Finance Bill

Drew Hendry Excerpts

2nd reading
Wednesday 13th December 2023 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House, while approving the changes to taxation of tobacco in the Finance Bill and full expensing being made permanent, declines to give the Bill a Second Reading because it fails to make a much-needed reduction in VAT for the hospitality and tourism sectors, and fails to introduce measures through the tax system that would help alleviate poverty.”

It is a pleasure to follow the Chair of the Treasury Committee, on which I serve, even though she is at odds with the London School of Economics and the University of Warwick on non-dom status—we might return to that later.

The problem with this Bill is not so much what is in it but what is not in it. For example, full expensing is being made permanent, which is laudable and is to be supported, but the Minister and, indeed, the hon. Member for Ealing North (James Murray) did not mention that choices are being made that fail to support families, that make people poorer and that reduce community resilience and sustainability, which is no way to grow an economy. There was no mention of tackling the growing cost of living crisis that people face every day. There was nothing on rents, mortgages, food bills and, most of all, energy costs, as we go deeper into winter. The Minister is an affable person, but he has a brass neck as wide as the Dispatch Box to say that the Government are looking to invest in public services—I will come back to that in a moment.

Today, the Bank of England has told us that the proportion of mortgage balances in which the borrower is behind on payments is the largest in six years. The SNP asked for direct help for people: a £400 energy bill rebate, a social tariff on energy, a lower price cap, mortgage interest tax relief and help for tourism businesses through VAT adjustments. Of course, there could have been much more, but we got none of that from the Chancellor or from this place.

Instead, the Government turned a deaf ear to the inflationary costs for households, in addition to starving the public sector of funds. Councils in England are already going bust: Labour-controlled Birmingham, Hackney, Croydon and Slough; Conservative-controlled Northamptonshire and Thurrock; and Lib Dem-controlled Woking. The Local Government Association says that one in five councils—60 of them—is at risk of issuing a section 114 notice, but the Chancellor, while doing nothing to help families, is slashing public sector spending. Richard Hughes, from the Office for Budget Responsibility, has pointed out that there are £19 billion of public sector cuts coming:

“the real spending power of Government departments in England goes down by about £19bn over the forecast period”.

The Chancellor has also frozen capital spending, which has a direct negative impact on the spending available in Scotland. When Labour is asked what it would do differently, we hear only silence. There is no attempt by this place to protect public services. Scotland’s block grant has, over the past few years, been cut by 17% in real terms compared with 2010—the House of Commons Scrutiny Unit has given those figures. We all know that inflation running at 4.7%—do not forget that it was much higher last year, at 11.1%—means that any increase is dwarfed by inflation, so when Scotland’s block grant increases by just 1.4% next year, it is wiped out before it touches the sides. This is a savage real-terms cut for Scotland.

The Office for Budget Responsibility has said that living standards will be 3% lower in 2024-25 than they were before the pandemic, which is the largest reduction in living standards and the highest tax burden since the 1950s. There is zero growth forecast for the economy. The GDP figures from the Office for National Statistics show that for the three months to October 2023 there was no growth, and the economy actually contracted in October.

David Bharier from the British Chambers of Commerce says that this

“confirms the low-to-no growth cycle the UK economy is in.”

That, of course, takes us directly to the choices that this Government and this place have taken since Brexit. Labour, the Conservatives and the Lib Dems support Brexit, so the self-harm continues to cause difficulties.

The UK suffered a broad-based fall in both openness and competitiveness between 2019 and 2021. UK trade fell by 8%, compared with 2% in France. That is not my description; it comes from the London School of Economics. Our industries face severe challenges due to the Westminster-inflicted harm of Brexit, yet this place cannot point to a single benefit, beyond a made-up line about vaccines. Workforce shortages in tourism, hospitality, the NHS and care have all dramatically increased since Brexit—a Brexit that Scotland rejected and continues to reject. Yet for the people of Scotland, Westminster continues to show indifference.

The Institute for Fiscal Studies has pointed out that the 2p cut to national insurance in the National Insurance Contributions (Reduction in Rates) Bill is almost entirely eaten up by frozen tax thresholds, due to what is known as fiscal drag. Basically, this Government are giving with one hand and taking away with the other.

We have seen nothing on energy bills, which are due to rise again in January; nothing on food bills, while countries such as France and Canada take action; nothing on mortgages, on which the Government could have delivered some relief; and nothing to reduce VAT in a range of areas, where the Government could have taken action to help people and to ease inflation at the same time.

Although certain measures, such as full expensing being made permanent, are welcome, the biggest problem with this Bill is what it fails to address, and that is to help millions of households that are struggling with the cost of living. This place should have introduced a UK-wide version of the Scottish child payment to help families. It should have introduced a £400 energy bill rebate and a social tariff, and it should have provided for a household essentials guarantee.

