Finance (No. 2) Bill

Daisy Cooper Excerpts

Committee of the whole House
Tuesday 13th January 2026 Commons Chamber

[The Second Deputy Chairman]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

This is a retrospective tax without transitional protection. It upends plans for those who have already made sacrifices to build up their pensions, undermines confidence in pensions planning, reduces long-term investment and causes people to rush to withdraw money from their pensions.

As has been mentioned, the chartered institute and the ATT have raised concerns about this group of clauses, which shoehorn pensions legislation into tax legislation. There are major worries about creating personal liability without control for personal representatives, whether executives or administrators. Personal representatives are legally obligated to gather all the assets, settle any liabilities, including inheritance tax, and distribute the remainder of the estate to the beneficiaries. They are personally liable if they do not set aside enough money to settle all financial liabilities, including IHT. Experts have warned that someone being personally liable for IHT on a pension fund that never comes into their hands leaves the door open to costly and protracted litigation and will understandably make personal representatives, such as professionals or friends of the deceased, much more cautious before they distribute all of the estate.

Even more concerning is the fact that if representatives discover a new pension fund after settling the initial IHT liability, this would have a knock-on effect on not only the estate but all other pension funds. It means that IHT will have to be recalculated for every part of the estate and every pension fund. It is far from uncommon for people to have had different jobs with separate pension plans, so the risk of miscalculation is obvious. If someone passes away before they have had the chance to consolidate their pension funds, tracking down the unused pots within six months of their death will be very difficult for executors and will mean that the initial IHT calculations could be wrong. The Government must recognise that and amend this measure. If they do not, and Ministers simply ask future executors to sign some sort of disclaimer form, they will soon find that nobody will want to take on that role.

Our new clauses 18 to 20 raise the clear need for significant reforms and are a means of pressing the Government to protect individuals from being liable for private pensions that they did not know about and could not reasonably know about either. Finally, there is widespread worry that family members might have to wait up to 15 months before they are able to access their inheritance, during what is bound to be a hugely straining period of loss and grief. The Liberal Democrats’ new clause 20 urges the Government to recognise that reality and take steps to address it.

[Lucy Rigby]

I thank hon. Members for their contributions to the debate on this group of clauses. Before I respond to the specific points that have been raised, I will reflect briefly on the core purpose of the Bill.

The Bill contains fair and necessary reforms to the tax system, which unfortunately have been ducked for far too long. They will help to strengthen our economy for the long term, ensuring that we can cut the cost of living and inflation, and restore our public services and the public finances to health. The Tories and Reform—who are increasingly indistinguishable, it might be said—have already set out their choice: a return to the chaos and instability of the past. That approach failed before, and we are not going back.

The clauses in this group restore pensions to their core and intended purpose, which is funding retirement. We are not allowing them to function as a tax-free vehicle for the transfer of wealth. Generous tax relief for retirement saving is preserved. The clauses ensure that pension wealth is treated fairly and consistently for inheritance tax purposes. They protect ordinary families, with more than 90% of estates still paying no inheritance tax at all each year after the changes.

Let me turn to the non-Government amendments in this group. New clause 18 would require the Treasury to review the effects of the changes to pension tax policy, including their impacts on individuals, administrators and behaviour. A report would need to be laid in Parliament no later than six months from when the Act comes into force. This new clause is not necessary. The Government have published a tax information and impact note on the changes in the normal way. It sets out the impact on individuals, and accounts for the impact on personal representatives.

As hon. Members know, the Government keep all tax policies under review through the monitoring of returns and communication with representative bodies and taxpayer groups. A review within six months of the policy taking effect on 6 April 2027 is not practical, not least because the data relating to inheritance tax in 2027-28 will not be fully available until the summer of 2030. That is the normal timescale, and it operates because tax liabilities data is available only with a long lag, partly because the filing of the relevant inheritance tax accounts is due 12 months after a death. For those reasons, new clause 18 should be rejected.

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

I call the Liberal Democrat spokesperson.

[Daisy Cooper]

We Liberal Democrats have long campaigned for the doubling of remote gaming duty, and we are grateful to the Government, who have finally listened and taken that on board. This measure will raise vital revenue in a fair way, while addressing the eye-watering profits of the big online gambling companies and standing up for the thousands affected by problem gambling. According to the latest figures from the Gambling Commission, the online gambling giants saw revenues reach an eye-watering £7.8 billion in 2024-25. Meanwhile, Public Health England has estimated that gambling costs the UK economy about £1.4 billion a year through a combination of financial harms and the impact on physical and mental health, employment, education and crime. About 300,000 adults in Britain experience problem gambling, as well as roughly 40,000 children. Those figures are stark. This measure finally takes action that should have been taken a long time ago, and it will raise about £1.8 billion a year by 2029-30 to fund our public services fairly.

Buried in the fine print, however, is a detail that makes it seem as if the Government are giving the big online gambling firms a get-out, and I should be grateful to the Minister for some clarification. According to the “Budget 2025 Policy Costings” document,

“The tax base for this measure is the Gross Gambling Yield”,

which is the revenue retained by gambling operators after they have paid out winnings to customers. The tax base for remote gaming duty as defined in the Finance Act 2014 is a larger tax base. It is known as the gross gambling revenue, and includes the notional stake value of free bets and free plays. Can the Minister explain why today’s tax measure will apply to a narrower tax base than the one currently targeted by remote gaming duty? How much tax revenue has been forgone by this narrowing of the tax base? Was it unintended, or was it a result of influence from the sector? Did any of the big online gaming companies meet any Ministers and discuss these measures while they were being considered?

New clause 21, tabled in my name, seeks to clarify this situation by requiring the Chancellor, within six months of the passing of the Act, to undertake an assessment of the impact of the implementation of sections 83 and 84 in respect of the treatment of free bets and free plays for calculating general betting duty on remote bets, so we can clearly see the impact of this difference.

[Alex Ballinger]

I want to speak in support of clauses 83 and 84 on gambling taxation. I of course strongly welcome these steps on remote gaming duty, which cover online slots, online casino games and other high-risk remote gambling products.

Ahead of the Budget last year, I was one of more than 100 Labour MPs, alongside Gordon Brown, who wrote to the Chancellor calling for a different approach to gambling taxation and one that recognises the reality of the modern gaming industry. We highlighted how taxing the social ills caused by online gambling could pay for the abolition of the two-child benefit cap, and I strongly welcome the action the Chancellor has taken to lift hundreds of thousands of children out of poverty on the back of these changes. For us, fairness was not just about asking those with the broadest shoulders to contribute more, but about ensuring those whose business models generate the most harm make a proper contribution to the cost of that harm. That is why clause 83 is so important, as it targets the most addictive and dangerous forms of gambling: online slots and casinos.

As a country, we are experiencing record levels of harm caused by gambling. The Gambling Commission’s figures tell us that 2.5% of adults, which is more than 1 million people, are suffering from serious gambling harm. There are many types of gambling harm—debt, family break-up, crime and, at the most severe end, suicide—so it is extremely worrying that the Royal College of Psychiatrists has seen a threefold increase in the number of those referred for gambling treatment since gambling moved online during the pandemic.

In my own area, the Dudley-based Gordon Moody charity, which provides gambling treatment centres all over the west midlands, has seen a large increase in referrals, most worryingly among younger people involved in online gambling. This is not a coincidence, because online slots and casinos are designed to be high speed, continuous, psychologically manipulative and, for many, overwhelmingly addictive. So the Chancellor’s decision to increase remote gaming duty targeted at these most harmful forms of gambling is absolutely the right thing to do. It sends a clear message that the tax system must reflect the level of harm caused.

There is another reason why this change—as well as clause 84, which increases general betting duty—is the right thing to do: many online gambling operators, particularly large global operators, have spent years offshoring their profits, booking revenues overseas, minimising their UK tax liabilities and contributing very little in meaningful employment or investment in our communities. In one example, at the end of last year the online operator Sky Bet moved its headquarters to Malta specifically to avoid UK corporation tax, cutting its contribution to the Treasury by tens of millions of pounds. In another example, an unnamed online bookmaker was investigated by the Gambling Commission for illegally directing customers to offshore-based platforms —indeed, to the black market itself—to avoid paying UK tax and to avoid UK regulations. Increasing these online duties means that it will be harder for unscrupulous operators to avoid tax by moving operations offshore. Online gambling in the UK will be taxed fairly in the UK.

Raising remote gambling duty to 40% and general betting duty to 25% for remote bets also puts us on a footing much closer to that of other European jurisdictions and many states in the United States. Until the Budget, the UK was behind the curve in taxing these highly harmful online products. For us, the Chancellor’s move is a matter not just of revenue, but of fairness, responsibility and aligning our tax system with the reality of modern online gambling.

However, taxation is only one element of harm reduction. Raising duty alone will not of course prevent gambling addiction, stop children being exposed to online gambling advertising and ensure that families receive the support they need when a loved one falls into crisis. If we are to tackle these harms, we need a public health approach. That means proper funding for treatment, and I welcome the steps already taken under the statutory levy. However, it also means serious investment in prevention, community education and early intervention, and a modern regulatory framework that puts people, not profits, first and is fully independent of the gambling industry.

