Conduct of the Chancellor of the Exchequer
Dan Tomlinson Excerpts(4 days, 21 hours ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I thank the Chief Secretary to the Treasury, my right hon. Friend the Member for Ealing North (James Murray), for his earlier remarks, which framed today’s debate rather well. As he set out, we have here an Opposition day debate, a chance for Members to really interrogate Government policy, to challenge our decisions, to say what they would do differently and to paint a picture of the kind of country that they would build if they were in charge. Oh, what a sight it would be! In short, an Opposition day debate is a chance to be a serious Opposition, but as my right hon. Friend set out in his opening remarks, they have not chosen to do that, instead preferring to rehash their already discredited complaints about process, which we have already addressed extensively, rather than talk about the Budget.
Dan Tomlinson
I am going to make some progress, if that is okay, because my hon. Friend will know that many other Members have not yet spoken and I might give way to them later.
It is worth recounting just how many times Conservative Members have chosen in the last few days to major on process rather than policy. They are very interested in what was said by whom and on what day, so let us recount it. On Wednesday 26 November, the Leader of the Opposition, in response to the Budget, raised process multiple times, introducing to Hansard the somewhat intriguing phrase “fiscal fandango”. No, me neither! Admittedly, this was immediately after the OBR had dumped the Budget just before the Chancellor stood up, so that is fair.
But then the Tory process paso doble—two can play at this game—really began. Thank you, everyone! On 27 November, the shadow Chancellor raised process in a Budget debate. On 2 December, the shadow Chief Secretary to the Treasury raised it in a Budget debate. On 3 December, the Leader of the Opposition raised it at Prime Minister’s questions. This was the same day that the Opposition called an urgent question on the resignation of the chair of the OBR, which had coincidentally happened during a statement two days earlier by the Chief Secretary to the Treasury on the OBR and its forecast. Yesterday, the Opposition Front Bench raised this at Treasury orals, and today we are having an Opposition day debate on the same topic after the Chancellor took questions on it this morning in the Treasury Committee.
All this political dancing has denied the Opposition the chance to scrutinise the Budget. I am not sure how much of it they have read. Let me remind them that the Budget will cut the cost of living, raise pay for those earning the least and invest in our NHS. It meets our fiscal rules and delivers £21.7 billion of headroom. It is a Budget that delivers on the promise of this Government and delivers for the British people. By contrast, the Opposition are stuck in the past, playing the songs of old again and hoping for a new audience.
Shaun Davies
There are 4,600 reasons in my constituency why this Budget is the right thing to do: 4,600 children who will be lifted out of poverty by the Budget. On the basis of the Opposition’s remarks, it is my understanding that the Conservative party would plunge those 4,600 children back into poverty as part of a £46 billion welfare cut if it were to win the next general election—as well as potentially scrapping the triple lock. Does my hon. Friend agree that that is morally bankrupt?
Dan Tomlinson
I agree with my hon. Friend, who is a strong advocate of ensuring that we do all we can to support people, lift people out of poverty, and grow our economy and our towns and cities across the country.
By contrast, the Opposition are stuck in the past, playing the songs of old again and hoping for a new audience. After a year and a half on the Opposition Benches, the Conservative party knows that all it has to offer the country is the same as it offered before: a reheated and not renewed set of Conservative policies, tax cuts for the wealthy, wages held down for the poorest, cuts to public services and a rise in child poverty.
The problem is not just that the Conservative party is playing the old tunes but that half the old band has jumped ship to join the more extreme party, which has not even bothered to show up to this debate. I do not know how the band will manage to perform without the likes of the hon. Members for Ashfield (Lee Anderson) and for East Wiltshire (Danny Kruger), Jonathan Gullis, Dame Andrea Jenkyns, Nadine Dorries, Ann Widdecombe, Sir Jake Berry, Mark Reckless, Maria Caulfield and Marco Longhi—those are just the Tory-to-Reform switchers I have heard of. There are many more who I think are probably as well known as I am, so I do have a soft spot for them. For completeness, let me remind the House of their service and their defection, too: Lia Nici, Chris Green, Anne Marie Morris, Graham Simpson, Adam Holloway, Alan Amos—
Graham Stuart
On a point of order, Madam Deputy Speaker. Last time I checked, this debate was supposed to be about the conduct of the Chancellor of the Exchequer. I know the Minister is relatively new to the Dispatch Box; perhaps he may need a little guidance.
Madam Deputy Speaker (Judith Cummins)
I thank the right hon. Gentleman for his point of order. I am sure the Minister has heard it and will return to his speech.
Dan Tomlinson
Indeed; I heard the point of order loud and clear. It is worth remembering that this is an Opposition day debate—I think it is within the remit to talk about the Opposition and the fact that they have lost all their players to the other team.
I also think it is time to move on from talking about process, because on this side of the House, we have a country to run, an economy to build and public services to mend. Instead of this subject, we could have talked about whether it is right to raise wages for those on the lowest incomes, but the Opposition did not want to bring that up. Maybe that is because wages have risen faster in the first 10 months of this Government than they did in the first decade of the Conservative Government, or maybe it is because it turns out that their latest policy is a real-terms cut to the living wage. We could have talked about the cost of living, but again, the Conservatives did not choose that as a topic because its mini-Budget crashed the economy and added thousands of pounds to mortgages, and since this Government have come to power, the Bank of England has cut interest rates.
Rachel Hopkins (Luton South and South Bedfordshire) (Lab)
The Minister makes a point about the previous disastrous mini-Budget of September 2023. The shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), said at that time,
“I welcome much in this statement. There is a great deal that will help millions of families and businesses up and down the country.”—[Official Report, 23 September 2022; Vol. 719, c. 942.]
Does the Minister agree that the reason the right hon. Member focused on process is that his judgment on policy is so poor?
Dan Tomlinson
I agree entirely with my hon. Friend. Too many Conservative Members defended the mini-Budget, which crashed the economy and added thousands of pounds to mortgages. In contrast, since this Government have come to power, the Bank of England has cut interest rates five times, taking £1,200 off a typical two-year fixed rate mortgage. At this Budget, we cut £150 from the average energy bill, froze rail fares and prescription charges, and extended bus fare caps and fuel duty cuts, but the Conservatives do not want to talk about that either. They could have chosen in their Opposition day debate to talk about fiscal stability and increased headroom, but again, they chose not to do that because of the £21.7 billion of headroom that the Chancellor secured at the Budget, which will help protect our country from global shocks and unforeseen challenges.
Of course, the Conservatives do not want to talk about child poverty either because they know that this Budget has lifted 550,000 children out of poverty, whereas the last Government were content to leave them, preferring instead to rebrand the hungry children who they let down while in power as benefit scroungers. They should be treated as our future, not as our opponent.
I have a couple more minutes, so let me address some of the points made during the debate. I thank the Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), for engaging on policy. We have had conversations on business rates already this week, and I am sure that we will have more. We have begun the work to rebalance the system with a £900 million switch from the highest value properties to those on the high streets.
I thank my hon. Friend the Member for Harlow (Chris Vince) for his Thatcher quote. It was a good quote that bears repeating. She said,
“I always cheer up immensely…if they attack one personally, it means they have not a single political argument left.”
I thank the hon. Member for West Worcestershire (Dame Harriett Baldwin) for going through every single tax change and saying that she opposes them all. That is the sort of opposition we have got used to. Rather than constructive opposition, which comes forward with proposals that would raise revenue in a fair way, such as the changes on electric vehicle excise duty, which will stop us losing £12 billion of fuel duty revenue in the coming years, we just hear, “No, no, no,” over and over again. I thank my hon. Friend the Member for Loughborough (Dr Sandher). His experience in economics is richly valued in this place, and I enjoyed his speech, as I always do.
Finally, it has been a short debate, has it not, Madam Deputy Speaker? I am glad that the right hon. Member for Beverley and Holderness (Graham Stuart) took the time during the debate to read the Labour manifesto—that was much appreciated—and that he was able to clarify for the House that my right hon. Friend the Chief Secretary was right to say that we have stuck to our manifesto commitment.
James Wild
To bring the Minister back to the debate, it is about honesty and the real-world consequences of the briefing that happened around the Budget. Does the Treasury accept that hundreds of thousands of people drew down their pensions, which is an irrevocable decision—yes or no?
Dan Tomlinson
What the Treasury does accept is that at this Budget, the Government had to make the decisions to ensure that we could increase our fiscal stability and get borrowing falling in every single year. The previous Government were not able to control our public finances, and yet in every year of this forecast, borrowing will be falling, and we have more than doubled our headroom to £21.7 billion.
Dr Arthur
I always try to be helpful, and I thank the Minister for giving way.
There was a lot of speculation about the Budget, but a lot of that came from the Opposition Benches. Every single clickbait headline was repeated in the Chamber to fuel speculation. It was incredibly damaging—does the Minister not agree?
Dan Tomlinson
I agree that the Opposition are incredibly damaging for the economy.
The clean-up operation of the disaster zone that was the last 14 years is well and truly under way. Our economic plan is working, with growth up, employment up, interest rates down and borrowing falling, with a Labour Budget focused on the British people delivered by a Labour Chancellor making the fair and right choices. We reject this absurd monologue of emotion from the Conservatives, and we will stick to our plan for a better Britain.
Question put.
Oral Answers to Questions
Dan Tomlinson Excerpts(5 days, 21 hours ago)
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Sir Ashley Fox (Bridgwater) (Con)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
The Chancellor was clear at the Budget that we are taking the fair and necessary decisions on tax to do all we can to ensure that the contribution of working people is kept as low as possible. We have reduced the gap between taxes on income from assets and on income from work, stopped the unfairness that meant people could pay less council tax for a £10 million property than for a typical terraced house in much of England, and done much more.