The Government could have addressed unfair tax loopholes by abolishing the non-dom tax status. As I said, the University of Warwick and the London School of Economics reckon that would raise £3.6 billion per year. The Government could have done that and they could have decided to put a tax on share buy-backs, but instead they decided to set their sights on ill and disabled people, telling them to get back to work. It is worth remembering that, according to research in 2015 by the University of Liverpool and the University of Oxford, old-style incapacity assessments were “associated with” an extra 590 suicides across England between 2010 and 2013. This is a scandalous thing to bring to people at this time. Positive Money has noted that a windfall tax on the profits of the big four banks could have raised £20 billion in the first six months of this year, but the Government chose to do nothing.

The autumn statement delivered the worst-case scenario for Scotland and for our people. We needed proper funding for public services, but instead we face massive cuts—the health funding announced represents just 0.01% of the budget for 2024-25. We needed immediate help for people in our energy-rich country to pay for some of the highest energy bills across the nations of the UK.

By contrast, the SNP Scottish Government have ensured that people in Scotland pay less council tax than those in England, and we have frozen council tax for the next year in order to assist with the cost of living crisis. At the moment, people do not have to pay prescription charges or tuition fees, and they do not have to pay for eye tests. Under-22s and over-60s do not pay for bus travel. We also have the Scottish child payment and much more. In Scotland, we have used the limited social security powers we have to provide dignity, respect and support for people. Those are manifestations of the values of a progressive Government looking at every opportunity to help people who are struggling.

Imagine what would happen to all of that for the people of Scotland if this place had control of all of those issues, as Labour and Conservative Members want to happen. The Scottish Government are using all the levers at their disposal to help people through this cost of living crisis, but the implications of this Westminster fiscal event are clear; with the current reliance on Westminster for our capital grant allowances and limited borrowing powers, this place is stamping its austerity on Scotland. The path for Scotland is ever clearer: we need to be an independent country, to rejoin the EU and to have the ability to look after our own people.

--- Later in debate ---

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

This afternoon, we have been told that the measures in the Finance Bill and the wider autumn statement will deliver the growth that our economy urgently needs. Unfortunately, our leading economic institutions and economists do not seem to agree. Despite the Conservatives’ attempts to distract attention with headline figures, the independent Institute for Fiscal Studies has described their numbers as “sort of made up”. The Chancellor wants us to believe he is cutting taxes to give people back more of their pay packets, but the reality—as my hon. Friend the Member for Ealing North (James Murray) helpfully clarified for the Government—is an average tax rise for working people of £1,200, with nearly everyone who pays national insurance left with a bigger tax bill next year.

The Chancellor may want gratitude and praise for his recent interventions, but the reality is that growth forecasts have been cut for next year, the year after and the year after that. Meanwhile, the Bank of England is forecasting zero growth before 2025. The Conservative party might want us to believe that that is due to events outside its control and that things are starting to improve, but we learned just today from the latest GDP figures that growth fell in October, demonstrating that our economy is still going backwards despite all the warm words we have heard from Ministers. Taxes up, debt skyrocketing and the biggest hit to living standards ever recorded—that is the legacy of 13 years of Conservative government, however much they try to escape from the reality of their record. Only the Labour party has a clear plan to grow our economy by boosting wages, bringing down bills and making working people in all parts of the country better off.

As we have set out, there are a number of specific measures in the Bill that we support and, indeed, have long called for, so we will not oppose the Bill’s Second Reading. For example, we welcome the Government’s decision to heed the calls of industry and make full expensing for businesses permanent, because we know that if the UK is to turn a corner and we are to drive growth in the economy, we need to address our chronic lack of business investment.

While we wait for Committee stage to examine in great detail the decision to consolidate research and development tax relief schemes, it is worth noting that that is the latest of eight separate changes to the R&D regime that this Government have made since the last election. My hon. Friend the Member for Ealing North took us on a comprehensive tour of the constantly shifting tax policy we have seen from the Tories during this Parliament. It is now clear that by chopping and changing their business taxation and reliefs, from the annual investment allowance to the short-lived super-deduction, the Government have kept businesses guessing and not given them the confidence they need to grow.

The measures set out today do not scratch the surface when it comes to undoing the years of uncertainty for business and investors, while industry is crying out for stability and a long-term plan. The truth is that, despite the words of Conservative Members, the UK is now lagging behind our international competitors when it comes to private sector investment as a share of GDP, at a time when we cannot afford to drag our feet. It is Labour who will address this head-on with a comprehensive plan to boost business investment, working with our businesses to expand and compete with rivals in the US, Europe and Asia.

It is clear from this Finance Bill and the recent autumn statement that this Government lack the imagination, leadership and appetite to transform our economy after 13 years in power. Without that stability, certainty and long-term plan, our businesses will be left unequipped to deliver the growth that we so urgently need at this time. If we do not deliver that growth, the poorest in our society will pay the price as their living standards stagnate. The Government may want us to believe that our economy is turning a corner, but back in reality, millions of people are struggling to make ends meet.

