Furnished Holiday Lettings: Taxation

Duncan Baker Excerpts

Wednesday 1st May 2024 Westminster Hall

[Peter Aldous (Waveney) (Con)]

I beg to move,

That this House has considered the taxation of furnished holiday lettings.

It is a pleasure to serve with you in the Chair, Dame Siobhain. I welcome the Minister and other colleagues to their respective places.

This debate arises because of the changes announced in the Budget to the taxation of the furnished holiday letting—FHL—regime, which have already acquired the nom de plume “the staycation tax”. As I mentioned in the Budget debate on 12 March, I am concerned that the proposal could have unintended consequences.

I acknowledge the thinking behind the change, because there are areas of the country where local people are having great difficulty renting local properties, and it is possible—I will put it no more strongly than that—that holiday lettings might be contributing to that. In other areas across the UK, however, holiday lettings are not having such a negative impact, and they are a vital component of local economies all around our four nations. That is the case in the Waveney constituency, although I acknowledge—this may be where we have difficulties—that there are significant challenges for local people looking to rent a home in nearby Southwold, in the constituency of my right hon. Friend the Member for Suffolk Coastal (Dr Coffey).

[Duncan Baker (North Norfolk) (Con)]

I thank my hon. Friend for giving way on that point, which is a good one for North Norfolk, where there are clearly problems with housing supply. I put it to him that, in an area such as mine, which has a large number of second homes, the policy change may well lead to more homes coming on to the market to be snapped up by people who are buying them as second homes, making the situation even worse in picturesque places like North Norfolk.

[Peter Aldous]

My hon. Friend may have read my speech, because that is one of the issues that I will highlight, and I will mention some statistics that the Professional Association of Self-Caterers—PASC—kindly provided to me to make that point.

UK Economy

Duncan Baker Excerpts

Monday 19th February 2024 Commons Chamber

[Bim Afolami]

The hon. Gentleman will do well. There is nobody on the Government Benches who welcomes adverse economic situations for anybody. That is why we are doing everything we can—straining every sinew—to grow the economy. All the measures I have laid out will continue, but they would be put at risk by those on his Front Bench being in office.

[Duncan Baker (North Norfolk) (Con)]

Before I came to this House, I was a director of quite a large retail group in North Norfolk. No one has made the point that in the last quarter of the year the country saw Babet, Ciaran, Debi, Elin, Fergus and Gerrit—six major storms and floods. How many were there in the previous year? Absolutely none at all. Will the Economic Secretary tell everybody that of course the economy will not function properly in the grip of storms and floods every fortnight? We are not in recession, but the more we talk it up, the more we will be.

[Bim Afolami]

I thank my hon. Friend for that question—I would say that the loss of large retail groups in Norfolk is the House’s gain. His point about the international context is serious and important. Although Labour Members do not like to hear it, facing a once-in-100-years pandemic and Putin’s illegal war in Ukraine, which caused energy prices to skyrocket, will have adverse impacts on the economy. The country understands that and the House understands that; the Labour Front Bench should also understand it.

Loan Charge

Duncan Baker Excerpts

Thursday 18th January 2024 Commons Chamber

[Duncan Baker (North Norfolk) (Con)]

It has been referred to many times this afternoon, but the number of times in the last few weeks that I have spoken here about the Post Office scandal is well known, and it has rightly dominated our headlines. However, the question that we have probably not addressed enough is “Why?” There are clearly parallels between why we have addressed the Post Office scandal and the reason for the encouraging speeches we have heard this afternoon. If there is one thing that the British people hate more than anything else it is injustice, and it is the injustice of the loan charge scandal that makes it so important. The stark reality is that the people who were affected by it have had their lives ruined at just the same levels, in terms of financial as well as personal and family impacts, as those affected by the Post Office scandal.

I have been a member of the loan charge APPG since I was elected and have spoken about it in the House. When the APPG ran sessions, back when I was first elected, I heard harrowing accounts of people who are innocently caught up in this situation, including some of my constituents. My constituent Peter Phillips fell into a loan scheme on the advice of tax professionals, as a means to be clear of and compliant with IR35—you could not make it up. There was never any intent to avoid tax: it was simply a means to keep up the income and standard of living that his work as a contractor afforded him.