John Lamont
There seems to be only one word that the Chancellor understands: tax. Her decision to continue the freeze on income tax thresholds is a hammer blow to working people. In fact, even one of the Chancellor’s favourite unions, Unison, has said:
“Freezing personal income tax thresholds disproportionately impacts lower and middle-income workers.”
Does the Chancellor agree with the Labour party’s union paymaster?
Dan Tomlinson
I am a bit confused by that question. The hon. Member said there was one word that was important. Let me give him one figure: £150. That is the amount we are taking off energy bills next year to help people to deal with the cost of living in the here and now. We are supporting people because of the mistakes that previous Governments made by not investing in our energy infrastructure and not investing in our future. We are picking up the pieces after the Conservatives did not take the necessary decisions.
Sir Ashley Fox
Extending the freeze on income tax thresholds will cost working families £900 a year. It will also drag many pensioners into paying income tax for the first time. Why is the Minister hitting these low-income families to pay more for welfare?
Dan Tomlinson
I suggest the hon. Member asks his Front Benchers why 75% of the impact of people paying more tax at the lower end is the result of decisions made by the previous Government, who spent seven years freezing income tax thresholds. It is a bit rich for the Conservatives to talk about this Government doing it for three years when they did it for seven years.
Martin Rhodes (Glasgow North) (Lab)
What assessment has the Minister made of the impact on working people of the historic increase in the living wage?
Dan Tomlinson
We have chosen to uplift the national living wage and the national minimum wage so that those on low incomes are properly rewarded for their hard work. It will benefit 2.7 million people, including many people in my hon. Friend’s constituency and across the whole country. I thank him and Members—particularly those on this side of the House—for their support in making sure that we can make work pay up and down the country.
Mr Jonathan Brash (Hartlepool) (Lab)
Pensioners in my constituency of Hartlepool who rely solely on the state pension have shared with me their concern that freezing the tax threshold will draw them into paying tax. Can the Minister confirm what the Chancellor has already said publicly, which is that pensioners who rely solely on the state pension will not be taxed during this Parliament?
Richard Fuller (North Bedfordshire) (Con)
The Minister said this was “fair”—no, no, no. Perhaps breaking the election promise on tax thresholds is the reason why, by two to one, the public view the Budget as unfair, just 3% think it will make them better off, and two out of three think things will get worse. Does the Minister want to tell the public they are wrong, or will he explain to the House why this Budget has been received so badly by the British people?
Dan Tomlinson
The Conservative spokesperson talks about fairness. Let me just identify one element of unfairness he left in the tax system that this Government is correcting, and it is a popular measure when we look at the views of the public up and down the country. We on this side of the House do not think it is fair that someone in a £10 million property can pay less council tax than someone in a typical terraced house in his constituency, my constituency and constituencies across the whole of England. We are making that change to make things fairer in this country.
Jack Rankin (Windsor) (Con)
Wera Hobhouse (Bath) (LD)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
Small and medium-sized businesses are vital to our economy and our communities, and the Government’s small business strategy, published in July this year, sets out our approach to supporting them. As temporary pandemic business rates relief ends and the new revaluation comes into effect, we are supporting the high street with £4 billion-worth of support through transitional relief and our supporting small business schemes, as well as through our long-term reforms to permanently lower the multipliers for eligible retail, hospitality and leisure properties, and support them with a significant package that will cap most of the increases this year for those who have seen large increases since the pandemic.
Sir Julian Smith
Last week, Skipton was voted the happiest town in Britain to live in. One of the reasons for that—[Hon. Members: “Is you!”]—is its hospitality sector. Through covid, energy cost rises, national insurance rises and other challenges, that hospitality sector is facing massive challenges. I urge the Government to look again at reliefs and multipliers. Over the weekend, so many pubs and hotels raised with me the fact that they are not going to invest. We need the growth and we need the jobs. Will the Government look at how they can make things easier for the pub and hospitality industry?
Dan Tomlinson
If I had a such a charming Member of Parliament, I would also be as happy as his constituents in Skipton. I thank him for his question. We considered the support really carefully in advance of the Budget decisions announced last month. There is a challenge in that the revaluation, which was instigated by the previous Government and is carried out independently by the Valuation Office Agency, means that some businesses have seen their values increase significantly since the pandemic. That is why the Government are putting in £4 billion of support over the coming years, with around half of that coming next year to support businesses. Many will see their increases capped at either £800 or 15%. We think that that support will provide significant help to those businesses, alongside the underlying reform we are making to rebalance the system in favour of the high street.
Wera Hobhouse
May I give the Minister another example in which the numbers simply do not stack up? Mr B’s independent bookshop in Bath will see its business rates bill rise by more than 70% after factoring in changes to rateable value. The changes were packaged as a move away from short-term fixes, yet vital discounts have been scrapped and replaced with less-generous support and an unclear transitional relief system. How can he justify such a stark increase in business rates? It is a challenge for Bath’s cherished bookshops—we have three—which we want to support.
Dan Tomlinson
It is important that we all communicate to the small businesses in our constituencies, as I was doing this weekend, that there is a difference when it comes to the increase in the rateable value. It may be that the business to which the hon. Lady refers—I like good small independent bookshops myself—has seen a large increase in its value since the pandemic, but precisely because that has happened in some cases, we are implementing a significant support package this year. That will mean that no business that has a rateable value of less than £100,000 will see an increase in its bills of more than either 15% or £800. There is a bit of a technical detail there, which I would be happy to go into with her, but the important thing is that there are significant protections on bills in place this year, even if rateable values have increased significantly since the pandemic.
Clive Lewis (Norwich South) (Lab)
In Norwich there is a saying: there is a church for every Sunday and a pub for every day of the week. After 14 years of austerity, the numbers are a lot lower. After this Budget, many pub landlords—small and medium-sized businesses—tell me that we are not going far enough, and that many of them will go under. They need more support, and they need it soon. If the changes go through, I fear that Norwich will not have that saying at all; we will have hardly any pubs. Can we not put more of the burden on the pub companies and big corporations, which should be paying their fair share, rather than on the small and medium-sized businesses and small pub landlords, who cannot pay what is coming at them?
Dan Tomlinson
One of the things we announced at the Budget is a rebalancing in the system away from properties that have large rateable values and towards the small businesses on our high streets. That shift from the large to the smaller properties is worth almost £1 billion and supports them in the business rates system, as part of our work to reform business rates and support our high streets.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I welcome the Government’s support for our high streets and the consultation on the business rates system, which the Treasury launched on 25 November. But it is not just high streets that are suffering. Under the current system, major transport infrastructure owners face crippling bills: Eurotunnel’s business rates valuation has tripled from 2017, so it has cancelled investment in its international freight hubs, and Heathrow Airport’s business rates bill will increase by millions of pounds. Will the Treasury’s consultation on 25 November give transparency and predictability—
Mr Speaker
Order. The hospitality sector might use the rail industry, with freight, so I am sure we can get something on that.
Dan Tomlinson
I am sure that many of us do jump on the train to support our hospitality businesses. The consultation that my hon. Friend mentions, which we published on the day of the Budget, is an important piece of work. Chapter 4 of our call for evidence on how we can reform business rates to support investment will be important. We recognise that airports and other large infrastructure are valued in a different way from other business properties, and we want to look at the changes that we can make to support those businesses, which have seen very significant increases in their rateable values. Under the scheme that we have announced, they will of course be capped as well.
James Wild (North West Norfolk) (Con)
The Chancellor promised a new golden era of hospitality, but the reality of her business rates raid, as the British Beer and Pub Association has said, is
“sleepless nights, pay cuts and staff layoffs”
for publicans, who will be paying an extra £13,000 on average. Why did the Chancellor tell businesses last week that their taxes were going down when they are going up, and will she think again and change the multipliers?
Dan Tomlinson
The multipliers are a product of the change in the valuation, and they did come down. We brought them down even further for retail, hospitality and leisure businesses. Without intervention this year, the bills paid by pubs would have increased by 45% as a result of the increase in value since the pandemic; because of this Government’s significant intervention this year, bills are going up by 4%. That is the impact of the changes this Government have made.
Dan Tomlinson
We have set out our plans to reduce the multipliers for retail, hospitality and leisure properties, which is a rebalancing in the system. It means that those businesses—particularly the smallest RHL properties—face the lowest tax rate in the system since 1991. At the same time, there is—[Interruption.] The hon. Lady shakes her head, but the tax rate is the lowest it has been since 1991. At the same time, there has been an unwinding of the reduction in values going into the pandemic, and because we are seeing a recovery and businesses are bouncing back, and their properties are worth more, there has been an increase in the values. We are spending £2 billion this year to cap those increases at either 5% or 15% for many of those businesses up and down the country.
Kevin Bonavia (Stevenage) (Lab)
Matt Vickers (Stockton West) (Con)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
Let us be clear: nobody’s business rate bills are trebling. If businesses come to talk to us about increases in their rateable values because of the unwinding of the effect of the pandemic, it is important that all of us, on both sides of the House, are clear that the Government have put in support to ensure that pubs and those that have seen their values go up will not see increases next year. If the pubs rateable value is more than £100,000, they will be capped at a 30% increase. If it is less, they will be capped at 15% or £800. That is £4 billion of support that this Government are providing.
Tom Hayes (Bournemouth East) (Lab)
An independent and effective OBR is critical for our country, but it needs to do better. Why can the OBR not count? Why can it not forecast accurately, given that the economy grew 50% faster than it had predicted in March? Why can it not even publish the Budget document without making a dog’s breakfast of it? Is it not time for the OBR to properly price pro-growth measures and get behind our growth mindset?