The hon. Member for Ruislip, Northwood and Pinner (David Simmonds) asked what the greatest achievement of this Government is. Frankly, I think that is quite a dangerous question, but I will try to answer it for him anyway. Was it crashing the economy, or producing the shortest serving Prime Minister in the history of our country? Was it the tax burden being at its highest since the war, household incomes that will be 3.5% lower next year than before the pandemic or, my personal favourite, the latest growth forecasts showing us plummeting and plummeting even further? Was it—shall I turn to my own constituency—people having to make the choice between turning on the heating and eating? That is the reality facing people in the country after 13 years of a Conservative Government.

[Drew Hendry]

Will the hon. Lady give way?

[Tulip Siddiq]

I have one line of my speech left, but I will give way.

[Drew Hendry]

If, as the shadow Minister says, and I agree, the Bill is this bad, why is she voting for it?

[Tulip Siddiq]

We are not actually voting. [Interruption.] I think the hon. Member is slightly misguided, as we are not voting.

There are specific measures that we support, but, overall, we do not support the economic plan of this Government. If the Government are so sure about their economic plan, why do they not take their opinions to the public? Why do they not call a general election, and we will see who is smiling and smirking after that?

[The Exchequer Secretary to the Treasury (Gareth Davies)]

What a great pleasure it is to close this debate on the Finance Bill on behalf of the Government. I want to thank my hon. Friend the Financial Secretary, who is new in post, and to recognise the work of his predecessor and my constituency neighbour in Lincolnshire, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), who carried out a great deal of work on this Finance Bill in the run-up to the autumn statement.

I will address a number of the points raised in this very good debate—it was lacking on quantity, but high on quality from a number of sources—but before I reflect on the comments, let me reflect on the Bill. Be in no doubt but that this Finance Bill will mean that companies will pay less tax if they invest more. It will simplify and strengthen tax reliefs to bolster innovation, and it makes the tax system fairer and more secure. Taken together, the measures contained in it will strengthen our economy and create more opportunities for more rewarding work in every corner of this country.

I will now turn to the comments made by a number of colleagues. I will start with my hon. Friend the Member for West Worcestershire (Harriett Baldwin), the Chair of the Treasury Committee, who has carried out significant work on the tax simplification programme with her Committee. The Government are clear that we want the tax system to be simpler and fairer, and to support growth. As she mentioned, the Financial Secretary has written to her just this week setting out the progress we are making on simplification. This autumn statement, and the Finance Bill in particular, has a number of measures, not least the capital allowances and the R&D expenditure credit consolidation. This a step in the right direction, but we are not complacent and we will continue to go further.

I was heartened to hear cross-party support for full expensing. That is in the context of the lowest headline rate of corporation tax in the G7, but the autumn statement announcement, and the provision in the Bill, is a £10 billion-a-year effective tax cut, called for by the IFS, the CBI, the IOD, Make UK, and many other businesses across the country. It is also in conjunction—this is not in the Bill—with a business rates package that will see a freeze for more than 90% of rate payers in this country.

The hon. Member for Richmond Park (Sarah Olney) made a comment about the oil and gas sector. Let me be clear: this Government have resolute support for our domestic oil and gas sector, and its 210,000 jobs. She called for a “proper tax” on oil and gas companies, and I can tell her that we already have one of the highest rates of windfall tax in the world. The energy price levy strikes the right balance between providing support for families and businesses through an energy crisis—namely through the energy price guarantee, which effectively paid 50% of people’s energy bills—while also encouraging investment to bolster our energy security. Conservative Members want to see the sector’s profits reinvested to support our domestic economy, our jobs, and our domestic energy security. Investment allowances within the EPL help to do that, and the energy security investment mechanism, which I announced in June, will help to provide banks with certainty in their modelling as they provide financing to the oil and gas sector, and as they are part of the transition to net zero.

Along with SNP Members, the hon. Member also said that she would like an increase in tax on banks, but she failed to mention that tax on banks has increased in recent times from 27% to 28%. She failed to mention that the tax revenue contribution from banks has increased significantly from £17 billion in 2010, to more than £33 billion today. That helps to pay for our NHS, our education, our defence, and many other public services that we all rely on. We want our banking system to be internationally competitive, and to keep the 1 million jobs that it employs stable and secure.

Many Opposition colleagues have mentioned living standards, and they are right. Conservative Members care deeply about that issue. That is why as part of the autumn statement, we increased the state pension by 8.5% as part of the triple lock which, by the way, has brought 200,000 pensioners out of poverty since it was introduced by a Conservative Prime Minister. We have also uprated benefits by 6.7%, and uprated the local housing allowance, which will benefit 1.6 million households across the country. That was on the back of a £289 billion welfare budget. Under this Government 400,000 children have been brought out of absolute poverty, and we have seen the Government step in with significant support through two global shocks of covid and the energy price spike, with £500 billion of support to get people through.