I have got to know Peter over the four years since my election. There was a time when I probably did not wake up in the morning without an email from Peter—he is watching this debate, too. He is a good, decent, kind and law-abiding man, like so many of the constituents we have spoken about this afternoon. If he had been aware of HMRC’s view on these schemes, he would never have chosen that route, but it was never made plain to him, either by the tax professionals or by HMRC. In addition, he knew many other contractors who had been working through loan schemes for many years without any issues with HMRC.

Peter has settled his scheme with HMRC and, quite rightly, he is utterly aggrieved by the unfairness that, because he told HMRC of what he had done, he became an easy target, whereas the others, who did not tell HMRC, are getting away with it, so to speak. That is grossly unfair and unjust.

In the loan charge scenario, HMRC is treating the loans as both income and loans to the individual’s estate, and is therefore forcing Peter to pay income tax and inheritance tax on the amounts. We have been talking about this issue for a while, and many of the victims are older. As they get older, they are thinking about planning for their family, so these issues become even more of a worry and even more pertinent.

I do not think he should, but Peter is prepared to accept that he made an error of judgment. Of course, he did not make an error of judgment. In my view, this is retrospective penalisation by HMRC. At the very least, HMRC is equally at fault in the well-known retrospective penalties that it imposes. It seems wrong that Peter is paying a penalty for his honesty in disclosing the scheme. If Peter understands that he has to accept some responsibility, why is HMRC not doing the same and, at the very least, offering better settlement terms to all those affected?

Again, the parallel with the Post Office scandal is that many loan charge victims are not believed. These were complex tax arrangements in many cases, and they were simply mis-sold to people. The individuals who took out these arrangements are not tax professionals. They just went along with what they were told and, as we have heard, they have been financially crippled, way beyond any sensible, proportionate rationale. They need help.

I agree with other Members who said we have an opportunity to put this right. At the very least, these individuals could be better supported in three ways. For a start, the loans should be exempt from IHT. Where victims are subject to accelerated payment notices, which occur when HMRC thinks it has detected a tax avoidance scheme—the disputed tax is paid to HMRC—why is proper discretion not applied to the circumstances? Minister, go back and look at the cases and help the victims.

Finally, we should scrap or, at the very least, extend the residual tax waiver, which has been thoroughly unjust time and again. Remember, if a person did not settle before 30 September, HMRC applied the penal loan charge and calculated the settlement, giving a higher figure. That, again, has disadvantaged many, many people.

We took decisive action last week, and many applauded us for that. Were the extent of the loan charge exposed, I think there would be a willingness in society to act. Something should be done, and it can be done. Remember that so many people are innocently caught up in this scandal. It has huge parallels with the Post Office scandal, and it should be put right.

Mortgage Prisoners

Duncan Baker Excerpts

Wednesday 28th June 2023 Westminster Hall

[Duncan Baker (North Norfolk) (Con)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I thank the hon. Member for West Dunbartonshire (Martin Docherty-Hughes), who has just made an incredibly powerful speech.

Twice this week, I have spoken in Parliament about the banks and how constituents have been let down. The situation with mortgage prisoners is a scandal in its own right, and a great problem is that it is frankly not spoken about anywhere near enough in this House. For those of us who have constituents who are affected by the situation, as I do, it is utterly heartbreaking to hear the stories. We often hear stories of people’s plight in this place. The plight and the financial situations of mortgage prisoners are particularly devastating.

I am rarely lost for words, but yesterday, when I came off a call with a constituent who had given me an update on her story, I realised I had found it an incredibly emotional experience. I will not use her name, but she is one of 195,000 people across the country affected by this problem. Many people around the country will be struggling with higher mortgage rates, but mortgage prisoners are in an entirely separate situation; they are in a degree of difficulty that is beyond what the average person is probably experiencing with their increasing mortgage rate. That is through absolutely no fault of their own, but because of the situation that occurred back in 2008 with the banking crisis.

My constituent’s situation is, I am sure, replicated among the 195,000 people affected by this problem. She is paying £1,782 a month for her mortgage. She is in arrears. She is under a Heliodor mortgage—the hon. Member for West Dunbartonshire mentioned that lender; I had never heard of it either—and is paying 9.24% to a lender that does not even have a lending licence. Many statistics suggest that the mortgage rates of millions of people across the country are shooting up by 5% or 6%, but some mortgage prisoners are paying 12% or 13%. Can anyone imagine what that pressure and stress must be doing to those households? The average mortgage prisoner is paying 9%. As has been echoed by hon. Members, we absolutely need to look at the standard variable rate, specifically for mortgage prisoners, because it is not right for families to end up in that situation. They are utterly trapped by what happened back in 2008, when mortgage books were sold off.