I want to highlight another pressing issue for the Minister, which is the continued prevalence of the B3 gaming machines on physical premises. These high-intensity machines, so often located in areas with higher deprivation, continue to cause significant harm, yet they remain under-regulated and undertaxed relative to the risks they pose. If we are to take harm seriously, B3 machines should be included in the next phase of gambling tax reform.

Finally, the most recent gambling Act was introduced more than 20 years ago, in a completely different era: before the smartphone, before the explosion of data-driven behavioural targeting, and before 24/7 online casinos in your pocket. A new Act is clearly needed. Our laws have not kept pace with technology, they have not kept pace with the scale or sophistication of online gambling operators, and they have not kept pace with the reality of the harm we now see every day in communities across the country. I welcome the measures in the Bill, but I urge the Government to move quickly to update advertising rules, strengthen affordability checks, protect children and vulnerable people, and ensure that tax policy, regulation and public health strategy on gambling are all aligned.

The measures on remote gaming duty and general betting duty are excellent steps in the right direction. They acknowledge the reality of harm, strengthen fairness in our tax system and take us closer to a modern framework that puts the wellbeing of the public first.

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[Lucy Rigby]

The hon. Member raises an important point. Before I commit to her that I will take that forward, I would like to check what discussions have already taken place. I hope she will accept that that is necessary from my point of view.

Both the proposed new clauses focus on the impacts of the changes to the gambling duty and ask for a commitment to update Parliament within six months of the Bill being passed. First, this Government did not announce, and are not proposing to make, any changes to the treatment of free plays or free bets through this Bill. Furthermore, the Bill does not make any changes to the duty charged on bets placed on horseracing in high street betting shops.

Secondly, on the illegal market, which has been raised a number of times, the Gambling Commission is already tackling that risk and is protecting consumers, but we recognise that modern technology makes it easier for illegal websites to target consumers. To strengthen enforcement and protect consumers from dangerous illegal sites, we are providing an additional £26 million to the Gambling Commission over the next three years. I hope I can assure my hon. Friend the Member for Stoke-on-Trent Central that the £100 million a year in the form of the statutory levy is ringfenced for prevention, treatment and research in this area.

The Government published a tax information and impact note for this measure at the Budget. As is set out in that note, consideration will be given to monitoring and evaluating the expected Exchequer impacts of the policy after at least two years of monitoring data has been collected and analysed. More broadly, the Government continually monitor the operation of all taxes and keep them under review to ensure that they deliver on their intended outcomes and, indeed, are fit for purpose. For those reasons, the proposed statement and the impact assessment are not necessary.

The measures in clauses 83 to 85 deliver fair reforms to our system of gambling taxation. They reflect how gambling has changed in our country, the harms that now exist and the need for the tax system to keep pace as those changes continue. The shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), raised levels of employment. He will know that right across the piece, the OBR expects that employment levels will rise in every year of the forecast. Costings were also raised, including by my hon. Friend the Member for Stoke-on-Trent Central. The OBR has taken account of behavioural impacts within its costing. Of course, those costings have been certified and scrutinised in the usual way.

The Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), asked about engagement with industry. I can confirm that the Government, as I hope she would expect, engaged with a number of stakeholders, including from the gambling industry, as part of the consultation process. My hon. Friend the Member for Stoke-on-Trent Central also raised Gibraltar. Of course we recognise that Gibraltar has a gambling industry that very much faces the UK. I can assure him that there has been engagement, not by me, but by some of my colleagues in the Treasury, with Gibraltar to that end.

[Daisy Cooper]

I am grateful to the Minister for confirming that she has consulted and that Ministers have had engagement with the industry. I was specifically wondering whether in the course of that consultation with the industry, there was discussion about using a different measure and choosing a different tax base for the calculation of this particular tax, because it seems as though the tax base could have been bigger if they had used the measure already in the Finance Act, rather than this new measure that seems to shrink the tax base. Did the Treasury have a particular reason for using a different measure for calculating this remote gaming duty?

[Lucy Rigby]

It was not me who had those engagements, but as I said, I confirm to the hon. Member that we are not proposing to make any changes to the treatment of free plays and free bets through the Bill, which I hope reassures her in that regard.

I urge the Committee to reject new clauses 21 and 25 and agree that clauses 83 to 85 and schedule 13 should stand part of the Bill.

Question put and agreed to.

Clause 83 accordingly ordered to stand part of the Bill.

Clauses 84 and 85 ordered to stand part of the Bill.

Schedule 13 agreed to.

New Clause 25

Statements on increasing remote gambling duty and introducing a new rate of General Betting Duty

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the increase in gambling duties made under sections 83 to 84 of this Act.

(2) The statement made under subsection (1) must include details of the impact on—

(a) sports and horseracing,

(b) the number of high street betting shops,

(c) the gambling black market,

(d) the employment rate, and

(e) the public finances.”—(James Wild.)

This new clause would require the Chancellor to make a statement about the effects of the increase in gambling duties.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

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[Daisy Cooper]

Clause 86 increases the rate of alcohol duty in line with RPI inflation. On paper, that measure might look like a normal, simple uprating policy, but it must be seen for what it really is: in the broader context, it is yet another tax on struggling hospitality businesses and financially stretched customers.

Hospitality is being hammered over and over again with sky-high rents and soaring energy bills, the Government’s unfair jobs tax, and now this business rates bombshell buried in the fine print of the Budget. It matters, and hospitality really matters. It is the only element of pre-pandemic spending that has not recovered. The sector employs huge numbers of young people and part-time workers, often giving people their very first job and their way into longer-term employment.

This is one of the sectors that make life worth living. We all remember the place where we fell in love, or had our first date. I remember the music venue where I found my favourite band. I remember the pub where I sat with my girlfriends and one told me that she was not going to survive her stage 4 cancer—and I remember the spa day that we had when she did. Hospitality is part of who we are as human beings. It is unique in what it contributes to our economy, and we must do everything to support it.

[Mr Lee Dillon (Newbury) (LD)]

If this debate had taken place before Christmas, I would have had to declare an interest, but my father has now sold his majority share in our local pub in our home town, which I think goes to the core of today’s debate: publicans are leaving the sector. My hon. Friend has been talking about the importance of hospitality. My father’s pub used to host bingo nights on Thursdays and bingo on Sunday afternoons, and on those occasions we would see people there who would never go at other times of the week. Does my hon. Friend agree that the sense of community that pubs build is crucial, and is under threat from this Labour Government?

[Daisy Cooper]

My hon. Friend is absolutely right. Pubs are irreplaceable, and when a pub goes a community falls apart. Pubs are vital as part of the social fabric: they are the glue that holds our communities together, and we must protect them. We tabled new clause 9 because we want the Government to look at and

“report on the cumulative impact on the hospitality sector of alcohol duty measures”

alongside all the other “wider fiscal changes”, including the higher national insurance contributions and the business rates changes. This really matters.

[Dr Al Pinkerton (Surrey Heath) (LD)]

Back in November, the Chancellor promised to support the great British pub by introducing permanently lower tax rates in more than 750,000 retail and hospitality properties. In my constituency, the Half Moon will experience an 157% rise in business rates, the Inn at West End an 87% increase and the Frog in Deepcut an increase of 128%. Does my hon. Friend agree that this feels less like support and more like last orders?

[Daisy Cooper]

I agree 100% with my hon. Friend. One of the points that I have made repeatedly to other Ministers is that businesses heard the promise that there would be permanently lower business rates, and made decisions based on the fact that they had heard the word “lower”. The Government gave themselves powers to introduce a lower multiplier for retail, hospitality and leisure—20p less—and it was understood by the hospitality industry that if they used those powers, that would effectively cancel out the loss of the RHL relief. Businesses made investment decisions. They made hiring decisions. They made all sorts of decisions based on what they thought was going to happen. But the Government have not used those powers that they gave themselves, using a multiplier of minus 5p rather than the maximum of minus 20p.

[John Milne (Horsham) (LD)]

I recently met Richard, a publican in my constituency, and he told me the trade had never been so tough. He said:

“The truth of the matter is, for the first time I’m thinking I shouldn't have bothered taking the risk of going into business. I should have stayed with the big brewer, taken my salary and relied on my pension.”

He is right, isn’t he?

[Daisy Cooper]

I hope so very much that he is not, but I understand why he said that, and I hear the same from many hospitality owners and pub landlords on my own patch.

It is because we Liberal Democrats care so deeply for hospitality, and recognise the vital role that it plays in every community in the land, that we were campaigning ahead of the Budget for an emergency VAT cut for hospitality accommodation and attractions until April 2027 —a measure that would have brought growth into every corner of our country, saved jobs and our high streets, and given a real boost to consumer confidence. That is why, since the Budget, we have been fighting tirelessly against the Government’s devastating business rates hikes, and pressing Ministers to implement the full 20p discount for which they legislated last year.