[Drew Hendry]

Will the Minister give way?

[Gareth Davies]

I will not give way. We are going to proceed I’m afraid; the hon. Gentleman has had his chance.

I pay tribute to my right hon. Friend the Member for Witham (Priti Patel) who has great consistency when it comes to reducing the tax burden. She has made clear her views on our tax system, and we agree with her. We have a keenness to bring taxes down, but we will do it in a responsible way that is in line with sustainable public finances. She also made clear her consistent campaign on pillar 2, and we are very alive to her concerns. I am pleased that the Chancellor recently met and wrote to her, following the two fiscal statements. I understand her concerns about sovereignty, and I assure her that the pillar 2 provisions do not impact on sovereignty or indeed on competitiveness. The provisions in the Bill are technical amendments that we will discuss in more detail as it goes into Committee.

Finally I thank, as always, my hon. Friend the Member for Poole (Sir Robert Syms) for his positivity about our economy, which does not always get reported. For me, his critical point was about looking at the long-term performance of the economy, not just at the provisions we are putting in place. Instead of looking month by month by month, we should look at long-term provision.

In conclusion, in January this year, the Prime Minister set out his priorities for the Government. Three of them were economic and, since then, we have seen our inflation cut in half and our economy is expected to grow in every year of the OBR’s forecast period. That is half a decade of uninterrupted growth. Because we are reducing borrowing, debt is now forecast to fall. Put simply, we have turned a corner, and it is because of the actions of this Government, this Prime Minister and this Chancellor.

This is a Conservative approach through supply-side reform, and it is in stark contrast to the Labour party’s debt-driven ambitions. We know that its plans to borrow some £28 billion every year for green initiatives will put at risk the great progress that we and the British public have achieved. The independent Institute for Fiscal Studies has issued a stark warning for Labour’s plans. It said they will increase inflation and drive up interest rates, leading to more debt, higher rates, higher inflation, fewer jobs and more tax. That is the Labour party’s playbook. We cannot let that happen, and we will not.

We want an economy driven by enterprise, and by workers and by businesses throughout this country who push and strive, making us more competitive abroad and resilient at home. We want a tax system that pushes up businesses and workers who want to succeed, not that pulls them down when they do succeed. The autumn statement was a statement for growth, investment, work and reward. The measures in the Bill will deliver much of that, so I strongly commend the Bill to the House.

Question put, That the amendment be made.

Finance Bill

Drew Hendry Excerpts

Committee of the whole House
Wednesday 10th January 2024 Commons Chamber

[The Chairman of Ways and Means (Dame Eleanor Laing)]

I call the SNP spokesperson.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am only going to make some brief remarks on the two clauses. The UK Government are clearly scrambling to fix an economic mess of their own making, and the Bill is full of such measures.

On clause 1, during the autumn statement I welcomed this move, but it does little to deal with the damage to business that has been caused by the big grey elephant in the room that none of the parties wishes to mention, which is Brexit. Far from the ideal of removing red tape and decreasing bureaucracy, as we have heard thrown about in this Chamber, it has actually led to more red tape and more difficulties for business. This is just one of the measures the Government should be taking, among many others they must consider in future. I hope to come to those later in the debate.

The “years of uncertainty” that the hon. Member for Ealing North (James Murray) mentioned have indeed been years of uncertainty caused by this Government, but they have definitely been impacted by the Brexit that Labour now supports, along with the Liberal Democrats. People are struggling with a cost of living crisis, and it is affecting domestic sales too, so they need other fixes. Again, I will have some questions about that later.

Clause 2 and schedule 1—I hope this will be helpful for the Minister—are like trying to make a jigsaw puzzle with no box, no picture and just some random bits and pieces to try to plug together to make something out of. Productivity does not work without the skills required in research and development. We do not get the advance or the boost we need without that and, once again, the spectre of Brexit means that we have a skills shortage across the nations of the UK. That is particularly affecting Scotland, which needs its own immigration rules. It is something we would ask to have powers over, short of our call—it would of course be the absolute best result—for Scotland to have independence so it can make these decisions itself.

[Nigel Mills]

It is a pleasure to speak in this debate. I want to direct my remarks to clause 1, on permanent full expensing for the purchase of plant and machinery, which I discussed during the autumn statement and on Second Reading.

This is actually quite a radical and expensive policy. We have, probably for longer than all our lifetimes, given companies relief for capital expenditure using capital allowances. That was originally quite a generous 25% in the first year—I suspect that most plant and machinery had a longer life than that when the rules were produced. We have chosen to do that for all these years, rather than just letting a business deduct its own accounting calculation of depreciation, because we did not want the manipulation of tax deductions by businesses doing their tax returns. We chose to do it this way.