Another issue is that many mortgage prisoners are now older families; they got into this situation some 15 years ago, when the banking crisis first happened. In my questioning, I try to understand the situation. I ask questions such as, “Well, why can’t you exit this financial arrangement by selling up and moving on?” It is not that simple for families, who may well have children. The lady I spoke about has a family of three, and one child is disabled. Her situation is creating untold distress for her, and is affecting her mental and physical health. In constituencies such as mine, people cannot just sell their house and find another at an achievable price. I live in a beautiful area on the north Norfolk coast, where house prices are extremely high, the rental situation is extremely difficult, and the local housing list has roughly 3,000 people on it.

These are people’s homes. They are private homes. We must have some compassion and help people who, through no fault of their own, have ended up in this situation. As has been said, people cannot just move to another mortgage product, because they will simply fail to meet the lending criteria and the affordability test. My constituent was in a perfectly normal mortgage until the collapse of Northern Rock. We are told that there is help and support out there, but that is not always the case.

I am on the record as saying on Monday night that the Minister is a good man, and that when I talked about banking hubs, he listened to all the problems that I brought him about bank closures in my constituency. I say that again. If his officials are watching, will they please help my constituent? She would readily listen to help and advice. I asked her what one thing would help make the problem go away. One of her answers was, “Will the Minister engage with the mortgage prisoners group, so that he can understand the situation for so many people who have worked hard and got into this situation?”

Let me finish by saying that the Government have done a good job of dealing with the escalating problem of interest rates in recent weeks, including through the Chancellor’s meeting with all the lenders. I want those words on the record. We have worked extremely hard to help families up and down this country. Let us now go that extra mile for the cohort of people who are affected by the mortgage prisoners problem. They are hurting more than most people at the moment, because of their particular circumstances.

Financial Services and Markets Bill

Duncan Baker Excerpts

Consideration of Lords message
Monday 26th June 2023 Commons Chamber

[Nick Smith (Blaenau Gwent) (Lab)]

I rise in support of Lords amendment 27. First, I thank the Ministers in this House and the other place for this important concession. I also express gratitude to those Members from all parties in this House and the other place who supported my campaign on this matter. We are all glad that there will be a mechanism for greater parliamentary oversight of our financial services regulators. The specialist insight from statutory panels on the performance of regulators will be invaluable, particularly on the Financial Conduct Authority’s fulfilment of its all-important consumer protection objective.

To help take things further, I hope to meet the chair of the FCA consumer panel shortly. I will explain why the FCA’s handling of the British Steel pension scheme in 2017 was so very disappointing. It is simple: the FCA faced the City of London, not the homes of vulnerable steelworkers in Ebbw Vale, Port Talbot and Scunthorpe. As parliamentarians, we found it hard to influence the dilatory regulator in support of our steelworker constituents, who deserved much better protection against the financial sharks.

Having said that, amendment 27—in addition to the FCA’s new consumer duty—makes me a little bit hopeful that we will encourage the FCA to become more outward looking and capable of adapting to the changing needs of Britain’s consumers. I am more optimistic that there will be a different way of working; that oversight and scrutiny will be embraced; and that scandals such as the British Steel pension scheme will not happen so easily again.

However, our fight for the proper protection of consumers does not stop there. I declare an interest: the Labour Treasury spokesperson in the other place is my wife, Baroness Chapman. I will speak in support of Lords amendment 10, which she moved in the other place. Financial inclusion is crucial to the regulation of financial services, so I urge the Government to reconsider their opposition to that amendment. The design, marketing and administration of financial products and the quality of financial advice have a direct impact on whether vulnerable groups are properly included in our financial system.

Just last week, I met steelworkers who, once bitten, were twice shy about what to do next with their pension pots. They are smart and highly skilled, yet understandably they do not have the financial knowledge nor the right impartial support on their investment needs. Across our country, there is still the danger of millions like them being at risk of exploitation by bad actors in the financial sector. Financial inclusion should therefore be at the forefront of our regulatory framework. After all, consumers are our financial services sector. They need to have confidence in a regulatory framework that prioritises them and faith in our financial sector.

[Duncan Baker (North Norfolk) (Con)]

I rise to support the Bill, and primarily to speak about access to cash and, therefore, my support for Lords amendments 72 to 77.