[Dr Luke Evans]

The hon. Member rightly points to the cumulative effect, but I am interested to see that her new clause 9 does not mention the Employment Rights Bill or the impact of the national living wage increase. Is it by design that the Liberal Democrats have not put those in, because they do not agree that they will have an impact on hospitality, or was it an oversight, and they are other cumulative effects that need to be considered when holding the Government to account?

[Daisy Cooper]

I am grateful for that question, but if the hon. Member reads the explanatory statement closely, he will see that it says “alongside wider fiscal changes”. The Government could of course widen that to other legislative changes, if they chose to do so. However, on that basis, I hope the hon. Member and his colleague will be supporting the new clause when we push it to a vote later.

[Dr Arthur]

As an important point of clarity on the living wage, which of our constituents on low pay does the hon. Member think do not deserve that uplift in living wage? Is she saying they do not deserve it?

[Daisy Cooper]

Absolutely not. During the passage of the Employment Rights Bill, we Liberal Democrats said repeatedly on the record in both Houses that we supported a higher minimum wage. The problem we are hearing from businesses, particularly small businesses, is that they are getting lots of changes from the Government all at once. It is business rates changes, higher contributions, wages, the new regulation and now alcohol duty as well. It is the cumulative impact of all of the employment changes and the fiscal changes that means business owners and pub landlords just cannot cope.

This is about the cumulative impact. We have made very clear which measures we support and which ones we do not, but the cumulative impact is felt by small businesses. That is why, during the passage of the Employment Rights Bill, we tabled a number of amendments asking the Government to report on the impact on small businesses in particular. I hope that has clarified the matter for the hon. Member.

[Dr Arthur]

A wide range of concerns has been developed, and I get the point that these are costing the hospitality sector money—I absolutely get that—but all that the Lib Dems are promising is a review. What I do not hear is what they would do to resolve this and how much it would cost, apart from the broad assertion that they would cut VAT in some undefined way. What is this going to cost, and where is the money coming from?

[Daisy Cooper]

I have explained all those measures in this Chamber before, but I am happy to spell them out again, including the remarks I made a few minutes ago.

The very first thing we called for was for the Government to use the powers they gave themselves in the Budget last year. I would love to know the costings for that measure, and I have tabled written parliamentary questions to ask the Government to give me those numbers. If the Government will not answer written questions, how on earth are opposition parties supposed to come up with modern proposals? We have tabled written questions time and again, but we have not received any answers.

On the VAT point, we have costed it. We said it would cost £7 billion over 17 months, and we would fund it with a windfall tax on the big banks, which is a proposal backed by the Institute for Public Policy Research and independent economists. So we have answered all of these points and explained where the money would come from. The suggestions are fully costed and fully funded. We have made those points in this Chamber on several occasions, as I am sure the hon. Gentleman will see if he has a look at Hansard. My point is that, if we are going to put questions to the Government asking them for data so we can make informed policy suggestions, I very much hope that they start to answer them.

On that matter, it has been reported in various newspapers, on the BBC and in other places that the Chancellor and Ministers did not understand—those sources have quoted the Chancellor and Ministers as saying they did not understand—the impact that revaluation would have on business rates bills, especially for pubs. I find that impossible to believe, and I cannot understand how that can be the case. We know for a fact that, at the very least, the Valuation Office Agency gave the aggregate data to the Treasury. We know that because it says it in black and white—or in black and slightly red—on page 81 of the Red Book. It says that the VOA gave that data to the Treasury.

I tabled a number of written questions asking the Government whether they had received that information broken down by sector, and I did not receive any answers. I wrote a letter to the Leader of the House and I made a point of order, but again, that information was not forthcoming. Then we had a bombshell revelation today when the VOA, in giving evidence to the Treasury Committee, confirmed upon questioning that it had given data drops on the sectoral impact starting a year ago. It also confirmed to the Treasury Committee today that 5,100 pubs have seen their rateable values at least double. It therefore seems, if the VOA did provide that information to the Treasury, that the Treasury should have had that information. It is not clear to me why I did not receive data-rich answers to my written questions asking for that breakdown by sector. It is also not clear to me how the Chancellor and Ministers can say that they did not know or did not understand the impact that the revaluation would have on bills if they had had that data over the course of the past year.

I urge Ministers when they come to the House, as they are indicating they will, to provide some kind of a U-turn—we do not know what that looks like—to bring some clarity to all those questions. In the meantime, I hope the Government do support new clause 9, because we need to see the cumulative impact not just of alcohol duty changes, but their impact alongside national insurance and business rates.

[Sir Edward Leigh]

The hon. Lady is giving a very good speech. I hope, as the Liberal Democrat spokesman, she will say just a tiny bit more about rural pubs. I think a lot of urban Members do not understand the context. Where I live here in Westminster, it takes me one minute to walk to my local—one minute. Where I live in the Lincolnshire Wolds, it takes me one hour to walk to the pub—one hour. Everybody who accesses pubs in rural England has to go there by car. We do not ride horses any more, and it is too dangerous to walk on the road or take a bicycle. The Government have to understand that the rural pub is in real danger from the alcohol limits and other measures.

[Daisy Cooper]

I am incredibly grateful to the right hon. Member for making that point. I am the MP for St Albans, which is a small city, but I am a Suffolk girl born and bred. I know how valuable rural pubs are. They provide all sorts of services: they look after older people and single people; they are a fantastic community hub; and they provide employment for young people—one of my first jobs, aside from apple picking, was working in a pub—so I understand the vital importance of pubs in every single village, town, parish and hamlet up and down the United Kingdom. I am grateful to him for making that point.

In closing, I hope that when the Government respond this evening they provide answers to some of these questions. What did Ministers know and when? If the VOA sent that sector information on valuations, when was it sent? When did it send the information on pubs, specifically? If the VOA did tell Ministers that rateable values had at least doubled for more than 5,000 pubs, how is it possible that Ministers did not know? Why have we still not had a statement from the Government on what they are trying to do? Will their announcement extend to the rest of the hospitality industry, or just to pubs? Will the Government now use the full powers that they gave themselves? I cannot cost this, because I have not been given the numbers despite repeated attempts to get them. Will the Government consider a VAT cut?

Finally, the only rumour we have heard about what the Government may be considering are the changes to licensing laws, so let me close with this point: if your pub is empty, you do not want to keep it open for longer, paying more money to keep the lights on, the radiators heated and the staff behind the bar. That is not an answer to this problem.

[Jacob Collier (Burton and Uttoxeter) (Lab)]

As the MP representing the home of British brewing, Burton-upon-Trent, it will come as no surprise that I will speak to clause 86, and focus my contribution on pubs and hospitality. For me, this not just political; it is personal. As a Burtonian, I grew up with the smell of hops permeating the air and Burton’s famous water flowing from the taps. My very first job was in a pub. This industry is who we are.

Pubs are woven into the very fabric of our country. They are the heart of our high streets and villages, and are among our last shared spaces. When we talk about growth, and supporting wellbeing and employment, pubs and hospitality sit at the heart of that conversation. Yet this is an industry that has faced years of challenge. Navigating the pandemic, absorbing high energy costs and managing rising prices have left many venues operating on very low margins, if any at all.

That is why the decisions we make in this clause matter so much. We must look carefully at the overall effect of alcohol duty and how it interacts with consumer behaviour. There is a case for strengthening differential rates of duty between supermarkets and pubs, known as draught relief. Drinking in a pub is not the same as drinking at home. Pubs are supervised, regulated spaces. Landlords ensure responsible drinking, with pubs providing social connection and supporting mental health in our communities. Pubs give character to our high streets and town centres, yet the tax system makes it cheaper to buy alcohol in bulk from a supermarket than to go down the local pub. If we are serious about encouraging people back into our town centres, into these shared protected spaces, alcohol duty must work in favour of pubs.

I encourage Treasury Front Benchers to read the letter from those of us on the all-party parliamentary beer group, which calls for the multiplier to be increased from around 13% to 20%. Our proposal is supported by the Campaign for Real Ale, the Society of Independent Brewers and Associates and the British Institute of Innkeeping. This is not about encouraging more drinking; it is about encouraging better drinking in places that strengthen our local communities and our local economies.

I recognise that the Government have put in place the permanently lower multiplier on business rates for retail, hospitality and leisure businesses, but any wins in this space have been wiped out in many cases by the new rateable values published by the VOA. In my constituency, the rateable value of the Devonshire Arms—the Devvie, my favourite pub—is set to increase by over 60%. Down the road at the Roebuck, the rise is more than 70%. At this rate, I am not going to have much of a pub crawl.

We must stay true to the manifesto commitment we made to level the playing field between online retailers and the high street. An average 76% increase for pubs compared with just 14% for online retailers means that we must think again on this policy. It is no good having transitional relief in place when the bill at the end of the three years is simply unaffordable.

Industry voices are clear that further support is needed in the short term while longer-term changes and reforms are worked through. Operators such as Punch Pubs, which is headquartered in my constituency, have called for a higher business rates discount—up to the maximum permitted—to help offset the valuations and the cumulative tax burden that pubs face. UKHospitality has similarly warned that even after reduced multipliers and the transitional relief that the Government have put in place, the average pub faces a significant increase to its business rates bill, alongside other cumulative impacts that hon. Members talked about earlier.