The tool that Governments of all colours for decades have had when the economy hits trouble is to give first-year allowances and various enhancements. I remember a 40% first-year allowance and a 50% first-year allowance. We have had full expensing up to £1 million, as the shadow Minister referred to. That has been the way of incentivising investment in a period of economic recovery for probably as long back as there has been a toolkit.

Now we have landed on permanent full expensing, so businesses get full relief on plant and machinery spend in the first year. What are the Government expecting to happen differently here? Are we expecting capital investment by businesses of more than £1 million a year that otherwise would not be economically viable and would never have happened? Are we expecting investment to be brought forward and to take place earlier than it otherwise would have? That would be entirely welcome and would probably modernise businesses, protect jobs and give them a chance to grow in a way that they perhaps would not have had, which is not a bad policy aim at all. Or are we just giving business an earlier tax relief than they otherwise would have had, whereby they bank that and are happy but it does not change behaviour?

It is hard to get behind the numbers on this measure in the Green Book. As I said earlier, the estimate at the end of the five-year period, and probably the first full year that making this permanent will make a difference, is a tax cost of £10.9 billion just for this measure. If we run the numbers, bearing in mind that businesses will already have had 25% tax relief on that same expenditure in that year, that means we expect a £55 billion higher claim to get tax relief in that financial year than otherwise would have happened. However, the Minister said that only £3 billion of that is estimated by the OBR to be additional investment that would not otherwise have taken place at some point. It suggests that we have a lot of investment being brought forward with a lot of more generous tax relief that would have happened anyway. Will the Minister explain what the Government are aiming to achieve and what is being forecast? Is the OBR being unduly cautious? That would enable us to understand how we judge whether the measure has been successful.

Are we expecting to see whole loads of investment in plant and machinery that never would have been viable before, or are we expecting to see it brought forward? If what we are getting is brought forward, at some time the cost should start to taper down, because this is not a new tax relief that businesses would not have already had; it is just an acceleration of tax relief and businesses will pay more tax in all subsequent years, because they are not getting the relief they used to get. The measure could cost £11 billion in the first year and gradually that would level down and in the fullness of time there would be no more annual cost, in effect. Can the Minister clarify that?

It is not immediately clear how the Government plan to assess whether the measure has worked or is working. I assume that from electronic corporate tax returns we can track down to the pound the amount of investment claimed for full expense relief every year. We could have a report within six months of the end of a calendar year on how much of these 100% allowances has been claimed and compare that with the total amount claimed for capital allowances in whichever preceding years we like. We could see whether full expensing was driving behaviour change. Will the Minister talk us through what he expects to happen and how he will assess whether this has been an effective way of boosting productivity and increasing investment for £11 billion a year? It is probably one of the most sizeable line entries we have seen in a Finance Bill in my 14 years here. Normally we expect the big number to be a tax cut for individuals, and this measure is significant.

As we are making this measure a permanent feature of our tax system, it shines a light on what we are trying to get from our corporation tax system. There will not be any kind of compliance saving. The Minister made a brave attempt at saying there might, but effectively all that will change is that the number that a business currently puts in its additions to its writing down allowance pool will now be put in the 100% first-year claim box. It is the same number in a different box; that is the only compliance change we have here. It throws into question some previous policy decisions we have made, because for a business to get full benefit from this, it needs to be paying enough tax to use the full relief in that first year.

If a business cannot use the full relief, the incentives are not as powerful as they would otherwise be, because then the option is effectively to carry that excess deduction forward, but we introduced rules a few years ago that are strict on how many losses a business can use in a year. If we really think that giving people the earliest possible cash tax benefit for capital investment drives investment, we should probably take away that restriction on using losses, so that businesses can get the benefit as early as possible and not have it spread over a number of years going forward. Will the Minister explain whether the Government will look at that and make sure we are not accidentally undoing some of the benefit we are seeking to get?

My second question is: what do we do with the legacy writing down allowance pool that relates to plant and machinery expenditure for God knows how many past years? On a reducing balance basis of 25%, it takes many, many years to get full tax relief for expenditure, so every business will have a large pot of money that it has not yet had tax benefit for. Are we expecting them to run that down at 25% reducing balance a year and still be doing so in 23 years’ time, by which point no one will have any idea what on earth that balance ever was? Or should we say, “That is a bit of a nonsense. Why do we not just let you take the whole balance at 20% a year over the next five years and finish that problem off, because we do not need to be focusing on that?”? We could find any number we like there, but it would draw a line under that past expenditure in a way that genuinely simplifies things.