Alison Bennett (Mid Sussex) (LD)
Dan Tomlinson
At the Budget, we came forward with a revision to the policy to support people whose spouses have already passed away, and we made the allowance transferable between the spouses. That change will reduce the number of farms affected by the agricultural property relief changes from about 500—as was estimated at the previous Budget—to 375, when coupled with changes to the underlying economic forecast. The policy raises money from those with the largest estates in a fair way, and I encourage Members in all parts of the House to consider whether or not—
Alison Hume (Scarborough and Whitby) (Lab)
Alexander Dennis is a British electric bus manufacturer employing more than 700 people in Scarborough. Major bus contracts are due to go live in early 2026. Will the Minister confirm that this Government are backing British-built buses over Chinese imports, and can he confirm that the changes to public procurement processes will be implemented in time for taxpayers’ money to be spent on buying British buses?
Dan Tomlinson
I thank my hon. Friend for her question and her continued campaigning on this issue, which I know is important to her constituents. On those who seek to bend the rules, companies like Airbnb now send data to His Majesty’s Revenue and Customs on all their hosts, and where hosts fail to provide the detail that HMRC requires, Airbnb stops payments until they do. However, we need to go further, and I will meet my hon. Friend to discuss this.
Simon Hoare (North Dorset) (Con)
In the hope that the Government had listened to the National Farmers’ Union and others, a North Dorset farming family sat to watch the Chancellor’s Budget statement, in expectation. They were disappointed with the announcement on the family farm tax. The farmer withdrew from his medical treatment, and three days later he died. That is how determined he was to keep the farm in his family. He knew the struggle that they would have had in meeting the tax bill after 1 April. I share that not to be inflammatory, but to ensure that Members on the Treasury Bench know that their decision on the family farm tax has direct consequences for people up and down the country.
Dan Tomlinson
Members on the Treasury Bench are fully aware of the fact that changes to inheritance tax have an effect on those who are older. In the changes to both agricultural and business property relief that we have put forward, we have ensured that there is a higher allowance, with an extra £1 million, and a tax rate that is half as low as everyone else pays. We think that these reforms, which raise money in a fair and sustainable way, will contribute to raising the revenue that we need, in a way that protects family farms. Of course, we understand that there will be impacts on people. That is why we have designed the policy in the way that we have, and why we came forward with the changes that we announced at the Budget just a few weeks ago.
Rachael Maskell (York Central) (Lab/Co-op)
Independent businesses in York are really struggling with the revaluation of business rates. In 2024 they were £6,200; in 2025 they are £15,000; and in 2026 they will be £19,100, after discounts. Will the Minister meet representatives from York High Street Forum to understand the challenge of those rates for my city?
Dan Tomlinson
I am happy to speak to my hon. Friend about the issues that she raises in her constituency.
Rupert Lowe (Great Yarmouth) (Ind)
The Chancellor has embarked on a Fabian programme of brutal tax-and-spend economics that might please the dwindling number of Labour voters, but is hollowing out the nation’s productive base. Those who take risks, invest long term and create high-quality jobs are increasingly voting with their feet. Record numbers of top earners—the rain-makers who actually bankroll public services—are leaving the UK for good, taking their wealth and, more importantly, their brain power with them. Does the Chancellor even begin to understand the lasting and irreversible damage that she is causing to the British economy?
The Customs Tariff (Establishment) (EU Exit) (Amendment) Regulations 2025
Dan Tomlinson Excerpts(6 days, 21 hours ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That the Committee has considered the Customs Tariff (Establishment) (EU Exit) (Amendment) Regulations 2025 (S.I., 2025, No. 1199).
This statutory instrument updates the UK’s tariff schedule to correct two errors relating to three tariff lines. These tariff lines apply to imports of specific varieties of basmati rice and tropical fruit and nut jams—if any hon. Member knows what a nut jam is, I look forward to talking to them about it later in the Tea Room. Both errors will be corrected in “The Tariff of the United Kingdom” reference document that sets out the UK global tariff rates for each good. For context, these errors relate to only three out of many thousands of commodity codes.
First, the correction relating to tropical fruit and nut jams reinserts the correct tariff of 14% into the reference document. This tariff has applied in the UK’s tariff schedule since 2021, but in an update earlier this year, the rate was erroneously left blank, leaving it sadly undefined. Before the error was discovered, His Majesty’s Revenue and Customs continued to collect the correct 14% tariff rate on imports of these goods. To repay traders who paid this rate, HMRC will shortly start the process for issuing repayments. By correcting this error, the instrument removes uncertainty for traders and ensures that they pay the correct rate as introduced in 2021.
Secondly, the correction relating to specific varieties of basmati rice realigns the tariff rate applying to two commodity codes with the original policy intention, by increasing the rate from 0% to £25 a tonne. These two codes were introduced in 2023—so Conservative and Labour Governments are both responsible for one of these errors—and the tariff rate was erroneously set at 0% instead of £25 a tonne, as applies to other basmati rice codes. Similarly, the new codes did not require traders to certify that their rice was genuine basmati rice, which meant there was a risk that traders could import other varieties of rice under the two new codes, paying a significantly lower tariff rate than they should.
This instrument realigns the tariff with the original policy intention and eliminates the risk of circumvention, ensuring that all traders pay the correct duty. I do want to highlight, however, that less than 1% of basmati rice imports were declared under these two new codes in 2024, so the impact on traders will be minimal. I hope that hon. Members will join me in supporting this instrument, which I commend to the Committee.
Dan Tomlinson
The Opposition spokesman is right that the import of tropical fruit and nut jams is a relatively small import stream. To give him and other interested hon. Members a sense of quantity, we expect the total amount owed in repayments to be lower than £7,000—quite a small amount in the grand scheme of things.
The Opposition spokesman mentioned other tax changes in the Budget, which I believe are broadly out of scope of this Committee, but I will correct him about the overnight visitor levy. Mayors will have a choice as to whether to introduce it or not; the Government are not applying the tax ourselves. We believe in devolution and we want to enable mayors to choose whether to make that decision to raise more revenue and invest in their local areas. It is up to them. That is what genuine devolution looks like.
I sadly do not have an answer to the Opposition spokesman’s question about the volume of basmati rice imports, but it is an important topic and my officials will endeavour to write to him on it. In concluding, he reminds me that I may have made the biggest mistake of my political career to date by upsetting Paddington, and I will reflect on that deeply this evening, and in the days and weeks to come.
Question put and agreed to.
Draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025
Dan Tomlinson Excerpts(1 week, 6 days ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025.
The Chair
With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025, the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025 and the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.
Dan Tomlinson
It is a pleasure to serve on this Committee with you as Chair, Mr Swayne.
The orders before the Committee give effect to the double taxation conventions, or DTCs, with Andorra, Peru, Portugal and Romania. Like all DTCs, these agreements will provide tax certainty to businesses and investors by removing double taxation and, importantly, without creating opportunities for the avoidance of tax. In doing so, they will remove barriers to cross-border trade and investment, support growth, and provide a clear and fair framework for taxing businesses that invest and trade across borders. That will benefit businesses and the economies of both the UK and our respective treaty partners.
The DTCs are based mainly on the OECD model tax convention, which contains a set of internationally agreed principles and standards that make them easier for businesses to understand and tax administrations to apply. Those standards ensure that DTCs are not used to avoid or evade tax. They include a statement to that effect in the preamble, and are clear that it is not a purpose of a DTC to create opportunities for tax evasion and avoidance.
The DTCs include a principal purpose test that denies treaty benefits in case of abuse. They also allow for the exchange of information between the UK and its treaty partners to facilitate tax transparency. Other anti-avoidance rules in the new treaties include a tie-breaker provision for determining corporate residence based on agreement between the competent authorities of the treaty partners. The orders include dispute resolution provisions, which provide that where a taxpayer considers that the DTC has not been applied correctly, they can present their case to either tax authority, allowing both countries to work together to resolve the issue.
Together, those features strengthen our collective defences against tax avoidance and evasion while supporting cross-border trade, investment and mutual growth. I commend all the orders to the Committee.
Dan Tomlinson
I thank the hon. Member for giving me the chance to correct the record that we have a Sir in the Chair today—Sir Desmond Swayne. I am very grateful for your chairmanship, Sir Desmond.
On the impact of these different DTCs, trade with Andorra is only £93 million a year, so the impact will be relatively small for some of these measures. The impact will be larger with both Portugal and Romania as they are already very significant trading partners and we trade a similar amount with both.
On the hon. Gentleman’s second question, Romania has ratified this already and Peru, Andorra and Portugal are expected to do so by the end of the year.
Is this the moment where I conclude, or do I sit down now?
Dan Tomlinson
In closing, Sir Chair, the orders before the Committee implement DTCs between the United Kingdom, Andorra, Peru, Portugal and Romania. The conventions will ensure that we have a modern DTC in place with all four of these countries, which will provide a stable foundation for trade and investment to grow, while at the same time making it harder to avoid taxes here in the United Kingdom. I am grateful to all hon. Members—Sirs and non-Sirs—for their contributions to the debate.
Question put and agreed to.
Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025.—(Dan Tomlinson.)
Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025.—(Dan Tomlinson.)
Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.—(Dan Tomlinson.)
Draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic)) Order 2025
Dan Tomlinson Excerpts(1 week, 6 days ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025.
The Chair
With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025, the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025 and the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.
Dan Tomlinson
It is a pleasure to serve on this Committee with you as Chair, Mr Swayne.