The Government are right to listen to Labour Members who have been raising the voices of pubs, brewers, restaurants and small business owners. I want to thank those publicans, business owners and representative bodies that have engaged positively with me; it is only through working together constructively that we can bring about change.

Businesses that I speak to want to invest and grow, but they need the space and certainty to do so. I really welcome the recent hospitality investment that my constituency has seen—from Lowe’s on Carter Street to Nathan Dawe’s expansion of Isabel’s and Bespoke Inns’ redevelopment of the Hart and taking on of Tutbury Castle. Such businesses need to be supported by Government so that we can meet their ambitions. We must create more well-paid jobs and revive our high streets and town centres.

That means a fair approach to alcohol duty under clause 86, a recognition of the difference between pubs and supermarkets, and targeted support on business rates while deeper changes are delivered. If we get this right, the reward is clear: thriving pubs, stronger high streets, more resilient local economies, and communities that are not just better off but happier and more connected. That is why pubs and hospitality must continue to be listened to, supported and championed in this House and by this Labour Government. I shall continue to do that.

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[Lucy Rigby]

I am going to make a bit more progress.

New clauses 8, 9 and 26 would require the Government to publish reports on the impacts of alcohol duty. The shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), invited me to refer to our tax information and impact note, and I will take him up on that invitation. As is usual practice, our note was published at the Budget. It outlined the anticipated impacts of this measure for alcohol producers and the hospitality sector. Because this uprating maintains the current real-terms value of the duty, the Government do not expect it to have significant macroeconomic impacts, including to the employment rate or hospitality businesses’ costs, where a duty on drinks will have comparable relative bearing as now.

[Daisy Cooper]

Will the Minister give way?

[Lucy Rigby]

I will make some progress.

On the impacts on the public finances, HMRC publishes data on alcohol duty receipts quarterly. That data is reviewed alongside other evidence by the OBR when it produces its forecasts of alcohol duty receipts, as it did most recently alongside the November Budget. The Government’s view, as is evident from OBR-certified policy costings in recent years, remains that freezing or cutting alcohol duty rates reduces duty receipts.

The hon. Member for Angus and Perthshire Glens raised the importance of producers of Scottish whisky, and I agree with him about that. This Government are supporting key Scottish industries, including whisky, such as through our free trade agreement with India, which will boost exports of whisky and add £190 million a year to the Scottish economy.

Clause 1

Daisy Cooper Excerpts

Monday 12th January 2026 Commons Chamber

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

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I will speak to clauses 1 to 8 and schedules 1 and 2. Overall, the tax changes increase complexity, raise the tax burden on small businesses and savers, and raise the risk of serious unintended consequences on the property market. They all have the hallmarks of a Treasury tax grab without proper the consideration of the broader consequences.

When taken together, clauses 4 to 8 add more complexity, and concerns have been raised by the Chartered Institute of Taxation and the Association of Taxation Technicians, which highlighted that the new property rates add five new income tax rates. They are: the property basic rate of 22%; the property higher rate of 42%; the property additional rate of 47%; the property trust rate of 47%; and the savings trust rate of 47%. Rates will apply differently to investment returns and to savings. Basic and higher dividend rates have been changed, but additional dividend rates have not, and no explanation has been given as to the policy intent behind that. It would be helpful if the Minister could set that out on the record.

The long and short of it is that the Government say that they want to simplify tax, but their tax changes are making things more complicated. The Making Tax Digital forms will need to updated, and more individuals and small businesses will likely make more calls to His Majesty’s Revenue and Customs. Recent research by the House of Commons Library, commissioned by Liberal Democrats including my hon. Friend the Member for Maidenhead (Mr Reynolds), shows that HMRC failed to pick up one in five taxpayer calls over the last decade, with the tax service leaving the best part of a hundred million calls unanswered in the last 10 years. HMRC has failed to pick up 83 million calls from Brits in the last 10 years—6 million in just the last year. That is why we have been calling for a new HMRC hotline dedicated to supporting pensioners. It would help those who are among the likeliest to seek tax information over the phone while freeing up capacity for the tax service to deal with other queries—something that is imminent, given that the tax changes will result in more phone calls.

More broadly, the Federation of Small Businesses said:

“Hikes to dividend tax mean the Government continues to make investing in your own business one of the least tax-friendly things you can do with your money.”

Will the Minister listen to our small businesses, which are suffering under a mounting tax burden, not least from the Government’s business rates bombshell, and finally give them some respite?

With new clause 2, the Liberal Democrats call for a review of the impact of section 7 on rent prices. As many hon. Members have highlighted, the new clause would require the Chancellor of the Exchequer to lay before the House a proper assessment of the impact of the Bill’s tax changes on rent prices. Countless renters across the country will be worried that the higher property income tax will simply get passed on to them, making things even worse during the cost of living crisis. We cannot afford to ignore the unintended consequences of any tax policy.

The new clause would require the Government to update the House on some crucial details about the broader impacts of this measure. What proportion of the tax rise will get passed on to renters, according to the Treasury’s estimates? Which income groups are most likely to be affected by the tax rise? Which parts of the country will bear the brunt of it? I hope the Minister will agree that that information is essential.

[Dan Tomlinson]

I thank Members across the Committee, particularly those on the Labour Benches, for their contributions today. I believe that other things going on in the Palace today have drawn other Labour Members to Committee Rooms, but I am very glad that my hon. Friend the Member for Loughborough (Dr Sandher) chose to prioritise speaking in this important Finance (No. 2) Bill debate. I thank him for that.

I will respond to the points that have been raised in this all-too-brief debate on this group of important clauses. It is always a pleasure to stand at the Dispatch Box opposite the shadow Financial Secretary, the hon. Member for Grantham and Bourne (Gareth Davies). It was enjoyable to hear a history lesson rather than a selection of poetry or literary references, which I often get when I am opposite the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride). The shadow Financial Secretary noted correctly that income tax was originally introduced as a temporary measure. Running through my mind are the taxes introduced by the 2010-2024 Government that were initially announced as temporary but are still with us—but I will not comment on those, for reasons he may understand.

The shadow Financial Secretary mentioned my constituency, and I thank him for giving me a chance to talk about Chipping Barnet. He questioned what the tax rises are for. I can tell him that in the area that I know best NHS waiting lists are falling for the first time in a very long time, and the number of police officers is increasing after having been cut significantly. We are also opening breakfast clubs in primary schools. Those changes happening in my patch are happening across the country. That investment in our public services has been enabled by the tax changes that this Government have made. We are raising revenue in a sustainable and fair way in order to ensure that we can fund our public services and keep borrowing on a downward trajectory.

The shadow Financial Secretary raised the change landlord income tax—the two percentage point increase. I fully understand, as does he, that there are many reasons why people end up becoming landlords. We want to make sure that the taxation is fair and reasonable, which is why landlords do not pay national insurance in the way that their tenants do, and it is why we have taken steps to reduce—but not close in full—the gap in tax treatment, with the two percentage point increase. Landlords will still typically pay a lower rate of tax than their tenants, but the gap will be reduced following the measures set out today.

The shadow Financial Secretary, and other Members in interventions, mentioned the changes on dividend taxation. The main takeaway from the Office for Budget Responsibility is that it does not expect the changes to dividend taxation announced at the Budget a few short weeks ago to have a significant impact on business investment. Business investment is forecast to continue to grow over the course of the OBR’s five-year forecast horizon.

That is good news, because one thing that we know we need to do in this country is turn around the long-term weakness in investment—by both public and private sector—that has driven our long-term productivity and growth underperformance. That under-investment over the last 30 years is an issue that both major parties—and the Liberal Democrats for their time in the first five years of the coalition Government—should take responsibility for. I believe that in 24 of the last 30 years—that stat may now be one year out of date; I will have to update it for next time—the UK had the lowest rate of investment of any G7 economy. Until we can start to turn that around through higher public and private sector investment, our economy will not be able to fire on all cylinders, as this Government would like it to.

Let me turn to new clauses 2 and 12. New clause 2 would require the Government, within three months of the Act coming into force, to lay before the House of Commons an assessment of the impact of the implementation of section 7 of the Act on rent prices. New clause 12 seeks to require the Government, within six months of the Act coming into force, to publish an assessment of the impact of the changes introduced by sections 6, 7 and 8 on the private rental sector in England, Wales, Scotland and Northern Ireland.

As hon. Members will be aware, the Office for Budget Responsibility engages closely with the Treasury on the potential impacts of policy measures as part of standard Budget processes, and the OBR does not expect that the reform to property income will have a significant impact on rental prices in the forecast horizon. As I said, the economic literature points to rental prices being determined by the balance of supply and demand in the market, not just the cost facing landlords. The housing market proved to be more resilient than expected in 2025, and as interest rates fall further we hope that will reduce costs for landlords, too.