We then have the question of, “What do we do with capital expenditure on items that are not plant and machinery?” The tax relief we give on structures and buildings is not generous, but if we are trying to drive an increase in productivity and large businesses to invest in new gigafactories to build batteries for electric cars or for electricity storage or whatever, do we not want to incentivise them to build the factory building as well, rather than either giving them no relief or giving it over a long time? If we are spending £11 billion a year to encourage investment in plant and machinery, should we not spend a little money on trying to encourage other things that are key for industrial investment to take place, by being a bit more generous on buildings and structures? Has the Minister any thoughts on that?

The Government did a capital allowances review only a year or two ago, which did not look at permanent full expensing as one of the options, but it would be interesting to see whether they have had any further thoughts on that. We are now asking every business to go through and track every item of capital that they spend and treat it differently in their tax return from how they treat it in their accounting records. Then we have all manner of different laws depending on whether it is a long-life asset, a short-life asset, a car or an environmentally friendly car—I could go on. For the amount now at stake, and given that we have given full relief for plant and machinery, which is the biggest amount, do we really need all that cost and complexity? Or should we just say for all those other items, “You can just have your accounting calculation”? Okay, businesses might take it a bit quicker than we would like, but in actual fact the cost of that is not all that material in the grand scheme of things.

We could move to a system where the only adjustment someone has to make to their tax return is to claim a very generous tax relief on plant and machinery, and they would not have to touch anything else. That would be a more coherent corporation tax regime, now that we have spent all this money incentivising plant and machinery. It would then genuinely be a compliance saving for a business in that situation.

I support the measure and truly hope that it works, but, as a significant amount is being spent, it would be helpful to understand what we are trying to achieve and how we will know whether we have been successful. I hope that the Government will move on to think about how we can slightly recast our tax system so that it makes sense, having made this radical and generous change.

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[Sir Mike Penning (Hemel Hempstead) (Con)]

It is a pleasure to have sat through the Committee stage of the Bill and to hear the Government talk about the advantages we have from Brexit. I am pleased to hear that the Government have looked, and continue to look, extensively at the taxation system—in particular at the interpretation of VAT, as mentioned in this clause.

One interpretation of VAT in this country massively affects people who are visually impaired and those who cannot read, perhaps because of dyslexia: there is no VAT on books, but the Treasury apply VAT at 5% to audiobooks. If that interpretation of VAT is to be taken as far as it possibly can, I am disappointed that disabled people are not being protected within the structure of the Bill, in the way that they have been for many years.

Years ago, when I was disabilities Minister, I was told that VAT changes could not happen because we were in the EU. We are no longer in the EU and we can set our VAT rates as we would like. It would be fundamentally good if the Government came forward with an interpretation of VAT that said that people who rely on audiobooks, through no fault of their own, do not have to be penalised by VAT at 5%. I am not talking only about the visually impaired—I declare an interest: I am dyslexic and rely on audiobooks, although not completely. People who do not read Braille are being punished as well.

The Government continue to look at new taxation rules and new ways of making sure that people do not get around the taxation system, and it is clear that they are looking at the implementation of VAT. What better spring present for those who rely on audiobooks than for the Minister to say that he will meet me, talk about the issue further and perhaps look at the early-day motion in my name?

[Drew Hendry]

The technical changes in clauses 25 and 27 open up a lot of questions. I agree with the Labour Front Bench spokespeople that there are many questions on operation that still have to be answered, but there are wider questions about both these clauses, inspired by their context. Before I get to them, I want to point out that this Finance Bill is a stark reminder that the Westminster Government never reflect the values of the people of Scotland. We need independence so that we can build a fair and dynamic economy that works for everyone. People are suffering through the bitterest cost of living crisis. The provisions set out in the Finance Bill are nowhere near enough to help households in Scotland, which have been left paying the price for disastrous decisions by Westminster Governments—not least the harm of Brexit. There is no help for families struggling with rocketing food prices, and no help for mortgage payers, many of whom are now seeing huge increases in their fixed-rate deals.

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[Patrick Grady (Glasgow North) (SNP)]

Is this not the problem? If we do not invest in people’s health and wellbeing, in the long term it will cost the NHS, social services and the Department for Work and Pensions even more to support people as they continue to spiral down. Does that not contrast with the preventive approach that the Scottish Government take, with such innovations as the baby box and the child payment?

[Drew Hendry]

My hon. Friend is right: the on-costs of not doing so lead to further problems, and to higher costs not only to the public purse but to the mental and physical wellbeing of those who are impacted by the cost of living crisis.

These major fiscal events serve as a tangible example of the total mismatch between the values of the UK Government and the people of Scotland. The things that the UK Government choose to spend money on and the tax measures that they have chosen to leave out of the Bill, such as abolishing non-dom status, are a clear reminder of that. It is abhorrent that at the same time as announcing cruel measures to force ill and disabled people into work, the UK Government did not include any provisions on making the tax system fairer. There are countless examples of the UK Government wasting money and then attempting to claw back the funds by targeting groups who are the least well off. The return to draconian measures forced on ill and disabled people is just the latest example. The stark difference between the Bill and the Scottish Government’s Budget, which prioritises ensuring that everyone in Scotland can have a decent standard of living, is a timely reminder of why we need independence.