I have spoken many times in this place about banking provisions. I brought in a ten-minute rule Bill, the Banking Services (Post Offices) Bill, which the Government did not in the end take up. I have said time and again in this place that the UK is not ready to go cashless. That is why I am particularly pleased with the provisions in this Bill. The reasons for that are manifold. The elderly, the vulnerable and particularly those living in rural locations such as mine of North Norfolk simply rely on cash, and I think I can speak for many Members in the Chamber on that. If Members do not believe me, they have only to look at what the access to cash group said in its research, which is that 5 million adults would struggle without access to cash, and those are often the people on the lowest incomes and the tightest budgets.

[Robin Millar (Aberconwy) (Con)]

My hon. Friend can add to that list residents in my constituency of Aberconwy who have seen the banks withdraw, first from the market towns and towards the coast, and then from coastal towns along the coast—a withdrawal only matched by their move online. Does he agree that this is a good move by the Government, and that it will be welcomed by many people specifically because it retains access to cash for those in societies, communities and demographics for whom cash is a crucial part of their everyday lives?

[Duncan Baker]

I am very happy to agree with my hon. Friend, but I want to go even further. Particularly in the rural and coastal areas he mentions, which is indeed the case with North Norfolk, access to cash is just not good enough. Yes, there are the provisions in the Bill, but we have to go even further. That is why I want to talk about the disgraceful attitude of the banks and what we can do about this through the advent of banking hubs.

Since 1988, some 14,000 bank branches have shut across the United Kingdom. There are only approximately 6,000 left, and what is even more worrying is the acceleration with which they are being shut. We heard the shadow Minister, the hon. Member for Hampstead and Kilburn (Tulip Siddiq), say that 54 branches continue to be closed every single month, and that accelerating trend is a particular worry. In my view, there is an absolute lack of corporate social responsibility from the big banks. Given that the UK taxpayer bailed them out in 2008 with such a high number that it is extremely difficult to ascertain what it is—in some cases, it was up to £1 trillion—I think it is particularly poor not to give a hoot about the people affected in these communities.

In my constituency, Lloyds bank, which announced about a month ago that it was going to embark on another wave of closures, is going to close not just one bank branch, but two. I cannot even begin to put into words how upset my constituents are about that, and I have had countless emails. Both at Cromer, which is on the north Norfolk coast and is visited by many thousands of tourists, and further inland at North Walsham, people will suffer a Lloyds bank closure and be left with one bank in the town.

[Sara Britcliffe (Hyndburn) (Con)]

Does my hon. Friend agree that when we question why the banks are closing and ask them for evidence, some banks supply evidence from during the pandemic, when obviously banks were closed and not many people were able to access them?

[Duncan Baker]

My hon. Friend makes an extremely important point. So much of this research has been conducted during a window when, of course, footfall was incredibly low because the pandemic meant we were not able to go out and use our high streets in the same way. I think they have used that data to help extrapolate the views and opinions they want, and they then go on and close branches. That goes to the root of what they are doing.

These branches are simply saying, “Don’t worry. You can go online. Oh, there’ll be a community banker to help you. Of course, you can then go and use your local post office.” We know that, in so many communities up and down the land, that just is not appropriate. To take my constituency, I have the oldest cohort of individuals in the entire country: one third of people are over the age of 65. In some coastal towns, the vast majority of my constituents cannot go online, because in many cases they are in their 70s or older and such suggestions are just not appropriate. How can communities of 8,000 people in Cromer and of 13,000 people in North Walsham be left with one bank? The other point not taken into consideration is the expansion of these towns. Under the local plan, North Walsham will see at least another 2,500 homes built over the next decade. The banks take no account whatsoever of the increase in population, and therefore do not factor that into their numbers.

Banking hubs are often given as one answer. Of course, there are others. There is a notable case in Frome in Somerset, which is a similar scheme to a banking hub but is slightly different, and that was also reasonably successful. The big issue with all of this is the regulations on how to get a banking hub. I think we can already see that this is not working as well as it should if only six have opened so far. The criteria include that people have to wait until the last bank in town shuts before they are eligible to have a hub. To me, the rigidity of that structure does not work. We have different sized towns, different sized populations, different age cohorts and towns that are miles away from the nearest bank, so how on earth can certain towns be using that rigid structure? It does not seem right to me. I ask the Minister to keep under review how the banking hub solution, which is being run in conjunction with Link, is being operated. It seems that it is not working well.