--- Later in debate ---

[Daisy Cooper]

These stealth taxes were started by the Conservatives and are being continued by Labour. When the Liberal Democrats were in government, we made sure to raise the income tax thresholds, taking people out of paying tax, but it is clear that the two biggest parties continue to drag more people into paying tax. According to the OBR, by 2030, an extra 9.4 million people will be dragged into paying the basic and higher rates of income tax, 1.7 million of whom will be dragged into the system because of this Government’s decisions at the last Budget. By 2031, the stealth taxes introduced by the Conservatives and continued by Labour will cost British taxpayers an eyewatering £67 billion a year, some £13 billion of which is a result of last November’s Budget.

To put that into perspective, in a two-person household, where someone earns £26,000 and someone earns £60,000 a year, over the decade of Conservative and Labour stealth taxes, the lower of those earners will lose the equivalent of an entire year’s pay due to frozen tax thresholds. Wiping out an entire year’s pre-tax salary for a typical earner is devastating for household finances. It is staggering to realise that this decade of frozen thresholds will cost what is broadly a typical two-earner family a staggering £26,800. The OBR says that one in four adults will be a higher rate taxpayer by 2031, up from one in seven in 2022. That represents an additional 5.7 million people, including 920,000 dragged into the higher rate band as a result of the Chancellor’s latest three-year extension.

It is really important that people understand that this is happening. The Liberal Democrats have tabled new clause 3 so that people are notified about how they will be affected by these frozen thresholds. The new clause will require the Chancellor to properly communicate to the people the impact of frozen tax thresholds. One of the most damaging aspects of this tax rise is that it goes unnoticed by so many. Unlike other tax changes, the stealth tax does not show up on people’s payslips and too many people are simply unaware that they are paying more tax because of the Government’s decisions. New clause 3 would require the Chancellor to be transparent with taxpayers and directly write to them, explaining in black and white the impact frozen thresholds will have on their pay cheques.

As many other hon. Members have said, there is huge concern among pensioners about what the measures will mean for them. In a recent meeting with the Chartered Institute of Taxation, it was highlighted to me that is not clear who will qualify for which rate of tax. The way that the system is set up suggests that pensioners who receive the same amount of income but from different sources could end up paying different rates of tax. Many of us like Martin Lewis, but the fact that the Chancellor has done a podcast with him does not mean that the impact of the Government changes has been communicated clearly to every single pensioner. I urge the Minister to adopt our simple new clause 3. The Government have said that they want to make the tax system more transparent, so if Ministers truly want to be honest with people, they should accept this simple amendment and write to the people who are affected by these policies.

[Sir Ashley Fox]

A Budget is the most important set of choices that a Government can make, and introducing clause 10 is a choice by this Government. I oppose clause 10 because it extends the freeze on the personal income tax allowance and the basic rate limit for a further three years, from 2028 to 2031. That means that rates will have been frozen for 10 years.

The choice in this Budget, as in all others, was clear: will spending be controlled or will taxes be raised? For the second year running, this Labour Chancellor chose higher taxes. In 2024, the Chancellor said that to extend this freeze would be to break her manifesto commitment not to raise the level of income tax, but at this Budget, she did it anyway. At the last election, the Government promised growth. They promised not to raise taxes on working people and to fund public services through a stronger economy, but from the moment that they took office, they have done the opposite. Labour have expanded welfare without reform, handed out huge pay deals without productivity gains and piled costs and regulations on to employers. When the inevitable bill came, what did they do? They reached into the taxpayer’s wallet.

These tax rises are a political choice. The consequences of these choices are clear. Taxes on working people are at record highs, growth is sluggish and unemployment has risen consistently since the election. Record numbers are now trapped outside the labour market on benefits, with no requirement and no incentive to seek work at all. Those who do the right thing, who work hard to provide for their families, now face higher tax bills to fund an ever-larger welfare state.

--- Later in debate ---

[Dan Tomlinson]

It is so wonderful to see so many Members on the Opposition Benches wishing to intervene. They were much less forthcoming in my previous closing remarks. I have given way to one Conservative, so I will give way to a Liberal Democrat.

[Daisy Cooper]

The Minister will have heard a number of colleagues asking for more detail about how the pension provisions will affect pensioners. The Minister has just said that further information is to come. Will he please give us an indication of the date when we can expect that guidance to be published, so that he can then come back and clarify some points?

[Dan Tomlinson]

That information will be forthcoming in due course.

In conclusion, I hope that Members will see how the amendments that have been tabled are not necessary. We have set out the impact of our tax changes in numerous tax impact and information notes, which Members can read online at their leisure. This Government and I will not let Opposition Members who repeatedly voted to freeze thresholds until 2028 when they were in government to rewrite history. This Labour Government reject the Conservatives’ austerity measures, which got our country and public services into this sorry state. We inherited a mess at the 2024 general election, and the measures we are considering now, and those elsewhere in the Finance Bill, enable us to rebuild our public finances, to fund our public services for the long term and to get borrowing over the course of this Parliament to continue to fall. I therefore, urge the Committee to reject new clauses 3 to 5 and 13 to 15 and to support the inclusion of clauses 9, 10 and 69.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10

Basic rate limit and personal allowance for tax years 2028-29 to 2030-31

Question put, That the clause stand part of the Bill.

Agricultural Property Relief and Business Property Relief

Daisy Cooper Excerpts

Monday 5th January 2026 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Happy new year to you, Mr Speaker, and to House staff and all Members in the Chamber. This policy was a disaster from the get-go. It came with no warning, no consultation and no clue. The Liberal Democrats were the first party to point out the damage it would do to family farms. We have repeatedly and clearly highlighted that it would fail to tackle the loopholes exploited by private equity companies but hammer the family farm, damaging our food security in the process. The changes are welcome, but they do not touch the sides, and they are a clear admission by the Government that they have got it badly wrong.

There is now only one sensible course of action left: to scrap the policy in its entirety. Will the Government now do that? If not, the Liberal Democrats will table amendments to the Finance Bill to bring this measure down. Will the Government allow a free vote so that those on their own Benches who want to vote against the measure are free to do so?

[Dan Tomlinson]

I am always interested in reading Liberal Democrat amendments, even though none of them will ever get passed in this House—not least on this measure, where we have got to the right position. The changes that will be in the Finance Bill will raise about £300 million. It is a legitimate position for the Liberal Democrats to say they do not wish to raise that revenue and that instead they would borrow more money or cut public spending on services like our NHS. That is not our position. We think that this is a fair and proportionate reform.

Finance (No. 2) Bill

Daisy Cooper Excerpts

2nd reading
Tuesday 16th December 2025 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

If this Finance Bill represents anything, I am sorry to say that it represents the fact that the Government know the cost of everything and the value of nothing. We Liberal Democrats have tabled a reasoned amendment against this Bill, setting out all the reasons why we are against it.

Ultimately, this Bill is a series of short-term Treasury tax grabs, with no care for the consequences and no vision for the future. People are crying out for change—the change that they were promised—but the double whammy of stealth taxes on households and high streets makes the Labour Government look like nothing more than continuity Conservatives. Once again extending the unfair freeze on income tax thresholds will drag millions of low-paid workers into tax. The failure to reform the business rates system again makes the Government look like continuity Conservatives.

In a turbulent world, we need to boost our sovereign capabilities, and food security is critical to that, yet despite all the evidence, all the campaigning and all the honking of tractor horns on Whitehall, the Government have failed to get it right.

[John Milne (Horsham) (LD)]

In 2023, the Prime Minister told the National Farmers Union that

“losing a farm is not like losing any other business”.

He has also said,

“If somebody makes powerful representations, then my instinct is to consider what’s being said. Getting it right is more important than ploughing on with a package which doesn’t necessarily achieve the desired outcome.”

Is it not time that the Prime Minister followed his instincts and abandoned the family farm tax?

[Daisy Cooper]

I thank my hon. Friend for that intervention, and I wholeheartedly agree that the Prime Minister should change direction. It is deeply disappointing that, having been grilled at the Liaison Committee yesterday, he clearly has no intention of doing so. The changes to the agricultural property relief and the business property relief will punish family farmers who put food on our tables and guarantee the food security of our nation, and they will not tackle the loophole of private equity companies and celebrity farmers buying land to reduce their tax liability.

[Edward Morello (West Dorset) (LD)]

Labour Members have made much of the fact that, upon a family farm being inherited, the inheritance tax will be payable over 10 years. They completely ignore the fact that 30% of family farms made no profit at all last year. Invariably, those who inherit will have to sell land to pay the bill. That will feed exactly the kind of market that the investors that my hon. Friend mentions are looking for.

[Daisy Cooper]

I am grateful to my hon. Friend for making that point. This will have unintended consequences, and we can see what those will be. We have spent a year warning the Government; they can no longer say that they have not been warned. I hope so much that, at this late stage, they make changes to the Bill.

[Mr Carmichael]

My hon. Friend may be a little over-generous in saying that there are unintended consequences. The anti-forestalling clause, which is intended to deny those over 65, or anyone who dies within seven years of making a transfer, the ability to manage their tax affairs in a sensible way, puts a massive burden on those who are over 75.