The orders before the Committee give effect to the double taxation conventions, or DTCs, with Andorra, Peru, Portugal and Romania. Like all DTCs, these agreements will provide tax certainty to businesses and investors by removing double taxation and, importantly, without creating opportunities for the avoidance of tax. In doing so, they will remove barriers to cross-border trade and investment, support growth, and provide a clear and fair framework for taxing businesses that invest and trade across borders. That will benefit businesses and the economies of both the UK and our respective treaty partners.
The DTCs are based mainly on the OECD model tax convention, which contains a set of internationally agreed principles and standards that make them easier for businesses to understand and tax administrations to apply. Those standards ensure that DTCs are not used to avoid or evade tax. They include a statement to that effect in the preamble, and are clear that it is not a purpose of a DTC to create opportunities for tax evasion and avoidance.
The DTCs include a principal purpose test that denies treaty benefits in case of abuse. They also allow for the exchange of information between the UK and its treaty partners to facilitate tax transparency. Other anti-avoidance rules in the new treaties include a tie-breaker provision for determining corporate residence based on agreement between the competent authorities of the treaty partners. The orders include dispute resolution provisions, which provide that where a taxpayer considers that the DTC has not been applied correctly, they can present their case to either tax authority, allowing both countries to work together to resolve the issue.
Together, those features strengthen our collective defences against tax avoidance and evasion while supporting cross-border trade, investment and mutual growth. I commend all the orders to the Committee.
Dan Tomlinson
I thank the hon. Member for giving me the chance to correct the record that we have a Sir in the Chair today—Sir Desmond Swayne. I am very grateful for your chairmanship, Sir Desmond.
On the impact of these different DTCs, trade with Andorra is only £93 million a year, so the impact will be relatively small for some of these measures. The impact will be larger with both Portugal and Romania as they are already very significant trading partners and we trade a similar amount with both.
On the hon. Gentleman’s second question, Romania has ratified this already and Peru, Andorra and Portugal are expected to do so by the end of the year.
Is this the moment where I conclude, or do I sit down now?
Dan Tomlinson
In closing, Sir Chair, the orders before the Committee implement DTCs between the United Kingdom, Andorra, Peru, Portugal and Romania. The conventions will ensure that we have a modern DTC in place with all four of these countries, which will provide a stable foundation for trade and investment to grow, while at the same time making it harder to avoid taxes here in the United Kingdom. I am grateful to all hon. Members—Sirs and non-Sirs—for their contributions to the debate.
Question put and agreed to.
Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025.—(Dan Tomlinson.)
Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025.—(Dan Tomlinson.)
Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.—(Dan Tomlinson.)
Taxes
Dan Tomlinson Excerpts(1 month ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I thank all right hon. and hon. Members for their contributions today, as well as my right hon. Friend the Chief Secretary to the Treasury for his opening remarks, and the hon. Member for Grantham and Bourne (Gareth Davies) for summing up for the Opposition. He was Exchequer Secretary to the Treasury for a time under the last Government, and he will know just how busy the period two weeks before a Budget can be for a junior Minister in His Majesty’s Treasury. I imagine that when he was in my position, 14 days out from a Budget or autumn statement, with officials rushing in and out of his office with advice on various measures, and a day full of meetings trying to get the details right, there was nothing more he would have wanted in the world than be called to the House for an Opposition day debate. I thank him and the shadow Chancellor for calling this debate at such a crucial time in the Budget-setting process.
I expect some interventions during my remarks over the next 10 to 15 minutes, and I encourage Members across the House to play what I will call Treasury Minister bingo. If I am asked questions about the upcoming Budget, I intend to respond with, “The Chancellor will make all decisions on tax and spend at the Budget, and I will not comment on speculation.” We can see how many interventions we get, and how many times we get to play Treasury Minister bingo. That is just to forewarn those who, like me, perhaps enjoy a game of bingo—
Joe Robertson
I appreciate that this is the end of a debate and the Minister is trying to be funny, but a lot of constituents I speak to do not find this period particularly funny, and would like the Minister to confirm that his Government will stick to their manifesto pledge. Please can the Minister not respond with the word “bingo”? This is a really serious matter.
Dan Tomlinson
I thank the hon. Member for his intervention. The Chancellor will make all decisions on tax and spend at the Budget, and I will not be commenting on speculation. I have said that is what I will say if people continue to intervene. We are two weeks out from a Budget, and I will not be commenting on speculation from the Dispatch Box today.
Jerome Mayhew
I have heard what the Minister says and I do not ask him to comment on the Budget, but can he confirm whether he thinks that manifesto pledges are important?
Dan Tomlinson
If the hon. Gentleman wants to ask questions about the manifesto, I am glad that he is interested in the change that this Government are bringing through their manifesto. We have invested in our NHS and introduced new taxes on non-doms. We have introduced free breakfast clubs, and invested in HMRC to reduce tax avoidance—we will come on to talk about that, after the contribution from my hon. Friend the Member for Harlow (Chris Vince). We have set up Great British Energy, and we are implementing the National Wealth Fund.
Several hon. Members rose—
Dan Tomlinson
Let me make a bit of progress if I may—I will happily take a further intervention in good time. It is a sorry fact, but it is true that Conservative Members squandered their time in power, just as they squandered much taxpayer money. After 14 years of failure they left people paying more for less, and enforced a policy of austerity for too long, which my hon. Friend the Member for Birmingham Northfield (Laurence Turner) spoke about in his contribution. That policy brought public services to their knees—something we needed to fix—and saddled us with so much debt that we now pay £1 in every £10 of public money in debt interest payments alone. I agree with the contribution from a Conservative Member who said that that is not a morally acceptable situation, but that is the situation we inherited, and one that we intend to change. Over the course of this Parliament the international comparisons bear out, and we are on track to reduce the deficit that we inherited faster than any other G7 economy. That is the stability that the Chancellor is returning to the public finances.
Laurence Turner
The Minister has just spoken about public services and touched on productivity. At the start of the debate, the shadow Chancellor talked about the importance of timely public sector pay settlements to productivity increases. Having been a union official in the aftermath of the strikes by ambulance workers, I have some insight into this issue. Ministers in the previous Government said that they wanted productivity increases, but negotiators for the Government had nothing to suggest on productivity links and they were asking the trade union for ideas.
Dan Tomlinson
I thank my hon. Friend for his comments and for his years of work and experience supporting public sector workers and our proud trade unionists.
Conservative Members have mentioned the statistics that have been published of late. There is much that we need to do to ensure that the investment that we make in the NHS comes with improvements in productivity and output. The Health Secretary was talking about that today in reference to our reforms to NHS England, and about ensuring that we are not duplicating spending in both the Department for Health and Social Care and NHS England. I thought that Conservative Members were against quangos, but it turns out that they are against that reform.
Jerome Mayhew
I am encouraged to hear that the Minister wants to link increased funding with productivity increases. In that spirit, why was the resident doctors’ pay rise not linked to any productivity increases?
Dan Tomlinson
In the end, in order to sort out the strikes we needed to give public sector workers a fair deal. The situation that they were left in was not fair, with their wages going up significantly less than prices over the 14 years that the Conservatives were in power. The Health Secretary has been clear about not wanting to go as far the pay settlement demanded, but the situation that we reached last year is right and proportionate, and we hope that we can continue to invest in reform of our NHS.
Several hon. Members rose—
Dan Tomlinson
Let me make a bit more progress—I am only on page 2 of a six page speech—[Interruption.] I am taking many interventions, but I will take fewer.
The previous Government saddled us with much debt, as we have talked about, with £1 in every £10 of public money going towards debt interest payments, perpetuating a stop-start cycle of public investments that left us with roads full of potholes, train lines that cannot even make it between London and the north of England, and an unpredictable business environment, with business taxation going up and down all the time. All that gave us an incredibly narrow base for regional growth, with few parts of the country forging ahead, while too many in the rest of the country fell behind.
Levelling up was a Conservative slogan, not a solution. Instead, this Labour Government are growing the economy and lifting living standards in all parts of the country, investing in infrastructure to get Britain building again, and working with local leaders and Members of Parliament to build pride in place and revitalise communities. That is the change that we are bringing. The Conservatives had the opportunity to invest in our public services, to upgrade rail, roads and connectivity, and to protect our NHS, but instead they threw money around with little regard for its value.
A key factor in our stalled productivity is that, time and again, the Conservatives had the option to choose economic responsibility, but they chose political convenience instead. The austerity that they pursued after the financial crisis, when interest rates were at record lows, was a sledgehammer to our economy, gutting public services and cutting the essential flows of investment that would have aided a faster recovery. As the hon. Member for Witney (Charlie Maynard) said, and as Liberal Democrat Members are wont to mention, they then went ahead and implemented a rushed and ill-conceived Brexit deal that brought extra costs to businesses and extra disruption to trade. When the pandemic arrived, our country was not ready. Our public services and our economy have been severely weakened.
Gregory Stafford
As I told the hon. Member yesterday, he has the second worst job in Government, which I think he is feeling today. Even if what he has just said is true—I do not agree with him—after the Budget last year, the Chancellor said that the slate was wiped clean and that no more tax rises or borrowing would be needed. What has changed between then and now?
Dan Tomlinson
I was glad to attend the hon. Member’s Westminster Hall debate last night on wine producers across the UK. I am impressed by his close reading of all the words of members of the Cabinet; I hope one day to be as diligent as him in following the utterances of the Chancellor, the Prime Minister and all Ministers.
When it comes to the inheritance that this Government and the British people are dealing with, let me say that if wage growth since the financial crisis continued at the pace that it had before, it is not that families in my constituency, in the constituency of the hon. Member for Farnham and Bordon (Gregory Stafford) and across the country would be £1,000 or £2,000 a year better off; they would be £12,000 a year better off. Imagine the difference that that would make to the businesses and communities across our country if we had not had that productivity stagnation.