The Minister is a really good man. He has met me many times to talk about this issue, and he is certainly in listening mode. He could do a lot worse than dusting off my old Banking Services (Post Offices) Bill and having a look at it. The principle in that Bill was to look at the post office network—it has an 11,500-strong footprint—which I do not think we invest in enough. Instead of having a sweetheart deal between the Government and the banking institutions, let us regulate this with proper legislation saying that we will use our post office network and invest in it as the real future for banking. So many post offices could be banking hubs. It would give real solidity to the market and help many hard-working postmasters know what their future will be.

Finally, the Department for Levelling Up, Housing and Communities is sitting on £150 million in the community ownership fund. Why can we not have a special provision as part of that to give planning permission to buildings that can be used as banking hubs? Again, we could further accelerate the roll-out of these hubs. There is a bit of food for thought there, but I now want to close my remarks. I thank the Minister for listening, but please will he look at our banking hubs and the way they are working? I think we can do a much better job of it.

[Sara Britcliffe]

I agree with everything my hon. Friend the Member for North Norfolk (Duncan Baker) said.

I rise to speak in favour of amendments 72 to 77 on provision for access to cash. I, like many of my colleagues in this Chamber, understand the need of my constituents to have continued access to cash. This demand is concentrated in, although not exclusively restricted to, more disadvantaged groups who may still use cash for budgeting reasons or because they are not technologically literate.

That is why I have campaigned on this. In my constituency of Hyndburn and Haslingden, the number of free-to-use ATMs has fallen by nearly 40% since January 2021. Also, some towns in my constituency, including Great Harwood, have seen all their high street banks close, severely limiting access to cash compared with even a few years ago.

7 pm

We all understand the challenges. I have met with banks in my constituency and companies like LINK, and I am well aware that the long-term trends in digital payments and card payments are only going one way. But I strongly believe that even in the face of that evidence, we need to protect those individuals and businesses that still use cash.

I was a local business owner in Oswaldtwistle and we had to run between local businesses just to make sure we had the change we needed to run them. This is therefore very important, especially when the post offices close, which happened in Oswaldtwistle. We must make sure that provision is still in place and is easily accessible, especially for the older residents who live in all our constituencies.

Recently, I have been talking to businesses in Great Harwood, where all the high street banks have closed and the impact of the lack of ATMs is severe, especially if a business is cash-only or its card facilities are down. I am speaking to LINK and trying to get a banking hub in Great Harwood, and I am feeding in the issues facing local businesses, some of whom must travel out of the constituency to Blackburn or to Mr Deputy Speaker’s patch of wonderful Ribble Valley.

That is why I welcome the Chancellor accepting the Lords amendments on free access to cash. Having spoken to people across my constituency, I know how important that is. It is great to see the Government standing up for those who would struggle were the stark decline in cash access to continue.

I thank the Minister for his engagement throughout the process. I warmly welcome Lords amendments 72 to 77.

Cash Acceptance

Duncan Baker Excerpts

Monday 20th March 2023 Westminster Hall

[Duncan Baker (North Norfolk) (Con)]

I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for such a good speech, and for hosting today’s debate. We are discussing a topic that I find greatly interesting. In a previous life—not many Members realise this—I was a businessman, but also a postmaster, or at least I had the legal title of a postmaster. As such, understanding retailing as I do, access to cash is an absolute necessity in all parts of society, particularly, as has been mentioned, in rural communities. It is therefore important that we discuss the thorny issue, which has already been touched on, of the wilful negligence of banks in closing their branches on our high streets up and down the country, despite all of the changing public behaviour, and the issue of traders accepting cash as payment.

Despite the advances of technology and those changing consumer behaviour patterns, it is clear to me that the acceptance of cash should remain an option for the foreseeable future. The country at large, and the public, are simply not in a position to close that door off. All the research that has ever been conducted in this area shows that people must be able to still access cash.

In 2021, I presented my own Banking Services (Post Offices) Bill. It did not get very far, but, nevertheless, the intention was to try to ensure that banks were required to offer banking services for their customers, including the provision of cash, via the post office network. The 11,500 post office branches on our high streets seemed like absolutely the right place to be the authorised financial services dealer to enable cash to always be accessed on our high streets.