The SNP believes that building a strong economy starts with giving people a decent standard of living, and our most recent Budget reflected that, as my hon. Friend the Member for Glasgow North (Patrick Grady) mentioned. The Scottish Government’s Budget reflects the people of Scotland’s shared values and speaks to the kind of Scotland that we want to be. It is important to remember that the Scottish Government have achieved that against the backdrop of their very limited ability to raise additional revenue through taxes, and having to work largely with a fixed budget. Despite those very difficult circumstances, the Scottish Government have once again shown their commitment to protecting the NHS from strikes, as well as investing in it and shielding the most vulnerable people, as far as possible, from the impact of regressive Westminster policies.

While the Tories have just delivered a 3% real-terms cut to England’s NHS in their autumn statement, the Scottish Government announced an increase to the frontline NHS budget in real terms. They also remain committed to helping those most impacted by the cost of living crisis. In their Budget last month, the Scottish Government increased the game-changing Scottish child payment in line with inflation to £26.70 a week, giving more support to the more than 323,000 under-16s who receive it. They maintained their commitment to invest £1 billion over the course of this Parliament to tackle the poverty-related attainment gap, with £200 million to be distributed in 2024-25. They are committed to funding the £12-per-hour real living wage for adult and child social care, and early learning and childcare workers in the private, voluntary and independent sectors that deliver funded provision. They have helped households through the cost of living crisis by making available an additional £144 million of funding to councils that agree to fully fund a council tax freeze in 2024-25—the funding equivalent of supporting a 5% increase. Those are just the latest measures the Scottish Government have taken to promote equality.

The Scottish Government have of course introduced landmark policies to ensure that everyone in Scotland has access to a decent standard of living. If Westminster was in charge, Scotland would lose things like free university tuition, free school meals, free period products, free bus travel for under-22s and free childcare for three and four-year-olds, as well as eligible two-year-olds. All that is possible because the Scottish Government take a different approach to a Budget than this place, and we need to ensure that we can do that in a much more effective way through the powers of independence.

Finance Bill (Ways and Means)

Drew Hendry Excerpts

Ways and Means resolution
Monday 5th February 2024 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I rise to speak about the procedure being used here. This motion is very odd and worryingly symptomatic of a Government avoiding their responsibilities to this House, given that they could have tabled an amendment of the law resolution, which would have allowed them to add their new clause to the debate today, without this unique use of Standing Orders. This resolution has prevented Members from tabling any new clauses or amendments relating to the subject, because there is no time between the end of the debate and the beginning of the next one to table any relevant motions, as I would have liked to have done, for example, on the highland energy rebate for people living among generating equipment, both planned and existing. I sincerely hope that this unique use of Standing Orders does not become standard, as any future legislation based on a Ways and Means resolution can be unilaterally changed with almost no notice and no opportunity for this House to table related amendments.

Question put and agreed to.

Finance Bill

Drew Hendry Excerpts

Report stage
Monday 5th February 2024 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am sure that the people suffering through the rampant cost of living crisis across the nations of the UK hoped that if the Government tabled a new clause today, it would address their struggles in paying their rent, their ever-increasing mortgages, their higher food bills, thanks to Brexit, and their even higher energy bills after the cap was adjusted in January. The Government tabled only new clause 5 and, as I said on the Ways and Means motion, we have no opportunity to amend it.

The electricity generator levy disproportionately impacts Scotland’s renewable sector. The SNP welcomes the fact that new clause 5 will exempt new renewable projects from the EGL, but as noted by the chief executive of Scottish Renewables, though the autumn statement introduced new measures such as the EGL exemption, they are

“not enough on their own. We urgently need consistent policies to provide an environment which will enable businesses to invest at the scale needed right now.”

A pledge to invest £28 billion a year in the green energy transition might be a good thing, but it seems to be off the table not only for the UK Government but—

[Mr Speaker]

Order. I wish to make a short statement.

I know the whole House will wish to join me in expressing our sympathy with His Majesty the King following this evening’s announcement. Our thoughts are, of course, with His Majesty and his family, and we all send him our very best wishes for his successful treatment and speedy recovery.

[Drew Hendry]

Thank you, Mr Speaker. Obviously, it is entirely appropriate to have paused for that statement. I was unaware of the news brought to the Chamber, but it is clearly significant. Our thoughts are with the royal family at this time.

As I was saying, we need consistent policies to help the renewables sector, and we are not seeing that either from the Tory Government, who have run out of ideas, or from the Labour party, which makes promises and then ducks responsibility for what is required.