In the end, we will see at the Budget that the OBR is implementing its review of productivity. I will not pre-empt that review, but it is right and proper that we ensure our fiscal forecasts are based on accurate understandings of what has happened in the past to our productivity, because the past is a guide to the future. I hope that this Government will continue to beat the outcomes that happened under the previous Government, when productivity almost flatlined, and that is exactly what this Budget will be about.
Jerome Mayhew
My hon. Friend the Member for Farnham and Bordon (Gregory Stafford) asked the Minister a specific question. In October last year, the Chancellor said, “We are not coming back for more. We have wiped the slate clean. From now on, it is on us.” What has happened between then and now? What has changed?
Dan Tomlinson
One of the things that has changed is that Conservative Members seem to have found £47 billion down the back of the sofa and are coming forward with plans that are not deliverable, just like they did when they were in government. They have done the job of a losing Opposition—we have been there in the past—whereby numbers used in opposition are not serious or credible. We all know where that ends up.
The Conservatives said recently that they would slash taxes and pay for it with £47 billion of fairyland spending cuts. For context, that is the equivalent of firing every police officer in the country. Of course, I am not saying that they will do that or that they have joined the “defund the police” brigade, but what would they do? We do not really know, because all we have is a menu without a price list.
Josh Fenton-Glynn
One unexplored area we could look at to raise some of the money we need is selling the brass neck of the Conservatives on the commodities market. Having cheered when Liz Truss delivered her mini-Budget, they now have the gall to lecture us about fiscal responsibility.
Dan Tomlinson
And the Conservatives have the gall to lecture us about managing the public finances well. They say that they want to cut civil service numbers. Between 2016 and when the Conservatives left office, there were 130,000 more civil servants. The former Member for Uxbridge and South Ruislip and former Prime Minister said that he would cut civil service numbers by 91,000; they then went up. In October ’23—when the Opposition spokesperson, the hon. Member for Grantham and Bourne (Gareth Davies), was in my role—the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) unveiled an immediate cap on civil service numbers and pledged to cut them by 66,000; they then went up. Between May 2022 and July 2024, the numbers went up in every single quarter. I am not sure that the public would leave the Conservatives’ restaurant at all satisfied if they bought the items on their menu, because everything they have promised does not seem to turn into reality.
I will conclude, Madam Deputy Speaker.
Dan Tomlinson
Hon. Members want more! Okay.
If this debate has taught us anything, it is simply this: not only do the Conservatives need to stay in opposition for longer, but I am sure that they will do so. So far, they have learned nothing from their time on the Government Benches. There is no humility for their mini-Budget, no plan for giving Britain a brighter future, and no grasp of the realities that the country and the world face. They also have no will to face up to reality, to show leadership or to make choices that will support our public services, businesses and citizens.
Meanwhile, this Government have given the country the fastest growth in the G7 in the first half of the year. We have raised wages and living standards, and the Bank of England has cut interest rates five times because of the economic stability we have brought, which has reduced mortgage payments and lowered the cost of borrowing. This Government have increased public investment in capital spending by over £120 billion over the course of this Parliament, building for the future—something that the Conservative party failed to do. That is the difference that a Government with British values at their heart can make. At this month’s Budget, we will put those values into practice again, with fairness and opportunity for all so that we can secure our economy, strengthen our public services and lift living standards for the British people.
Question put.
Alcohol Duty: UK Wine Sector
Dan Tomlinson Excerpts(1 month ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Exchequer Secretary to the Treasury (Dan Tomlinson)
I am glad to be serving under your chairmanship, Mr Turner. I am grateful to the hon. Member for Farnham and Bordon (Gregory Stafford) for securing this important debate, and for speaking so eloquently in support of the UK wine sector. It is fantastic to hear him speak about the sector’s growth, as well as its continuing progress on exports, which is a really good thing. The irony is not lost on me, though, that he said that Treasury Wine Estates has some reservations about the Treasury’s tax policy—I will look into that.
I heartily echo the hon. Gentleman’s praise for the UK wine industry’s significant contribution to our economy, culture and tourism. As he mentioned, the statistics speak for themselves: we are the world’s second largest wine importer, bringing in 1.7 billion bottles in 2024. Sales of both imported and home-grown wine support hundreds of thousands of jobs, particularly in hospitality and retail. In recent years, as many Members have mentioned, more and more people have taken up work in the UK’s domestic wine sector, which is much like a dessert wine—small, but strong.
Industry figures suggest that more than 1,000 vineyards and 200 wineries contribute to our rural economy, with land under vine growing fivefold since 2005. The hon. Member for Weald of Kent (Katie Lam) listed many of the wineries in her patch; one of the challenges of being a Parliamentary Private Secretary, like my hon. Friend the Member for Hastings and Rye (Helena Dollimore), is that they do not always get to speak in these debates. However, I have been reliably informed by note that the two Members have the same number of vineyards in their constituencies—there may have to be a little Kent-based competition.
It is great to see that the number of home-grown products is increasing, with production exceeding 10 million bottles last year, and with sales rising too. This Government are committed to fostering an environment in which the wine industry, like its vines, can thrive and grow.
The hon. Member for Farnham and Bordon, as well as other Opposition Members, made important points about the UK’s alcohol duty system. Before I turn to those points, I will first acknowledge the Government’s wider work to support the wine industry through agricultural grants and export promotion. The Government have committed at least £200 million to the farming innovation programme through to 2030, and we champion domestically produced wines on the international stage. For example, we showcased English sparkling wine at the Osaka expo earlier this year.
As I have mentioned English sparkling wine, it is important that I also mention the contribution of my hon. Friend the Member for Edinburgh South West (Dr Arthur), who talked about Scotland’s growing wine industry and the impact it is having on high streets. He also said that, in designing a sensible tax system, it is important that it takes account of the impact on the health of the population, which I think is reflected in the current system.
Members have spoken about the previous Government’s reform of the alcohol duty system. I am a Labour MP, so it is not lost on me that I am defending an alcohol duty system implemented by Conservative MPs, and that Conservative MPs are opposed to a system implemented by their own Government. We learned in opposition that it is not always wise to oppose the decisions made by our party when it was previously in government. Indeed, I think that one of the reasons we won the last election is because we were able to talk proudly and confidently of the achievements of previous Labour Governments. Anyway, it is up to Opposition Members to choose which aspects of previous Government policy they wish to support, or not.
As others have mentioned, the alcohol duty system is now based on the principle of taxing alcohol by strength, which means that alcohol duty increases with a product’s ABV. Although it is true that some higher-strength wines have faced increases in duty, that has been balanced by reductions in duty for lower-ABV wines, including some British wines. Prior to the reforms, wines with 11% ABV and wines with 14% ABV both paid the same duty per bottle. Now, there is a difference: wines with 11% ABV pay £2.43 in duty and wines with 14% ABV pay £3.10.
I am interested in the point made by the hon. Member for Weald of Kent about the extent to which British wine companies are producing wine with an ABV below 8.5%. I will consider that point. Indeed, I was thinking the same thing when I was reading up on this topic earlier today. However, I know the changes were introduced alongside conversations with industry representatives, and those conversations will continue as the changes bed in.
In recognition of the big changes that were implemented, it is right to assess their impacts after they have had time to take effect. We have said that will take place at least three years after their introduction in 2023. I will take that work forward next year with officials from HMRC, and I would welcome evidence from Members in this Chamber, including representations from the businesses and communities they represent, and of course I will engage with the wine industry.
The hon. Member for Farnham and Bordon said he had three points, but I think he had four in the end, including on the cumulative impact—I will try to address all four. On his third point, yes, we will consider in the round all aspects of the system’s current design. I do not want this review to be one that does not properly interrogate the design of the system, and I also do not want to pre-empt where it will get to, but in my role overseeing that review, I want us to look carefully at the design of the system as a whole. I think the system is sensible and fair, but I also know there are challenges that have been raised by Members today.
On the hon. Member’s big point about cuts or freezes to alcohol duty, it is worth realising that any such cuts or freezes would come at a cost to the Exchequer. The Office for Budget Responsibility produces the costings for any changes to taxation policy.
Dan Tomlinson
The hon. Gentleman might think that some of the OBR’s assumptions are wrong. I encourage Members, if they have evidence, facts or figures that they want to put to the OBR on the elasticities—as I believe it is called when a tax rate is changed and has an impact on consumption—to send them in. The Government are confident in the OBR’s independence, but I will always want to ensure that we are putting forward accurate costings. In this instance, I believe that the OBR is in the right place when it comes to the elasticities, but Members should feel free to send in their own representations.
It is worth noting that freezing alcohol duty this year, if inflation was around 4%, would be equivalent to a 3.85% duty cut. Using HMRC’s published ready reckoner, this would cost the Exchequer roughly £440 million a year. It is right, therefore, that any decision on alcohol duty weighs the impact on overall revenues carefully. That is what I am confident that the Chancellor will do when she makes a decision in the Budget in just a few weeks.
I will try to run through some of the points made by Members in this debate. The hon. Members for Bridgwater, for Weald of Kent and for Farnham and Bordon, and the Opposition spokesperson, the hon. Member for North West Norfolk (James Wild), raised the issue of small producer relief for wine. That question was considered in detail as part of the previous Government’s review into alcohol duty, and as I have said, we will look to review it three years after the implementation that took place on 1 August 2023. We want to gather data and really look at the impact of the reforms. If Members want to come forward with proposals for change, then they should do so.
Dan Tomlinson
Of course. I was looking forward to my first intervention, and will happily give way.
Charlie Maynard
I am just going to make a plea. HMRC is losing nearly £1 billion a year, which is incredibly bad news, and there are massive frictions and admin costs on business. Why would we not just go back to the easement? We can stand looking at this massive problem, or we can face facts and deal with it—and actually get money for the Exchequer.