[Margaret Ferrier]

Cambuslang, in my constituency, was honoured to host a bank hub, through the pilot scheme between post offices and the high street banks, to help protect community access to cash at a time when more and more banks were facing closure on local high streets. The hub on Cambuslang’s Main Street has been a great success and very popular with constituents. Does the hon. Member agree that more bank hubs could and should be funded for communities in need?

[Duncan Baker]

I thank the hon. Member for her question. Yes, bank hubs would be a very good idea. The Minister will probably correct me, but I believe that the Government have initiated putting bank hubs in throughout the country. However, my point about using the post office network is that it is already there. There are already 11,500 post offices on our high streets.

Instead of a sweetheart deal with banking services between the Post Office and the Government, we should legislate, and make it legally binding that post offices must always be allowed to offer banking services, so that we do not have some bank, at the drop of a hat, withdrawing its services because it does not like the deal that it is getting from the Post Office. We should set it in stone so that people and consumers always have that offering on the high street.

The European Central Bank found that cash remained the most frequent method of payment in 2022, at 59%. Despite that, and all of the research that we have outlined, we continue to see a steady decline of bank branches on our high streets. In 2021, 736 bank branches closed throughout the UK. From my constituency, I remember some of closures proposed by Barclays. The reason for closing was that the research indicated a drop in footfall. I said to the bank team that presented the findings, “We have had lockdown; consumers have not been able to go to the bank. You cannot possibly use a drop off in footfall as an excuse to shut a bank branch when the public have been prohibited from even accessing our towns and villages.” It was absolute madness.

In the east of England specifically, we saw a 39% decrease in the number of banks between 2012 and 2022. The far-reaching impacts that this has had, especially in areas where many older people live—I have the oldest demographic in the entire country—cause huge concern throughout my constituency and other rural areas, because all the research shows that the vulnerable and elderly are simply not able to go cashless at this moment in time.

I witnessed at first hand the serious impact of last year’s Barclays bank closure in my home town of Holt, where I was born, despite the fact that we are a centre for retail in the area. We have a huge number of visitors coming to Holt, and Barclays was the last bank in the town to close. Cue pandemonium for a retirement area with elderly people—a vibrant market town that is rich with many retail shops—who were left with no ability to do their banking, which affects not just residents and businesses but visitors, who also need access to cash. Luckily, we were able to use a banking hub, exactly as the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) suggested, to try to safeguard people needing access to cash.

The research suggests that 10 million people would struggle to cope in a cashless society. Many of them are on low incomes and are older, but they also include people who have disabilities or ill health and those who run small businesses—a plethora of people across society. By preserving the physical infrastructure, whether through a post office or a banking hub, we also preserve the right for the most vulnerable to use cash, to make sure that they too can be looked after.

I was a retailer at one stage, so I appreciate traders’ attitudes towards accepting cash, which can become expensive. The banks make it expensive and more difficult for people to do their banking. If banks shut, people have to use courier services, which charge, and there is a delay in deposits coming into the bank. I understand that it is far easier to stop using cash, but that does not mean that it is the right thing to do. Limiting the acceptance of cash payments puts pressure on people, who can become financially excluded. It may be very difficult for the Government to enforce the preservation of cash payments in a free market, but they should be straining every sinew to incentivise providers and make sure that they continue to accept cash.

The access to cash review provided some sensible and feasible recommendations to help keep cash payments an option for the foreseeable future, and I am sure the Minister will have looked at it. The crux of all this is that I recognise that, at some point—one day—cash will begin to fizzle out, but it is fundamental that we help consumers for as long as physically possible, because it is necessary. It is not about stifling technology or progression. It is a fundamental basic requirement that millions and millions of people up and down the country still need access to cash.

The use of cash will always play a vital role for many people—for budgeting and for people who may have poor spending habits, because it is a great way to help people manage their bills. Keeping cash as a viable option will help to support those on low incomes and vulnerable people, as well as our high streets and small businesses. I do not think that cash should be something that we begin to dismiss and wind down. The crux of this is about not only keeping cash in circulation, but making sure that the Government play their part in ensuring that there is a proper, viable infrastructure for cash to circulate, which means doing something to legislate for the banks, whose corporate social responsibility has gone out of the window as they have closed as many branches as they can around the country. That has to be something we address as well.

