, while big chains such as pubcos and supermarkets may see their relief uncapped, which could give them a tax reduction of tens of millions of pounds. I would be grateful if the Minister wrote to me to share some modelling to reassure me that that is not going to happen and that we will not see independent businesses inadvertently subsidising big chain stores and multinationals.

The impact of the Government’s changes to business rates will have a massive effect on small businesses in my constituency. The oldest pub in Britain—or so they claim—Ye Olde Fighting Cocks, will see a whopping increase of £30,000 per year in its business rates alone. The Save St Albans Pubs campaign says that even an average pub in St Albans, with a rateable value of £100,000, will face an additional £19,000 in its business rates bill from April. If we assume that an average pub makes 30p profit per pint, each of those pubs would need to sell an extra 60,000 pints a year, or almost 1,200 pints extra a week—and that is before factoring in the increase in national insurance contributions.

Other low-margin, large-premises businesses, such as children’s soft play activity centres, will also lose out under these changes. DJ’s Play runs much-loved indoor play centres across Hertfordshire, which exist in large warehouse-style premises. The buildings are large, but the profit margins are not. DJ’s Play and many others like it provide a valuable and enriching educational experience for children, but they too will struggle to keep their heads above water.

The Liberal Democrats are also opposed to the Bill because it would levy a tax on education by removing the business rates exemption for private schools that are charities. We are opposed in principle to the taxation of education, because it is a public good. We believe that parents must be given choice when it comes to their children’s education. Many families feel that, whether due to bullying, SEND provision, mental health issues or other factors, the state system cannot meet their child’s needs.

[Josh Fenton-Glynn]

One of the first things the coalition Government voted to do was to scrap the Building Schools for the Future programme, which impacted schools in my constituency including Calder high school, Brooksbank and Todmorden high school. Will the hon. Lady reflect on whether that was a mistake by her party and whether it has prevented state schools from being able to provide for more students?

[Daisy Cooper]

I am grateful to the hon. Gentleman for his intervention. He may know that during those coalition years, both the health and education day-to-day budgets were protected and it was after the Liberal Democrats left the coalition in 2015 that capital budgets were serially raided to pay for day-to-day spending.

To return to my point, there are almost 100,000 children with SEND in private education without education, health and care plans, and it will be those families who bear the brunt of this measure.

We Liberal Democrats have tabled our own reasoned amendment setting out the reasons why we are against the Bill, but I have a number of questions for the Minister that I would be grateful if he could address in his summing up. Will there be an impact assessment that sets out the impact on small businesses on high streets? Will he exclude any new investment from business rates valuations from April, so that businesses that are able to invest in their future will not see that investment pushing up their rates bills even higher? Will he think again and complete the consultation before unfreezing the rates relief, which could badly affect small businesses and our high streets? Will he confirm whether the change from a system of capped temporary relief to an uncapped lower multiplier will inadvertently end up with small businesses subsidising big corporations?

The Government say that they want growth, and so do we, but these business rates changes will stifle the growth of small businesses and high streets at a time when we should be unleashing it. We urge Ministers to think again.

Financial Services: Mansion House Speech

Daisy Cooper Excerpts

Monday 18th November 2024 Commons Chamber

[Madam Deputy Speaker]

I call Liberal Democrat spokesperson Daisy Cooper.

[Daisy Cooper (St Albans) (LD)]

We welcome any reforms that will provide an effective route to growth without putting undue pressure on people’s savings, so we look forward to seeing more details from the Government. In the meantime, I press Ministers on their broader goal of getting investment in innovation. Constituents in St Albans report that their small and medium-sized enterprises have invested in innovation. They have successfully applied for research and development tax credits, only for His Majesty’s Revenue and Customs to claw them back. It is right that HMRC tackles errors and fraud, but thanks to Conservative inaction, it is now widely accepted that a number of SMEs are seeing their valid claims rejected or withdrawn, while others are simply not applying for the tax credits at all. Will the Minister please conduct an urgent review of HMRC’s approach, with a particular focus on whether it is undermining the growth and innovation of the SME sector?

[Tulip Siddiq]

I thank the hon. Lady for her comments. I will pass them on to the Financial Secretary to the Treasury, who will look into the matter. I am worried to hear what she says about SMEs; she is absolutely right that they are the heart and soul of our economy—we should be looking into that. I will ensure that he writes to her, but if she needs a further meeting, I am sure he will meet her.

Draft Local Loans (Increase of Limit) Order 2024

Daisy Cooper Excerpts

Wednesday 13th November 2024 General Committees

[Daisy Cooper (St Albans) (LD)]

As others have said, this legislation is uncontentious; I am happy to support it. This is a good opportunity to highlight the difference that some of these loans make to people’s lives. In my local area of St Albans, the district council has used Public Works Loan Board borrowing to help fund a range of really ambitious projects in our local area. That has included investment in social housing, such as the King Offa and Hedges sites; decarbonisation and improving the energy efficiency of council homes; investment in vehicles and equipment used for recycling, street cleaning and waste collection, which has helped our district council to achieve one of the highest recycling rates in the country; and investment in a regeneration project in the heart of the city, which is providing social, rented and shared ownership homes along with commercial space to rent.

Simply put, the Liberal Democrat administration at St Albans district council is really ambitious for our area, but it could not have achieved so much, or done work at such a scale to make homes warmer and cost less to heat this winter, without access to this productive borrowing facility. We very much hope that future applications from our and other councils will make just as much difference to people’s lives. We are very pleased to support the measure.