Dan Tomlinson
We will look in the round at the changes that were implemented in 2023. I do not want to rush to implement something that does not work for the alcohol industry as a whole and is not fair or proportionate. But I understand the points that have been raised—they are well made and I have been listening.
The hon. Member for Farnham and Bordon also raised the cumulative impact on the wine industry of various changes that have been made by previous Governments, and the current Government, including around packaging. That does go to a big-picture point that is contested in this place about the tax rises implemented in the Budget last year. It is my view, and the view of the Chancellor and the Government, that in the round we had to make those decisions to raise revenue. I understand that it led to additional taxation on businesses, but that was on the largest businesses—around half of businesses, those with the fewest employees, are not paying any additional national insurance as a result of the changes last year. But I understand that there was an impact on those firms that had to absorb those additional taxation levels.
The Government think that it was the right decision in order to raise revenue to fund our public services and ensure that borrowing was not increased more than is sustainable. It is right that the Government ensure that we borrow to invest in the future of this country, something I wish the previous Government had done when interest rates were down at 0.5%. On a serious point, as the Minister with responsibility for taxation policy and the Treasury, I am looking closely at the impact of all the changes that have been introduced in previous years that require compliance and burden for business. We have to look carefully at them, because we want to see businesses growing, thriving and being able to hire more people and expand.
On business rates specifically, the Chancellor will come forward at the Budget with the permanently lower multipliers for retail, hospitality and leisure. That policy was set out in our manifesto and we will announce the detail at the Budget.
Let me turn to the Liberal Democrat spokesperson, the hon. Member for Witney (Charlie Maynard). I was glad to hear a shout-out for my hometown of Witney—I went to Wood Green school in his constituency; it is a wonderful part of the world. He, too, raised the point that one of the challenges with the move to the new system is the additional bands. If we look at it on a chart, the line is flat because the rate is the same, but of course I am aware that, depending on the ABV, producers are at different points on that line. That is something they have to deal with, and he is right that it is maybe more of a challenge for those who are producing wine and growing products. I do understand that; the point was well made, and there will be a review of the tax three years after implementation.
The hon. Member for Aberdeenshire North and Moray East (Seamus Logan) mentioned Scotch whisky and was interested to hear from me about the support that the Government are providing to the industry. I would say that the industry is set to be one of the biggest beneficiaries from the trade deal with India, which is set to reduce tariffs from 150% to 75% initially and then to 40% over time.
I do not think I have reached every single question that Members raised, but I hope they feel that I have covered the points that were made. To conclude, our Government are dedicated to supporting the UK wine industry through a range of measures, including ensuring an alcohol duty system that is fair and proportionate. I thank the hon. Member for Farnham and Bordon for securing the debate. I share his pride in this growing British success story and look forward to further discussions, including with WineGB and the Wine and Spirit Trade Association—tomorrow, in fact—about how we can build a prosperous and sustainable future for UK wine.
Oral Answers to Questions
Dan Tomlinson Excerpts(1 month, 1 week ago)
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Ben Maguire (North Cornwall) (LD)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
Ministers from Government Departments have met organisations including the National Farmers’ Union, the Tenant Farmers Association, the Country Land and Business Association, the Central Association of Agricultural Valuers, the Ulster Farmers’ Union, and the NFU in Scotland and Wales. I also met farmers in the north-east of England only last month. After listening and considering the independent Centre for the Analysis of Taxation report, the Government believe that the approach we have set out is an appropriate one.
David Smith
I am proud to support a Government who believe in progressive taxation, as I am sure the Minister does—that those with the broadest shoulders should bear the greatest burden. Under the CenTax minimum share rule proposal, farm estates where at least 60% of the estate is used for farming would receive relief of up to £5 million per person. This would reduce the risk of family farms being broken up, place a greater burden on very large estates and those gaming the system, and double the forecast tax take. Will the Minister direct Treasury officials to take another look at the CenTax proposals on APR prior to the Budget?
Dan Tomlinson
I thank my hon. Friend for his question—he is a strong advocate in this place for his constituency and for farming communities. Just last week, he made the point to me that our farmers and farming communities are crucial to economic and social and cultural life. Along with other Labour colleagues from rural constituencies, he has been working hard to raise the points that matter to farmers, and this Government are doing all we can to support our farming industry.
On the specific point about CenTax’s proposals on minimum share, I do not need to direct officials to look at them, because I have read the proposals. It is worth noting that the number of losers from the proposed policy would be more than double the number of people affected by the changes that this Government are making. Over 1,000 estates would be affected by the proposals put forward by CenTax.
Sarah Dyke
A Liberal Democrat freedom of information request revealed that the Treasury recently had plans to review the family farm tax. Farmers across the country are fed up with bickering and infighting from a Government who just do not understand them, but there is still time to act and end months of confusion and misery. Will the Chancellor and her Ministers meet farmers from Glastonbury and Somerton, and me, to provide some clarity and reveal the full extent of the Government’s discussions on revoking this damaging family farm tax?
Dan Tomlinson
Just a few weeks ago, I met farmers to discuss this and other important issues. The Government believe that even though this tax is a difficult change—I do not shy away from that fact—it is the right change to make, because it is a method of raising revenue in a fair way that helps contribute to restoring the public finances.
Ben Maguire
I kindly ask the Chancellor to please respond to my joint letter on Cornwall’s future funding, sent last week, which asks her to meet all Cornish MPs without delay. Alternative proposals to this damaging family farm tax—such as a clawback scheme, as proposed by the NFU, or increasing the threshold to £5 million—would raise more in revenue than the Government’s current plans. In contrast to her speech this morning, the Chancellor now has the opportunity to do both the right thing and the popular thing. The mental health toll on farmers is becoming completely unsustainable, so please, Chancellor, rethink this damaging policy.
Dan Tomlinson
I would be happy to meet the hon. Member and Members from across Cornwall to discuss the issues raised in the letter to the Chancellor.
Maya Ellis (Ribble Valley) (Lab)
As the Minister has just highlighted, the main argument against the CenTax proposals for APR now seems to be a fear that more people will be subject to inheritance tax under those proposals, even though most of those extra people are essentially private homeowners with agricultural fields. Does he agree that Labour values call for supporting hard-working farmers, who are the backbone of this country, over millionaire homeowners who have money in their wider estate to pay the inheritance tax?
Dan Tomlinson
I thank my hon. Friend for her question, and for her time last week—it was good to meet her to talk about important issues affecting farmers and rural communities. On balance, the Government believe that the policy position that was set out at last year’s Budget is the right one, and we will be continuing with it.
James Wild (North West Norfolk) (Con)
This morning the Chancellor failed to take responsibility for her poor choices in a Budget that whacked up taxes, borrowing and spending, and made it clear that she would once again break her promises on tax. The farmers whom I have met have been in tears about the family farm tax, not because they are worried about losing their jobs but because the Chancellor is putting generations of farming at risk. Can the Minister tell the House whether the Chancellor has actually met any farmers, the NFU or other farming organisations to understand the impact of her policy and why she should scrap the family farm tax?
Dan Tomlinson
The Government have assessed the impact of this policy. According to the estimates that we issued at the time of last year’s Budget, about 500 farms would pay additional tax as a result of the changes; those numbers were contested by all Opposition Members, but the CenTax report—which the hon. Member has said that he and others are interested in reading—backs them up and confirms the Government’s estimates.
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.
Caroline Voaden (South Devon) (LD)
Shaun Davies (Telford) (Lab)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
HMRC is committed to improving day-to-day performance and the customer experience. Call waiting times in the first quarter of this year were half as long as in the same period last year, which is good news for customers. At the 2025 spending review, the Government allocated £500 million to make HMRC a digital-first organisation, and that transformation is well under way.
Shaun Davies
I welcome the Government’s £20 million investment in relocating and upgrading Telford’s HMRC office, with 1,000 members of staff working hard to deliver the best service possible. Will the Minister meet me and Telford and Wrekin council to discuss how the new HMRC campus can be at the forefront of improving the customer experience, including by harnessing the potential of AI and tech, as well as partnering with the start-up sector?
Dan Tomlinson
My hon. Friend is a very strong advocate for Telford, both for jobs in the private sector and for those in the public sector that we are able to support in his community. I am glad to hear that he, like me, is proud of HMRC’s Telford campus and wants to see it play a key role in improving customer experience through innovation, AI and digital technology. I will be very happy to meet my hon. Friend to discuss those issues.
Esther McVey (Tatton) (Con)
The Chancellor has justified her lack of a licence for renting out her house as an “inadvertent error”, but HMRC is never prepared to accept that people make inadvertent errors. Will this now change, or does the Chancellor expect to be treated differently from everyone else who makes an inadvertent error?
Dan Tomlinson
I am not sure that the matter that the right hon. Member just raised has much to do with HMRC.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Treasury Committee looks at HMRC’s customer service. We have recently seen people having their child benefit stopped, ostensibly on the basis of travel data. Could the Minister explain what he is doing to resolve this issue and what data HMRC based its information on?
Dan Tomlinson
I thank my hon. Friend for her service on the Treasury Committee; she is doing a sterling job as its Chair. This is a really important issue. Last year HMRC undertook a pilot to try to find a way to reduce fraud in the child benefit system. That measure is expected to save £350 million over the next five years, and we have already managed to prevent £17 million in wrongful payments, but my hon. Friend is right to say that a very small number of claimants had their child benefit incorrectly removed. I am really sorry that that happened. HMRC is writing to those who have been affected and ensuring that people who should get their child benefit payments do receive them.