Oral Answers to Questions

Duncan Baker Excerpts

Tuesday 20th December 2022 Commons Chamber

[Jeremy Hunt]

First of all, may I wish the shadow Chancellor, the right hon. Member for Leeds West (Rachel Reeves), a merry Christmas in her absence and a speedy recovery from the lurgy that I gather she has? I look back on the last 12 years of this Conservative Government with a great deal of pride. What the right hon. Gentleman never likes to mention in his comparisons is that Labour had a golden economic inheritance from the Conservatives in 1997 and left us with an economy that had run out of money. What have we done? We are the third highest-growing economy in the G7.

[Duncan Baker (North Norfolk) (Con)]

T4.   Before I came into this House I was a chartered accountant. The VAT threshold rate has remained at £85,000 for the last six years, including at the moment when inflation is at nearly 10%. Many of my constituency businesses are smaller trader entities in the leisure, tourism and hospitality sectors, and they are really struggling. What assessment has the Chancellor made of increasing the VAT threshold, and, if he will not look at that, of lowering VAT rates on the sectors I mentioned?

[Victoria Atkins]

I welcome my hon. Friend’s strong support for his local economy and the small businesses that play such a vital part in his constituency. The VAT registration threshold, at £85,000, is more than twice as high as the EU and OECD averages, which keeps 3.2 million small businesses out of VAT—the majority of businesses in this country. I hope my hon. Friend will welcome the fact that since the start of the pandemic more than £35 billion has been provided to the tourism, leisure and hospitality sectors in grants, loans and tax breaks. As a Government, we recognise their incredible value and how important they are to the wellbeing of our constituencies.

The Growth Plan

Duncan Baker Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

What I find extraordinary is that Opposition Members stood on a platform of pure unadulterated socialism in 2019 that was totally reckless and had no interest in the private sector. What we are doing is putting more money into the pockets of people and businesses. That is what drives growth.

[Duncan Baker (North Norfolk) (Con)]

Is it not the case that the Chancellor’s intervention to freeze energy bills is already predicted to reduce inflation by 5%, and that for every single percentage point that inflation comes down by, our borrowing costs are reduced by £6 billion? Therefore, by simple economics, in which the Opposition need a lesson, it is entirely feasible that we have the second-lowest amount of net debt to GDP within the G7. That makes this growth strategy entirely plausible.

[Kwasi Kwarteng]

My hon. Friend is absolutely right. Because of careful stewardship of the public finances, we can withstand the exogenous shocks represented by covid-19 and Russia’s invasion of Ukraine. We have the second-lowest net debt to GDP in the G7 and we will use our fiscal position to help the most vulnerable in society.

Economy Update

Duncan Baker Excerpts

Thursday 26th May 2022 Commons Chamber

[Rishi Sunak]

As I spelled out, over the long term, through responsible fiscal policy, independent monetary policy and supply-side activism we will combat and reduce inflation. We are making progress on all three fronts.

[Duncan Baker (North Norfolk) (Con)]

I warmly welcome the Chancellor’s statement. He said that into the autumn he will think about tax cuts, which would be very welcome. Will he think about raising the income tax personal allowance for millions of hard-working families? It has been kept the same for the last two tax years, but in lifting it we would start to see those families able to take more of their income home with them, which is very much needed.

[Rishi Sunak]

My hon. Friend is right that we want to ensure that our constituents keep more of their hard-earned money. That is why in July we will raise the national insurance primary threshold to equalise it with the income tax threshold—a tax cut for 30 million people, worth around £330 each.

National Insurance Contributions Increase

Duncan Baker Excerpts

Tuesday 8th March 2022 Commons Chamber

[Mr Clarke]

We have forgone a tremendous amount of revenue through the freeze on fuel duty. On VAT, we obviously continue to look closely at the revenue situation. It is sometimes a misapprehension about the way that the VAT scheme works to the Treasury’s benefit. There is often a focus on domestic fuel and the impact that it is having on our income. To that point, the more that people spend of their discretionary income on domestic fuel costs, which are VAT chargeable at 5% as opposed to the full rate of 20%, the less that the Treasury recoups. In that regard, we have to be careful about some of the arguments around that.

Now that I have set out some of the context of the Government’s response, I will return to the specifics of the debate—the need for the health and social care levy and the rationale behind its operation. Last month, my right hon. Friend the Secretary of State for Health and Social Care explained to the House that there is now a significant backlog of elective care as a result of the pandemic, which my hon. Friend the Member for Gloucester (Richard Graham) alluded to. More than 6 million people are waiting for elective care in England and more than 300,000 people are waiting longer than a year. The Government have set out a clear plan to tackle the backlog, but we must deal with that most pressing of issues and the levy will allow us to do that.