We would have liked new clause 5 to flesh out the Chancellor’s promise, made in the autumn statement, to take up to £1,000 a year for up to 10 years off the electricity bills of people living near new generation equipment. We have not heard that today, so we do not know what schemes are coming up.

As I intimated earlier, I would have liked to table an amendment on this point: if new clause 5 is applicable to people living next to new generation equipment, what about those who already live among generation equipment in, for example, the highlands and islands? We have the coldest climate in the UK. Most people are off the gas grid, so we have higher average bills than the rest of the UK. We pay the highest standing charge for electricity, 40% more than here in London, and because of UK Government policies, we have the highest level of fuel poverty in the UK, yet we export six times more electricity than we use in the highlands. It would have been entirely appropriate for the Minister to agree to introduce a highland energy rebate, to put some of that contribution back into the pockets of people across the highlands and islands who are struggling because of those conditions.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

The hon. Gentleman is making a very good point that rings true in my constituency, too. Of course, the problem is made more difficult still because of the other costs faced by people living in our constituencies, such as delivery charges and the cost of other services. Even a tube of toothpaste can cost a little more the further away it is from the big urban centres. That makes the problem a lot worse.

--- Later in debate ---

[Drew Hendry]

The hon. Gentleman is absolutely right, and I welcome his support for the campaign I am trying to start in order to get justice for people across the highlands and islands. He mentions other costs; of course, rural properties are often larger and less insulated. That does not mean that people in those properties have more money; it just means that their property was built that way, centuries or decades ago. That brings higher costs. Many of the factors affecting people across the highlands and islands could be mitigated by a highland energy rebate.

New clause 4, tabled by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), would require the Chancellor to review the public health, inequality and poverty effects of the Bill, and to publish a report within six months of the Bill being passed. It is regrettable that it looks as if the new clause will not be pressed to a Division tonight, but the SNP would have supported it. We believe that a requirement to consider the implications for equality, poverty and health should be included in every Bill for which that would be relevant.

As I said, people are suffering from a cost of living crisis fuelled by decisions made in this Parliament. Mortgages are going up as a direct result of the disastrous mini-Budget, and now food costs are going up. Of course, there is more to come, as the Brexit regulations kick in at the end of April. Not only are prices going up, but they will rise even higher from May as businesses across the UK face more red tape. Of course, we are already seeing our highest energy bills ever. Meanwhile, we are doing what we can with our limited powers in Scotland. We already have lower council tax and, of course, we are introducing a council tax freeze. A poll out today shows that nearly 70% of the public approve of this policy.

New clause 6 would require the Chancellor to publish an assessment of the Bill's impact on investment and growth and of the impact of making full expensing permanent, and to consider what other policies could support the effectiveness of permanent full expensing. Given that full expensing is expected to cost £1 billion to £3 billion a year, after an initial £10 billion a year for the first three years, the policy deserves some scrutiny.

Since full expensing was announced in the autumn statement, the SNP has supported its being made permanent, as this would give business greater certainty and would simplify the tax system. However, it is vital that Members be fully informed, so that this Parliament can assess the effectiveness of this policy and whether it encourages investment in assets such as plant and machinery, as it is designed to do, or whether that is at the expense of other forms of investment. Full expensing is a rare point in the autumn statement on which we agree, but as I have said time and again, the Bill has failed. People are struggling through a cost of living crisis, and they want to know what help they will get now, while they are struggling because their household expenses are going through the roof.

People want investment in clean energy, and a just transition from oil and gas. We will need oil and gas for a period, but that transition should be safeguarded. The United States is providing hundreds of billions of dollars in initial support for new green technologies, such as hydrogen. The European Union has made similar high-level investments, yet the UK Government and the Labour party are dawdling on the issue, wasting the opportunity for us to lead across the world. Like so many Bills, this Bill ignores the needs of the people of Scotland, so it is little wonder that they are on the inevitable path to independence.

[Mr Deputy Speaker (Sir Roger Gale)]

Order. May I take this opportunity to associate myself with Mr Speaker’s remarks? I am sure that all our thoughts are with King Charles and the royal family this evening.

--- Later in debate ---

[Drew Hendry]

In this Third Reading debate on the Finance Bill, one thing has been conspicuously absent from both the Tory and the Labour Front Benchers’ speeches—the one thing affecting people most just now: their struggle with the cost of living crisis. People are struggling to pay their bills. They are struggling to pay their mortgages, which have gone up because of this Government’s disastrous mini-Budget. They are struggling to pay their rent. They are struggling to pay their food bills because of these parties’ disastrous Brexit, which is pushing food price inflation even higher. They are struggling to pay their energy bills, because this Government have been asleep at the wheel while prices have been rising, and even allowed the energy price cap to go up in January when bills have never been higher. This is a travesty of a Finance Bill. It has done nothing to help the people of Scotland with their finances, it has done nothing to help people across the rest of the UK, and I will definitely vote against it tonight.