Vikki Slade (Mid Dorset and North Poole) (LD)
My constituent Hollie from Wimborne applied for a self-assessment refund of just £300 in April. When she chased it in June, she was told it had gone to a specialist tax team, with no reason and no time frame given. She complained in August, but it is now November, and she has heard nothing. While she may be owed only £300, this is happening around the country. Can the Minister tell me whether he thinks seven months is a reasonable time within which to receive a basic refund, and what the Department is doing to speed things up?
Dan Tomlinson
I thank the hon. Member for raising her constituent’s issue, and I would be happy for her to write to the Department about it. Even though it is not appropriate for me to get involved in an individual taxpayer’s affairs, I hope the Department can improve on that service. We have improved the response rates for both people making phone calls and people getting in touch via the post, but of course there is always more we can do.
Wendy Morton (Aldridge-Brownhills) (Con)
Maureen Burke (Glasgow North East) (Lab)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
The Government value our world-leading distilling industry and recognise that the spirits sector has found recent economic conditions challenging because of both tariff uncertainty and high energy costs. The Scotch industry is set to be among the biggest beneficiaries from the landmark trade deal that this Government secured with India, which is set to reduce tariffs from 150% to 75% initially, and then to 40% over time.
Maureen Burke
Scotch whisky is one of Scotland’s greatest products, with high demand at home and across the globe, but many are worried about the challenges facing the industry. The Scotch Whisky Association is calling for a multi-year freeze on excise duty for spirits to relieve some of those pressures and to back the wider hospitality sector. Will the Minister join me, GMB Scotland and others by committing to freeze spirits duty in the Budget later this month?
Dan Tomlinson
My hon. Friend is a strong advocate for the businesses and industry in her constituency and in the areas nearby. As she is aware, the vast majority of Scotch is exported, so it is not subject to UK excise taxes. Nevertheless, the Government appreciate the importance of the domestic market to Scotch producers, and I do acknowledge the wider pressures facing the industry. On her specific question, the Government’s baseline assumption remains that alcohol duties will be increased with inflation each year to maintain their real-terms values, which means that any cut or freeze would come at a cost to the Exchequer. Of course, as with all taxes, the Chancellor—not a junior Treasury Minister—will confirm her decisions on alcohol duty as part of the Budget process in the normal way.
Dan Tomlinson
I thank the hon. Member for his question, and I remind him of the landmark trade deal that this Government secured with India. He criticises the Government for not doing enough, but we have secured a trade deal with India, the EU and the US. We are also reducing tariffs to support industry and investing in Scotland with a record-breaking Budget to support jobs, investment and growth, and the public sector across the whole of Scotland.
Siân Berry (Brighton Pavilion) (Green)
Sally Jameson (Doncaster Central) (Lab/Co-op)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
We consulted on measures to simplify gambling duty and improve compliance. The responses from the consultation have now been analysed, and a response will be set out at the autumn Budget. We recognise the social and cultural value of horseracing, which is why we are listening to the horseracing sector as we consider our response to the consultation.
Sally Jameson
In Doncaster we have historic links to the horseracing industry, and we know at first hand the economic value it brings to our community and the country. Will the Minister agree to meet the British Horseracing Authority to discuss the potential impact on harmonisation and the impact that an increase in betting duties will have on the viability of racecourses, jobs and levy payments that support horseracing and the wider sporting industry?
Dan Tomlinson
My hon. Friend is a strong advocate for the horseracing industry and the jobs and economic activity in her constituency. I was glad to meet her just last week to discuss the topic she raises. As part of the consultation, there has been engagement with the horseracing industry to identify any potential unintended consequences for the sector and consider how they might be mitigated. As I said, the Government will respond to the consultation at the Budget. In response to her question, yes, I will happily meet with the BHA.
Jack Rankin (Windsor) (Con)
Both Ascot and Royal Windsor racecourses are incredibly important to my constituency. I have visited both, and I refer the House to my entry in the Register of Members’ Financial Interests. On this issue, I urge the Minister to heed warnings from across the House and, more importantly, the industry. I cautiously welcome the briefing to The Telegraph at the weekend. Racing should be treated very differently from online casinos and gaming. Can he assure the House that taxes on horse and greyhound race flutters will not increase?
Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)
Lewis Cocking (Broxbourne) (Con)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
The House will be aware that the 5p cut to fuel duty is set to expire in March 2026, and as with other tax policies, the Chancellor will make a final decision on fuel duty rates at the Budget in the context of the public finances.
Greg Smith (Mid Buckinghamshire) (Con)
Dan Tomlinson
Under the last Government, time and again, council tax went up and up and the funding for local councils went down and down. We have left councils on their knees, struggling when it comes to special educational needs, temporary accommodation and funding for homelessness and adult social care. This Government will make the right decisions when it comes to funding our councils and having a fair property taxation system.
Justin Madders (Ellesmere Port and Bromborough) (Lab)
Dan Tomlinson
I thank my hon. Friend for raising this issue. The Government are fully committed to doing all they can to supporting the UK car industry to grow, invest and provide employment in constituencies such as his and in other important sites across the country. Specifically on the employee car ownership scheme, we should be clear that private use of a company car is a valuable benefit to an employee but it is also right that company car tax is paid on it, ensuring fairness with other taxpayers who pay tax on cars provided by their employers. That said, I would be happy to meet—
Mr Speaker
Order. Members are meant to shorten their questions for topicals.
Dan Tomlinson
We will be introducing permanently lower rates for those businesses in the Budget.
Kenneth Stevenson (Airdrie and Shotts) (Lab)
Jerome Mayhew (Broadland and Fakenham) (Con)
Economists have told the Chancellor that stamp duty is a terrible tax because it damages growth. The Government’s response is to double stamp duty on a £300,000 house. Why?
Dan Tomlinson
In the end, when it comes to property taxation, we have to make sure that we have a fair and sustainable system that brings in revenues from a range of sources. Scrapping individual taxes without any realistic and plausible plan to fund them is the road to economic ruin in this country. We have seen what happened in the past when Conservative Governments came forward with plans to cut taxes without the means to afford it. We on this side of the House will not be making that mistake.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
Stephen Flynn (Aberdeen South) (SNP)
Charities, trade unions, academics and industry are united in their view that replacing the energy profits levy is not just an economic imperative, but a moral one. How many more of my constituents need to lose their jobs before the Government do just that?
Dan Tomlinson
At the Budget we will set out clearly our proposals for the future of the energy profits levy and the oil and gas mechanism. We will ensure that we can provide the certainty to business on the future regime as soon as we can.
Sam Rushworth (Bishop Auckland) (Lab)
People in Crook and Tow Law are excited by the £20 million that the Chancellor is investing in our area through the pride in place scheme. After years of decline under the previous Government, which failed to spend most of the levelling-up money that they promised our community, what assurance can she give me that this time it will be local people in the driving seat and that we can spend the funds?
Tim Farron (Westmorland and Lonsdale) (LD)
Will the Chancellor consider in her Budget closing the loophole in small business rates relief that allows wealthy second homeowners to have their homes on the rental market for 72 nights a year and therefore avoid paying any tax whatsoever? My constituents working the minimum wage are having to subsidise them. That is not fair, is it?
Dan Tomlinson
We will set out the changes that we will make to business rates at the Budget.
Mr Richard Quigley (Isle of Wight West) (Lab)
The Government’s pride in place programme presents a welcome opportunity for communities across the country to once again feel proud of where they live, especially after years of austerity and neglect under successive Conservative Governments. However, the Isle of Wight received none of that funding, which feels like an oversight, given the challenges our island faces, not least with cross-Solent transport. Will the Chancellor assure me that she is doing everything possible to ensure that islanders are not left behind and that they, too, can benefit from this programme and feel pride in our island once again?
Ben Obese-Jecty (Huntingdon) (Con)
In the past few weeks, I have visited two incredible local businesses: Saragusta Spirits, a local gin distillery, and Williams Family Wines, an award-winning winery. However, such entrepreneurial success is being hampered by small producer relief adding significant additional duty cost and preventing businesses from growing. With English viticulture and wines enjoying a surge in popularity, will the Chancellor consider extending small producer relief to drinks above 8.5% ABV, and if not, why not?
Dan Tomlinson
All decisions relating to tax will be made at the Budget in late November.
Juliet Campbell (Broxtowe) (Lab)
Claire founded Little Foxes Play Town in my constituency. It caters for and is enjoyed by children and parents in the community. However, Claire’s business has struggled with the cost of business rates and now with the requirement to pay VAT. Will the Minister assure me that the change in business rates will benefit small business owners such as Claire and ensure that they can continue to serve their local areas?
Dan Tomlinson
One important thing about the business rate reforms that the Government will undertake is that we support small businesses in growing and investing. They are the backbone of our communities and our country. The reforms that we will set out at the Budget—and on which we will continue to have conversations with Members across the House and with businesses—will, I hope, continue to support and enable investment in our small businesses.
Adrian Ramsay (Waveney Valley) (Green)
This morning the Chancellor spoke of difficult decisions for everybody but the ultra-rich. With billionaire wealth soaring while living standards for most people fall, does she agree that it is time to double down on gross inequality in our country and tax extreme wealth fairly, so that we can tackle the cost of living crisis, end child poverty and invest in our public services?
Terry Jermy (South West Norfolk) (Lab)
So often the farm is the very core of a rural economy. Could my hon. Friend confirm what assessment has been made about the impact of proposed changes to agricultural property relief on growth opportunities in rural areas and the viability of rural communities?
Dan Tomlinson
As I said earlier, the proposals made by CenTax and others in relation to agricultural property relief would result in twice as many farms paying more tax as are planned to do under the Government’s proposals. We think our proposals are right and fair.