--- Later in debate ---

[Daisy Cooper]

I could not agree more. My right hon. Friend chairs the Environment, Food and Rural Affairs Committee—a Labour-majority Select Committee—and he has navigated that issue so well over the last year. I say on the parliamentary record: all credit to him for his sterling efforts to draw attention to the issue.

If there had been any justification at all for the APR and BPR changes, it would have been that the Government were trying to crack down on loopholes, but as my hon. Friends have said, that has not happened as a result of these changes. The Prime Minister in effect admitted in front of the Liaison Committee yesterday that the Government were not even trying to do that. We all know that the measures will cause damage. Farming communities know it; Liberal Democrats know it; and Labour-majority Select Committees know it. This is just another short-term Treasury tax grab. Family businesses will be hit, too—the very businesses that support their employees through thick and thin; the very employers who provide employment in every corner of the country; the very family businesses that help the economy bounce back strongly after a crisis, giving our economy resilience. Why would a Government want to target our family businesses?

[Rachel Gilmour]

Does my hon. Friend agree that this is not a tax on passive wealth, but that it punitively, cynically targets productive enterprise? The Government expect to raise roughly £1.4 billion from the inheritance tax changes, but analysis by Family Business UK suggests that behavioural responses could produce a net fiscal loss of £1.9 billion by the end of the decade. Are these measures not anti-growth, and directly at odds with the supposed messaging of this Government?

[Daisy Cooper]

I wholeheartedly agree. It is so frustrating; in last year’s Budget and in this year’s Budget, the Government continue to say that they are pro-growth, and that growth remains their No. 1 mission, but measure after measure in those two Budgets is anti-growth.

Many of us have heard from family businesses in our constituencies and around the country. Many of them have told us that they have sat around the family dinner table and had deeply difficult and traumatic conversations, planning what to do with their business if they “die in the wrong order”, a phrase that some family businesses have used with me. Again, if they have to break up the business, they will probably end up selling it off to private equity companies. These are businesses that are household names and family favourites. It is another short-term Treasury tax grab, with no care for the consequences.

On the income tax hike for dividend, property and savings income, the Federation of Small Businesses sums it up:

“Hikes to dividend tax mean the Government continues to make investing in your own business one of the least tax-friendly things you can do with your money.”

At a time when we desperately need more business investment, that seems to be another short-sighted Treasury tax grab.

We desperately need growth. We Liberal Democrats have repeatedly banged the drum for growth with Europe. Brexit, we know, has been a disaster. Many of the Government’s own Ministers admit it, yet where is the strength of conviction needed to try to fix that? We now know that the previous Government’s failed Brexit deal costs the taxpayer around £90 billion a year in lost tax revenue. Just think about what the Government could deliver if they started to fix that. Just imagine what it would mean for people’s pockets and energy bills, and the money that they could have in their bank account at the end of the month. Imagine the change that the Government could deliver for households and high streets if they just started to plug that gap of £90 billion a year in lost tax revenue.

Our high streets are critical to our sense of community up and down the land, yet high-street hospitality businesses are getting hit once again. Last year it was the jobs tax; this year it is the higher business rates bills.

[Dr Roz Savage (South Cotswolds) (LD)]

Just yesterday, I was talking to a pub landlord who wants to expand his business and has acquired a new building. He has found that even though the new building is derelict, his business rates on it have increased by 89%. He is eager for his pubs to continue to be the heart of the community, but he is finding it difficult to recruit workers since Brexit, when all the casual workers went back to Europe. Does my hon. Friend agree that these policies profoundly undermine not just growth but the heart of our communities?

[Daisy Cooper]

I am incredibly grateful to my hon. Friend for making that point, because our pubs in particular, but hospitality more widely, are at the heart of our community. They provide so much more than just somewhere to have a pint and a pie. They provide community and social cohesion. They are the antidote to the epidemic of isolation. They have history and culture attached. They are somewhere we can go to argue well over a pint, yet our pubs and hospitality businesses are really struggling. That is why, as a point of protest, we Liberal Democrats voted against the increase in alcohol duty in the Budget resolutions last week, and we remain opposed to the measures in the Bill that relate to that increase.

On business rates, I am sorry to say that the Government are behaving as though they are somehow doing hospitality a favour, but I cannot tell you, Madam Deputy Speaker, how angry hospitality owners and leaders are. Furious, angry, betrayed, gaslit—these are just some of the politer words I have heard them use. The Labour manifesto was clear:

“The current business rates system disincentivises investment, creates uncertainty and places an undue burden on our high streets. In England, Labour will replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship.”

However, Labour has not replaced business rates, and it has not levelled the playing field.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

As a result of the Bill, in places like Stratford-on-Avon, pubs on high streets and in villages face bill increases many times higher than those faced by the larger distribution warehouses linked to online retail. Does my hon. Friend agree that this raises serious questions about whether the tax system is really supporting communities and local economies?

--- Later in debate ---

[Daisy Cooper]

My hon. Friend is spot on with that comment. We have all seen the statistics; while offices and warehouses face marginal percentage increases in tax, the increases faced by our pubs and hospitality businesses are massive. Analysis that I know has been shared with Ministers this morning suggests that the bill for Harrods, for example, will actually fall by £1.1 million, while the bills for many of our small independent pubs, hotels and hospitality businesses will be going up by tens of thousands.

The Government cannot hide behind semantics. For a year, they kept using the word “lower”, and that is what businesses heard; however, now the business rates bills have arrived, businesses can see that the rates are higher. The Government gave themselves the power to reduce the retail, hospitality and leisure multiplier by not just 5p, but 20p, but they now refuse to use that power. The system of transitional relief that the Government have put in place is simply an admission that they have got this badly wrong.

There is a stark warning coming from the hospitality industry that the looming increase in business rates, due to come in during 2029, will kill the pipeline of owners coming into the hospitality industry. This comes just as the Government are about to publish their visitor economy strategy. There is so much incongruence here. The Government say that they want to do one thing, and then do something else to undermine it.

The bottom line is that hospitality and high-street businesses have just two choices: they can shut up shop, or they can put up prices. There are few things that speak to the economic health of the nation and the high street more than the price of a pint. I issue a warning to the Government now: if they do not act, customers will see the £10 pint before the next general election, on Labour’s watch. I call on Ministers again to use the powers that the Government gave themselves to reduce the multiplier by the full 20p, and to make an emergency VAT cut for our hospitality businesses to boost growth, stimulate consumer confidence and help save our high streets. For all these reasons, we Liberal Democrats will vote against the Government’s Finance Bill.

--- Later in debate ---

[John Grady]

I have worked in hospitality. I am not sure I was particularly successful at it, but there is a macro point here—an important point not to lose sight of. We hear from Opposition Members objection after objection to the Chancellor’s decisions, but no credible alternatives.

[Daisy Cooper]

Will the hon. Gentleman give way on that point?

Conduct of the Chancellor of the Exchequer

Daisy Cooper Excerpts

Wednesday 10th December 2025 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

It is a real delight to speak in this debate, because I honestly thought that I would not get the chance. There was a risk, I thought, that the shadow Chancellor might even filibuster in his own Opposition day debate, much as I enjoy his poetry readings and so forth.

We all know that the Budget process was a bit of a mess. It had more leaks than a sieve, lots of flip-flopping, and all the rest. By the time we got to Budget day, many of us were relieved that the process was over. But let us not pretend that this was all new. Previous Budgets had involved a number of leaks, and we all know that the Liz Truss mini-Budget must surely be the gold standard for sidelining the OBR.

[Clive Jones (Wokingham) (LD)]

What with the Chancellor’s flip-flopping on the Budget, the various leaks and the misleading comments about the state of the public finances, Labour is beginning to look as incompetent as the Conservatives in its running of the economy and the Government. Does my hon. Friend agree that Labour has let the public down, and must start being transparent with us all?

[Daisy Cooper]

I am grateful to my hon. Friend for making that point. I agree with him: transparency is critical. On transparency, we Liberal Democrats think that it is time to overhaul this entire process. Colleagues will know that when Sweden faced a similar crisis in its Budget process in the 1990s, it overhauled the process, and it now has a system in which a draft Budget is published. There is a lot of time for it to be debated, and amendments can be tabled by Opposition parties before the process is concluded. The public would welcome such transparency; it would then be incumbent on the Government and all Opposition parties to set out how they would fund their pledges, raise revenue and manage Government spending.

These debates over the last few weeks have raised questions about the role of the OBR, and I want to put it on the record that we Liberal Democrats think that we should keep the OBR. It plays an important role as an independent organisation that can scrutinise the Treasury, but there is scope for more democratic accountability, and to tease out the divergence between forecasts by the OBR and the Treasury.

I am slightly perplexed to see that the Opposition day motion focuses on process, not policy, and that it promotes spin over substance. This Budget has levied stealth taxes on households and on our high streets, and has fundamentally failed to galvanise growth. Maybe it is obvious to people at home why the Conservatives have not tried to focus on the substance: because those stealth taxes were started by the Conservatives and have been carried on by Labour. The Conservatives failed to fix the business rates system, and Labour has not taken forward fundamental change. It is clear that both parties continue to refuse to go for growth with Europe.