[Duncan Baker (North Norfolk) (Con)]

Many things have happened in the last few weeks, but we must reflect on the fact that, for the last two years, we have been in the worst global health crisis for years during which the Government spent £450 billion to support people’s livelihoods. Any Government would need to look at themselves and recognise the enormous issues that that has created. It is simply unsustainable to continue to pay for services without looking at how we can gain more revenue for the Treasury. That is a sensible financial decision that any Government would have to make in the circumstances in which we find ourselves.

[Mr Clarke]

I agree with my hon. Friend. The hon. Member for Leeds West (Rachel Reeves) said that when the facts change, we should change our policy, but the point is that the facts have not changed. The covid backlog has not changed and the damage that it has done to our ability to deliver the healthcare that people need has not gone away. Governments have recognised the importance of tackling our social care issues for a long time, but there is no record of action. This time, things are different. We believe that it is only right that in an advanced and wealthy country such as the United Kingdom, people should know that their loved ones will have dignity and financial certainty if they require care. The new levy will allow us to achieve both our health and social care aims.

--- Later in debate ---

[Duncan Baker (North Norfolk) (Con)]

I have said many times in this place that I represent the oldest demographic in the entire country. Hon. Members might expect me to say that North Norfolk is beautiful; it is my home and it is where I grew up. People come to live there all their lives, retire there or come back for years and years. If I knock on a door, there are two things that my constituents say they care about. They care about their health, and they recognise that with the dreadful situation we are in, the conflict we are seeing and the shifting of geopolitical plates, we have to have a competent Government looking after the economy. In pretty much any polling across the country, the most important factors that people care about are their health and the economy.

As I said in my intervention on the Chief Secretary, we have spent £450 billion, an eye-watering amount, on safeguarding the jobs and livelihoods of millions and millions of people—working-class, everyday people whose jobs have been saved. As a consequence, we are now in £2.2 trillion or so of debt. I find it staggering that the Opposition think that we can just amble out the other side of a global pandemic and everything will be normal. It simply cannot be, and we must and should be honest about it.

The health and social care levy is needed. We have heard all the statistics that show why: to repair the backlog in elective surgery and repair the social care system that we need in this country. According to reports, as my hon. Friend the Member for South Cambridgeshire (Anthony Browne) said, £12 billion a year is needed—a colossal amount of money. We cannot raise £12 billion a year by making savings or cuts to other services that have been ravaged throughout the pandemic that we have just come through.

Social care is a subject that I have spoken about many times in this Chamber—obviously I would, with the demographic I represent. We should not underestimate the herculean efforts of our carers. It is completely right that we hail our nurses through the pandemic. Imagine the care and patience someone needs to be a dementia nurse or a palliative carer. It is about time we fixed that—it is about time we grabbed the nettle and did it. This is a Government who are finally gutsy enough not to be derailed, no matter how difficult the situation. They will not be pushed off track; they will deal with it.

Before I came to the House I was a finance director, and I remember that when automatic enrolment came in, the situation was very similar. The initial levy was 1%, and what was being said then was what is being said now—people would be desperately worried about the cost, they would not pay for it, and they would opt out. What happened? Ninety per cent. of people stayed in the scheme, because they saw the value of what it was doing in the context of the marginal extra amount that they were paying.

The same will happen in this case. No one wants to see tax rises—we all agree on that—but the proof of the pudding will be in the eating. If we end up funding services properly and taking care of our elderly people properly—and we have the opportunity now to reform the social care sector and fund the NHS in this way—the 1.25% about which Members are so concerned today will dissipate, and for that reason we have to be entirely sensible.

[Anthony Browne]

My hon. Friend is making a powerful case for the need to increase spending on health and social care in the long run. Does he share my concern about the fact that, while proposing a cut in national insurance, Labour Members have no answer to the question of how they would fund ongoing health and social care services, and the fact that cutting national insurance would inevitably lead to their cutting those as well?

--- Later in debate ---

[Duncan Baker]

This is the great problem in the House: we are constantly being told that what we are doing is wrong, but there are never many opportunities to ask, “What would you do?”, and that is the case again today. Yes, we have heard about the one-off windfall tax on the energy companies, but that has been dismissed for very good reasons. If anyone is able to come up with a sustainable way in which we can generate £12 billion to improve the situation that we are discussing today, I should very much like to sit here for the rest of the afternoon in order to hear it.