Carla Lockhart (Upper Bann) (DUP)
Asylum accommodation costs are set to quadruple in Northern Ireland, from £100 million to £400 million, and across the UK to £15.3 billion in the next decade. Before hiking taxes again, should the Chancellor not look at where the waste really lies, when we are funding an asylum system that is failed, chaotic and expensive? This is not racist or far-right; it is looking after our own citizens who cannot pay their bills.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
Between 2010 and 2020, the personal tax allowance threshold went up by 9.2% on average per year. However, it was frozen by the previous Government in 2021, and the freeze has continued under this Government. Will the Chancellor consider unfreezing the personal tax allowance and adjusting the additional rate and higher rate bands to compensate, to ensure that tax receipts are maintained?
Dan Tomlinson
It is important to realise that changes to taxation, if they are unfunded, will mean additional borrowing. This Government will ensure that we do not return to austerity, as the Conservatives did, but nor will we return to additional borrowing, which causes interest rates to rise, causes the cost of mortgages for families to go up and leads to economic chaos. That is not the approach this Government will take.
Bill Presented
Dairy Farming and Dairy Products Bill
Presentation and First Reading (Standing Order No. 57)
Sarah Dyke presented a Bill to make provision to require the Secretary of State, in any negotiation relating to an international trade agreement, to seek to ensure that the agreement does not result in any detriment to UK dairy farmers; to make provision about the labelling of dairy products imported from outside the UK; to make provision about fair dealing between dairy farmers, processors and retailers, including in relation to pricing; to provide for certain additional contractual protections for dairy farmers; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 28 November, and to be printed (Bill 323).
Family Farming in Northern Ireland
Dan Tomlinson Excerpts(1 month, 2 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
It is a pleasure to serve under your chairmanship, Mr Efford, for my first time speaking from this position in this fantastic Westminster Hall. I congratulate the hon. Member for Upper Bann (Carla Lockhart) on securing the debate, and she spoke with passion and with personal insight from her own family farming background. She spoke clearly about the impact on jobs and employment and on communal life in Northern Ireland, about how essential farmers are to so many of the villages, towns and communities in Northern Ireland and across the whole country, and of course about the importance of farming to family life.
The decision to reform agricultural property relief and business property relief from next April was not one the Government took lightly. Over the past 12 months, the Government have listened to the concerns of the hon. Member for Upper Bann, of other hon. Members and of external organisations. The Government and I recognise the strength of feeling on this topic in Northern Ireland and elsewhere across the country. But having listened and discussed the question with a range of stakeholders, the Government believe that the approach set out at the Budget last year is the appropriate one.
I recognise and deeply respect the contribution that small businesses and farms make to the economy in Northern Ireland and across the United Kingdom, but I and the Government also recognise the need to restore economic stability, fix our public finances and contribute to funding our public services. As well as all this, we need to make sure we raise taxes in a way that is fair for all of us.
Tim Farron
Will the Minister take a look at the University of Cumbria report that shows that upland farmers in all four corners of the United Kingdom will, at the end of the transition, will be earning only on average 55% of the national minimum wage—barely half the living wage? Those are the same farms, often worth £2 million or £3 million on paper, that may have to spend £20,000 a year to pay off the tax. How does he think that is fair and how does it raise money for the Government coffers in a sustainable way?
Dan Tomlinson
I will happily look at any report any Member recommends I read, so I encourage the hon. Gentleman to send it my way.
Since we took office, the Government have taken a range of decisions to seek to restore economic stability and raise revenue to help support our public services, because it was vital to attempt to sort out the mess we inherited, so that we can invest again in the future. The decision to reform APR and BPR was one of the decisions that enabled us to do that.
Under the current system, the 100% relief on business and agricultural assets is heavily skewed towards the very wealthiest estates. According to data from His Majesty’s Revenue and Customs for 2021-22, almost half of agricultural property relief across the UK—40%—was claimed by just 7% of the estates that made claims. That is £219 million in tax foregone from just over 100 estates.
It is a similar picture for business property relief, which is linked and is treated in the same way under the reforms, with more than 50% of business property relief claimed by just 4% of estates. That is £558 million in tax foregone from just 158 estates. That contributes to the very largest estates paying much lower tax rates than smaller estates and everyday people up and down the country.
Jim Allister
In that context, does the CenTax report not make evident sense? If we impose the full-blooded inheritance tax on the top end—on those above £10 million—are we not reaping the same tax return, while at the same time not punishing and driving out of existence those at the bottom end? Is that not logical, and is that not right?
Dan Tomlinson
The hon. and learned Member raises the CenTax report, and it is worth noting some points about the analysis in that report. First, the Government have consistently said that around 520 farms would be paying additional inheritance tax as a result of the reforms announced at the Budget last year.
Members from all parties have been turning to the CenTax report as an independent analysis of the Government’s reforms. That report agrees with us on the number of farms that will be affected. That independent analysis conducted separately from the Government comes out with the same conclusion on the number of farms that will be affected and it says that its proposal—the minimum share proposal, which the hon. and learned Member for North Antrim mentions—would more than double the number of estates that would pay additional inheritance tax. I do not think the right way forward is to have the number of estates that would be affected increase from about 500 to, I think, about 1,200. I have looked at the report, which has been raised by Members from all parties, but I do not think it is the silver bullet that others have concluded it could be.
The context I just set out is why we are changing how we target agricultural property relief and business property relief from April next year. We are doing so in a way that maintains a significant relief for estates, including smaller farms and businesses. Individuals will still get 100% relief for the first £1 million of combined business and agricultural assets. I know that Members know this, but it is worth setting out the position again. On top of that amount, there will be a 50% relief. That means that inheritance tax will be paid at a rate of up to 20% rather than the standard 40%.
Robbie Moore
A £1 million threshold is nothing when we take into account the value of farmland, a cottage, a farmhouse, growing crops, stocks in store, livestock and machinery valuations—all of which will be taken into account at the valuation of an estate on death. A £1 million threshold is nothing before a 20% IHT liability is put on that estate. I urge the Minister to look at this again. Farmland values are significantly higher in Northern Ireland, and I reiterate my point that Northern Ireland farmers will see a greater impact from the £1 million threshold.
Dan Tomlinson
I do not agree that £1 million is nothing. It is a significant increase and a significantly higher threshold than that for anyone who does not have access to APR or BPR. I understand the point about land values in Northern Ireland, but at the same time, as far as I am aware, farms in Northern Ireland are smaller than those elsewhere. It is also worth bearing in mind that the £1 million relief comes on top of the spousal exemptions and nil-rate bands, so, depending on individual circumstance, up to £3 million can be passed on by two people, free of inheritance tax, and, as has been mentioned, the payment can be spread over 10 years, interest free. That policy design is not seen anywhere else in the inheritance tax system.
Carla Lockhart
The Minister is certainly sticking to the script, but can he give us even an opening through the door of the Treasury? Will he open that door and speak with the farming unions across the nation?
Dan Tomlinson
I thank the hon. Lady for that intervention and hope that today we have been able to have that open and public discussion to share the different views on this policy. I would be happy to continue the discussion with her and others who think that the issue is important. Just last week, I made sure to speak to individual farmers to understand their perspectives on the policy. I will continue to engage with people who will be affected by the changes, and with Members in this place. I hope that we can continue those conversations across the aisle.
Let me make progress—I can see the time is slipping away from us. Overall, the reforms are expected to result in up to around 520 estates claiming UK agricultural property relief, including those also claiming BPR, paying more inheritance tax in 2026-27. Almost three quarters of such estates will not pay any more tax as a result of the changes, based on the data. As I have already mentioned, CenTax has looked at the Government’s figures and has reached a similar conclusion. Its work concludes that of the estates that are affected, half will see an increase in their effective inheritance tax rate of less than 5 percentage points, and 86% of those estates could pay their entire inheritance tax bill out of non-farm assets.
Ben Goldsborough
I congratulate the Minister on his first appearance in Westminster Hall. My question is about that 5 percentage point change. This year has been a terrible year for yields, especially in South Norfolk with the droughts. That hits the profitability of farming, which is non-existent—there is not enough profitability in farming. Will the Minister share what investigations the Treasury has done on that fluctuation in profitability and the ability of our farmers to pay the 5 percentage point increase he mentioned?
Dan Tomlinson
The figures that I raised were from research carried out by an independent organisation, CenTax. Profitability and incomes change from year to year, of course, and can change for different types of farms—we can see that beef prices, for example, are higher this year than they have been in the past, and the Government are aware of that.
Overall, we understand that the reforms to inheritance tax generate strong views from Members from Northern Ireland and from all over the country, who are here to represent their constituents. I understand that, and I respect and admire the work of Members on both sides of the House in bringing their residents’ concerns to this place.
I know that the questions about inheritance and family businesses are deeply personal, and I do not pretend that such changes are not difficult, but I believe that the reforms get the balance right between supporting farms and businesses and funding our public services. They mean that assets will be taxed at a lower rate than most others, and, in this tough context, I think that the Government have made the right decision. I thank the hon. Member for Upper Bann again, as well as all the Members who have intervened today.
Question put and agreed to.
Post Office Capture Redress Scheme: Tax Exemptions
Dan Tomlinson Excerpts(1 month, 2 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
On 19 June 2025, the Department for Business and Trade announced a new compensation scheme that offers redress to postmasters affected by errors in the Capture software, which predates the use of the Horizon software. DBT has set up the capture redress scheme to compensate postmasters.
The Government are committed to ensuring that postmasters are treated fairly and will legislate to formalise tax exemptions shortly, ensuring that no income tax, national insurance contributions, capital gains tax, corporation tax, where applicable, or inheritance tax will be payable for redress received under this scheme.
[HCWS994]