My hon. Friend the Member for North Norfolk (Steff Aquarone) asked a very reasonable and legitimate question about why the Treasury has not said whether it will provide funding for dental training places in his county and for his constituents. That was a legitimate question to ask, so I was disappointed that the Minister tried to say, in response, that we have not supported his tax rises, when we Liberal Democrats have repeatedly, over the last year and more, set out the different ways in which we would raise taxes, including by reforming capital gains tax, looking at other taxes and a windfall tax on the big banks, as recommended by the Institute for Public Policy Research and endorsed by independent economists. We have also set out how getting a customs union with the European Union would boost public finances by £25 billion a year. [Interruption.] I understand that the Minister and those on the Treasury Bench who are chuntering right now may wish to level their accusation at the Conservative party, but that does not stack up when talking to the Liberal Democrats.

[Dave Doogan]

Is the hon. Lady as frustrated as I am to hear the normally temperate Chief Secretary to the Treasury chuntering, “Do you agree with our taxes?”, as though there is only one way to raise fiscal revenues, and as though if we do not agree with Labour, we have got it wrong? That would be ironic, because there are many ways to raise taxes. Is she, like businesses across Scotland, concerned that this Government have taken £66 billion out of the real economy, with no care for what that will do to growth?

[Daisy Cooper]

I am concerned about the impact of this Budget on businesses, and particularly about business rates.

We have been very clear that we are trying to be a party of constructive opposition. In last year’s Budget, it was clear that the jobs tax would raise £10 billion, once we had adjusted for spending, for rebates for the NHS and education, and for changes to behaviour—not the £25 billion that the Government claimed. We set out a number of proposals that could have raised that £10 billion. We Liberal Democrats welcomed the Government raising remote gaming duty in this Budget, because that was in our manifesto at the last general election. I absolutely agree with the hon. Member for Angus and Perthshire Glens (Dave Doogan) that there are other ways of raising taxes, and we hope that the Government look at some of our proposals, including our ideas for reforming capital gains tax, which would be a fairer way of raising revenue. It would raise more money from the 0.1% of the population who are super-wealthy.

[Graham Stuart]

Let me make a point before the hon. Lady makes it herself: the jobs tax is a peculiarly misconceived tax. It is a £25 billion or £26 billion hit on the real economy, with all the lost jobs that we have seen as a result, and it does not even raise much money. Looking at all the negative impacts in the round, it may actually raise even less than £10 billion. There is a £25 billion or £26 billion hit, and the measure potentially raises less than £10 billion. It is economic madness, and it shows why the Government need to think more deeply.

[Daisy Cooper]

I agree with the right hon. Gentleman that the jobs tax has been damaging. I say to Treasury Ministers that the combination of the jobs tax and higher business rates bills will have a profound impact on the very small businesses on our high streets, and our high streets are critical to our communities. Most ordinary folk do not follow the statistics on growth, unemployment, GDP and everything else; when they walk out their front door and look at their high street, they decide how they would answer the question, “Is the economy working in our area?”. It is so vital that we support our high streets.

On that point, I genuinely urge Ministers to look again at the multiplier for retail, hospitality and leisure businesses. They talk in a very technical way about one element of the bills and continue to say that the rates are coming down. They have come down by 5p for retail, hospitality and leisure businesses, but Ministers gave themselves the power to reduce them by 20p. However, businesses heard “lower business rates”. They did not think about the technicality of how the rates are calculated; they just heard the word “lower”, and made decisions on that basis—but bills are now higher, and they are really struggling.

I have said it before, and I will say it again: we cannot tax our way to prosperity; we have to grow our way to prosperity. We hope very much that, as Ministers move ahead on this debate, they not only reform the OBR and Budget process, so we have more transparency in this House, but think again about going for growth with Europe.

Oral Answers to Questions

Daisy Cooper Excerpts

Tuesday 9th December 2025 Commons Chamber

[Mr Speaker]

Order. The good news for the Chancellor is that she has no responsibility for the SNP. I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

The botched Brexit deal has wrapped up British businesses in red tape and blown a hole in the public finances to the tune of £90 billion a year. The Chancellor insists that her No. 1 mission remains to get economic growth. If that is the case, will she and her Ministers vote with the Liberal Democrats this afternoon to make sure that we get rid of that red tape and deliver on a new UK-EU customs union?

[Rachel Reeves]

Since we came to office last year, we have reset our relationship with the EU, which is why last May we agreed with the EU an expansive set of changes to our relationship, including on food and farming, on electricity and energy trading, and on youth mobility and Erasmus. We are taking all that forward, but at the same time we are taking opportunities to trade more with fast-growing economies around the world, including India, and we also got the first, and the best, trade deal that anybody has secured with the US. That is how we are going for growth, alongside passing the Planning and Infrastructure Bill last night in this place.

--- Later in debate ---

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

High street hospitality businesses are on a knife edge—this is a disaster in the making. The Government say that they have rebalanced business rates, but that is not the case. UKHospitality says that the average increase for hospitality businesses will be 76% over the next three years, compared with warehouses, offices and large supermarkets, which will go up by only 16%, 7% and 4%. The reality is, the Government said repeatedly that they were going to introduce permanently lower business rates, and businesses heard that and made decisions based on that—and now their bills are going up. In the spirit of constructive opposition, I implore the Minister to look again, use powers to reduce the multiplier to minus 20p and look at an emergency VAT cut.

Office for Budget Responsibility Forecasts

Daisy Cooper Excerpts

Monday 1st December 2025 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I understand that the Minister says he does not have all the answers to the questions about the incredibly serious security failings at the OBR, but has he requested or received any advice on whether the attempts to access the information might have reached a criminal threshold under the Criminal Justice Act 2003 or a civil level under market abuse regulations? Are there any other arm’s length bodies, related either to the Minister’s Department or to other Departments, that might now need to conduct a similar internal review into their security?

The Budget process has been a mess. There have been leaks on a level that has never been seen before and huge amounts of flip-flopping, which has created uncertainty for households and the markets and has led to businesses putting investment on hold. During the pre-Budget press conference, the Chancellor talked about a reduction in productivity growth, but failed to mention that tax receipts were higher than expected. Why did the Government omit to communicate that information?

Following Sweden’s budget crisis in the early ’90s, its Government changed to a system where the Swedish Parliament saw a draft budget and debated it at length, and Opposition parties could propose alternatives and amendments. Have the Government given any consideration at all to introducing a better system?

On the issue of omissions, on a number of occasions over the past year Ministers have repeated the claim that they would introduce permanently lower business rates for businesses in this country, but they omitted to say that business rates bills would go up because of the higher valuations. Pubs are now saying that their average increase will be £12,000 a year, or 76% over the next three years. Why did the Government omit to mention that?

[James Murray]

I refer the hon. Lady to the comments I made in my statement about how we are going to take forward the recommendations in the report. As I made very clear, this is an incredibly serious incident, and we take it incredibly seriously. We are going to move urgently to take forward the recommendations in the report.

The hon. Lady asks about other arm’s length bodies and Government organisations. We take security, information security and cyber-security incredibly seriously right across Government, and the spending review focused on ensuring that all Departments and all Government bodies are adequately resourced so that they have the right information technology, cyber-security and information security for the future.

The hon. Lady referred to the Chancellor’s speech on 4 November, where the Chancellor set out the challenges we are facing and the principles that would guide her going into the Budget: cutting NHS waiting lists, cutting the cost of living and cutting Government borrowing. That is exactly what she delivered in her Budget last week. On business rates—I suspect this is a debate for another day, rather than for this statement—I point anyone concerned about increases in their valuations towards the generous transitional relief, which will cap the increase in bills at 15% or less for most small businesses next year.

Budget: Press Briefings

Daisy Cooper Excerpts

Monday 17th November 2025 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

These leaks are not just Westminster tittle-tattle; they have a real impact on people’s lives and livelihoods. The cold weather has now reached all corners of Britain, and households do not know if they can afford to put the heating on, because they do not know if their taxes are going up or down or staying the same. It is just five weeks until Christmas, and our high streets are struggling with low consumer confidence. That is precisely why we Liberal Democrats have called for a windfall tax on the big banks to fund an emergency cut to people’s energy bills and a VAT cut for hospitality, visitor accommodation and attractions.

However, these leaks are a symptom, not the cause; the real problem runs much deeper. The Labour Government have no vision for the country and no vision for the economy, and whatever their destination is, they are not taking the country with them. [Interruption.]

[Mr Speaker]

Order. I have had Pinky and Perky chirping all day. Well, that is the last time!

[Daisy Cooper]

When people and the markets do not know what the Government are trying to achieve, rumours can and do run rife. It is clear that this Budget is more leaky than our crumbling hospitals.

I should add that the confected outrage from the Conservatives is slightly absurd, because their key Budget announcements were often leaked in advance—in at least one case, almost word for word. Perhaps this House needs to move to the Swedish system in which the Swedish Parliament gets to debate the Government’s Budget, proposes alternatives and amendments before it is finalised, and gets a proper period of scrutiny and accountability in the months that follow. What are the Government doing to stop these leaks, do they recognise that this flip-flopping is incredibly damaging to households and the markets, and will they consider all good ideas, including from the Liberal Democrats?

[Mr Speaker]

I remind the Liberal Democrat spokesperson that the time limit is one minute, not one minute and 50 seconds.

Oral Answers to Questions

Daisy Cooper Excerpts

Tuesday 4th November 2025 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

On Friday I sat with farmers and their families in Brecon and Radnor, and they are desperate. If they are 65 or over, they have no time to plan for the family farm tax, they cannot get insurance, and they will be put in an impossible position if the Government go ahead with the tax unamended. The CenTax report sets out options that could extend extra protection for family farms while rightly raising funds from people who are currently exploiting the tax loopholes in APR. Those farmers asked me to put a question to the Chancellor. They asked, “Can the Chancellor please say precisely which parts of the CenTax report the Government disagree with, and why?”

[Dan Tomlinson]

I have already answered the question about the CenTax proposals, but it is clear from its analysis that the number of estates that would pay more inheritance tax would be more than double the number contained in the proposals that the Government have put on the table. I understand that changes in inheritance tax are always difficult, but last year the Government had to make the decision to raise more revenue to ensure that we could fund our public services adequately, and this change raises half a billion pounds in a fair way.

--- Later in debate ---

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Analysis by UKHospitality suggests that more than half the job losses in the UK since last year’s Budget have come from its sector. That is further evidence that the jobs tax has been bad for growth and bad for job opportunities. We Liberal Democrats have set out fairer ways of raising revenue and going for growth, so rather than the Government suggesting that we have not done so, can I instead ask them: will they use the Budget to consult on a new lower national insurance contribution band to create opportunities for part-time workers, especially in hospitality?

[Rachel Reeves]

We increased the employment allowance at the Budget last year. That is, rightly, agnostic between part-time and full-time workers. That is why 865,000 businesses will not be paying national insurance at all this year—an increase to help our smallest businesses. Employment is up 358,000 so far this year; that is very different from the picture that the hon. Lady just tried to set out.

Stamp Duty Land Tax

Daisy Cooper Excerpts

Tuesday 28th October 2025 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

Our tax system is a mess. It is complicated and unfair. It is riddled with cliff edges that distort behaviours and create inequities, and there are exemptions that have not been reviewed for years. Council tax is outdated and hated. Inheritance tax and capital gains allow the super-wealthy to exploit loopholes while the squeezed middle picks up the tab. Business rates are a tax on bricks and mortar that penalise our high streets while online giants corner more and more of the market. IR35 is a sledgehammer to crack a nut for contractors, and research and development tax credits are in such a muddle that they are triggering lots of disputes, even for legitimate claims.

When any one of those taxes is tweaked, it causes problems elsewhere. Time and again, we see that when people want to do the right thing and pay the right amount of tax or query a tax issue, they call His Majesty’s Revenue and Customs, only to have the call handler hang up, or they contact the Valuation Office Agency and have to spend money on an expensive third party that specialises in disputes.

Stamp duty has all the hallmarks of a bad tax. It is a transaction tax and an extra cost that stops people from moving, when they might want to move to start a family, to take up a new job or to take on caring responsibilities. It prevents people from getting on the housing ladder, from upsizing and sometimes from downsizing. It gums up the housing market in a country where we simply cannot afford for that to happen. It disincentivises people from moving and holds back a dynamic economy.

[Dr Luke Evans]

The Liberal Democrat spokesperson is making some excellent points. Will she therefore support the motion?

[Daisy Cooper]

No—for all the reasons that I will come to. The hon. Gentleman was a fraction too early. Here’s the rub: stamp duty raises a lot of money, and that is presumably why the Conservatives did not seek to scrap it at any point during all their years in power.

Stamp duty for primary residences in England and Northern Ireland raised around £4 billion in 2023-24, and it is suggested that it will raise £9 billion in 2029-30. The Institute for Fiscal Studies estimates that the cost in 2029-30 will be around £11 billion, with the additional costs in Scotland and Wales taken into account. That means that abolishing stamp duty on primary residences would cost in the region of £36 billion to £44 billion in total over the next five years. For anybody who is not keeping up, that is almost the cost of the mini-Budget, just in slow motion.

The Conservatives say that they want all those cuts to come from public expenditure, but in this motion they do not say where those savings would come from. By my calculations, they could choose to scrap nearly the whole of the Ministry of Justice—given revelations in recent days about prisoners being let out wrongly, it feels like that may already have happened.

The Conservatives could instead decide to end all support for farmers by scrapping the entirety of the budget for the Department for Environment, Food and Rural Affairs, which reached £7.4 billion in 2028-29, including capital—[Interruption.] Well, it does not say that in the motion. Maybe they would want to do away with the cost of clearing the vast majority of the NHS maintenance backlog—a cost they would reach in a single year—or maybe they would want to scrap the £12 billion a year budget for special educational needs and disabilities. It is not clear in the official Opposition motion where the cuts would come from.

There is a strong case for looking at reforming or scrapping stamp duty all together, alongside other property tax reforms and moving to a land value tax. Indeed, some commentators suggest that scrapping stamp duty and council tax together and phasing in a land value tax over time could be one way to move ahead.

[Dr Murrison]

The average price of a property in St Albans is £642,000 a year. Under the proposals of the hon. Lady’s party, how does she think her constituents would face paying ever more taxes, either through stamp duty land tax or the council tax reforms that she and her colleagues propose?

[Daisy Cooper]

As the right hon. Gentleman will understand, I am not setting out proposals; I am commenting on the proposals from his party. For the record, I was not setting out Liberal Democrat policy; I was discussing what some commentators have pointed towards. I am sure that in the next two or three years, as we get closer to the general election, the Conservatives will be very interested to read our tax plans, which are under active consideration.

Even if people cannot agree on what should replace stamp duty, they can agree on this: if we change one tax in isolation, there are knock-on negative effects. Far from giving more people the security of home ownership, this measure in isolation would put it further out of reach. How do we know that? We know it because there was a big surge in house prices during the temporary stamp duty holiday in 2020-21; it had a negative impact on house buyers.

If the Conservatives—and, indeed, the Government—are truly interested in growing the economy, surely they will agree that the best and most immediate way to do so is to reverse the damage of their terrible Brexit deal with Europe. Analysis shows that if the Government did a better deal with the EU, within their own red lines, they would raise an additional £25 billion per year by unleashing the growth potential of our exporting British businesses.

[Hon. Members]

We’ve heard this one before!

[Daisy Cooper]

Well, I’ll say it again. The way to grow our economy is to do away with the 2 billion pieces of paperwork that have come in since Brexit: enough paper to wrap around the world 15 times—and yet still the Conservatives groan.

Fifteen months ago, it seemed as though the Conservatives were struggling to adjust to life in opposition; now it seems that they are simply enjoying it far too much. That is precisely why the idea of abolishing stamp duty in isolation and funding it through cuts to public services alone is fantasy economics and desperate politics. The announcement at the Conservative party conference had everything to do with the Leader of the Opposition keeping herself in post until after May’s elections and nothing to do with making a serious contribution to the debate on tax reform. This motion is unfunded, unserious and not worth the paper it is written on, and that is why we will not support it.

--- Later in debate ---

[Bobby Dean]

When the hon. Gentleman refers to covid, I think he is referring to total debt, which has increased. We are talking specifically about why the civil service has increased in size. A lot of that can be attributed to the new functions that the UK Government have had to take on.

On the welfare budget, yes, the Government struggled to get through their welfare reforms, but so did the previous Conservative Government. That is why the proposal that half of the £47 billion will come from welfare cuts lacks credibility.

[Daisy Cooper]

My hon. Friend is making a fantastic speech. It really does irk me that the Conservatives keep talking about the welfare bill going up when they blew a hole in the public health budget, eroded primary and community care, and did nothing to fix social care—and NHS dentistry has been hollowed out. Is it any wonder that when people cannot get the care that they need when they need it, we end up firefighting and spending loads of money on welfare and the NHS further down the line? We should be investing to save.

[Bobby Dean]

I wholeheartedly agree with my hon. Friend. I made the point earlier that the welfare bill went up on the Conservative Government’s watch, not least because they cut back NHS funding.

--- Later in debate ---

[Bobby Dean]

I thank the right hon. Gentleman for giving way after his fantastic punchline, which everybody really enjoyed.

[Daisy Cooper]

Where was it?

[Bobby Dean]

Exactly. He obviously was not paying enough attention to our argument. Yes, we did agree with the analysis that stamp duty is a poor tax, but we could not support the motion, because we do not think there is a credible plan for abolishing it. We would like to see a much more holistic review of property taxes, alongside a credible plan. There is no credible plan in the motion. We do not trust the public spending cut proposals that have been put forward.