Graham Stuart
Main Page: Graham Stuart (Conservative - Beverley and Holderness)Department Debates - View all Graham Stuart's debates with the HM Treasury
Monday 3rd March 2025
(1 day, 11 hours ago)
Commons ChamberRead Full debate Finance Bill 2024-26 View all Finance Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 3 March 2025 - large print - (3 Mar 2025)
James Wild
Well, the last Government had to deal with a global pandemic and an energy price shock. I am happy to enlighten the hon. Gentleman, who has obviously not read the Red Book: taxes are going up—they are going up to record high levels—under the Budget and the Finance Bill that he is supporting. If he is worried about the tax burden, he should not be voting for this Finance Bill today.
Households are facing financial challenges, and the measures in the Bill will only make things worse. The Office for Budget Responsibility predicts that real household disposable income will fall by 1.25% by the start of 2029, largely due to the measures in the Budget. New clause 3 would require the Chancellor to publish an assessment of the impact of the changes on household finances. The choices that this Chancellor and this Government have made mean that borrowing is increasing, so interest rates will be higher for longer and people’s mortgages will be higher, and hard-working families will be paying billions of pounds to pay off the debt interest. The Government inherited inflation at target, but since then inflation has gone up, meaning less money in people’s pockets.
While it is the Chancellor’s wider mishandling of the economy that is attracting the headlines, the measures in this Bill will have a direct role in squeezing households. Whether it is higher stamp duty, increased alcohol duty, air passenger duty, capital gains increases, vehicle excise duty, changes to the tax treatment of hybrid vehicles or many other measures, the costs of the Bill will be felt directly by households across the UK. When households are stretched, it is essential that we have transparency about what the Government’s actions are doing to incomes.
Graham Stuart (Beverley and Holderness) (Con)
Of course, the big tax-raising measure in the Budget, as my hon. Friend says, was the national insurance contributions rise, with its £25 billion impact on the economy, yet once we have taken off compensation for public services and the negative impact on activity, it nets only about £10 billion. It is a peculiarly ridiculous policy that nets only £10 billion or £11 billion, yet, according to the Office for Budget Responsibility’s numbers, will take £19 billion out of people’s pay packets. Does my hon. Friend agree that there has surely never been a more ridiculous measure that costs so much and delivers so little?
James Wild
My right hon. Friend makes the point that this measure may have been introduced by a Chancellor who did not actually understand the impact it was going to have. The Government should have stuck to the promise they made at the election not to increase national insurance at all.
New clause 2 concerns the Government’s plan to undermine our energy security by increasing the energy profits levy to 38%, bringing the headline rate on oil and gas activities to 78%, extending the tax by a year and removing investment allowances. The consequences are fairly predictable. Offshore Energies UK has said that the hike will choke off billions of pounds of investment in the North sea, putting 35,000 jobs at risk.
James Wild
Absolutely. I wonder if, when the Prime Minister was in Washington last week, he had the opportunity to talk to President Trump about home-grown energy and the importance of supporting the domestic sector. That is what we on the Conservative Benches certainly support. This is a sector with 200,000 high-skilled jobs, so it is important that we have an up-to-date assessment of the impact of what the Government are doing on our domestic energy production, energy security, energy prices and the UK economy. Unfortunately, we already see some of that impact: the US firm Apache has said that it will end its operations in the North sea by the end of 2029, blaming the extension of the profits levy for making it uneconomic to stay beyond then.
Graham Stuart
This measure is vying with the national insurance contribution change to be the most absurd measure. I think that it wins by a head. The Prime Minister says that we must have energy security, and the Climate Change Committee that says we will still need oil and gas for 25% of our energy needs if we meet net zero in 2050, but the Government will have no more licences. We will lose tens of thousands of jobs, tens of billions of pounds in tax, and the engineering capability that we need for the transition. It is absurd on every single possible front.
James Wild
My hon. Friend is 100% correct. I think we all know that the architect of much of this is the Secretary of State for Energy Security and Net Zero, who takes a rather fundamentalist approach. He wants to cover farmland with solar farms, and wants to undermine our oil and gas sector. We on the Opposition Benches disagree. It was the previous Government who introduced the levy, but that was to tackle extraordinary profits at an extraordinary time. The revenue helped to keep energy bills lower for all our constituents, but now the Government are ratcheting up the levy and seem to want to tax North sea exploration out of existence. This is just a further example of the Government’s ill-conceived energy policy. GB Energy is a net zero vanity project that will not generate any energy or be an energy supplier. It certainly will not deliver £300 off bills.
Amendments 67 to 69, tabled in my name, would remove clause 47 and abolish Labour’s education tax. Since 1 January, independent school fees for education and vocational training have been subject to VAT at 20%. It is the first time education has been subject to VAT. Why is that? Because education is a public good, so we do not tax it. Putting VAT on independent schools particularly hurts those on the most modest incomes who have chosen to save and make sacrifices to send their children to a school that they think will serve them best.
James Wild
I agree with the hon. Gentleman. Everyone will have an opportunity, if the amendment is moved and selected for a Division, to vote to strip the measure out of the Bill. None of those parents on modest incomes are getting a tax break. They are also contributing to funding places in the state sector, whether or not their children take them up. Ultimately, this is a tax on aspiration, and we oppose it. In Committee, we raised concerns about the impact on certain groups, including children with special educational needs, small schools, faith schools and military families.
Graham Stuart
My hon. Friend is being very generous in giving way. He touches on the issue of children with special educational needs. This is not just about scrimping parents making a choice; this is about people with no choice, whose children have been bullied or who have special needs that have not been met in the state sector, and who have made a sacrifice to put their children in the private sector. People with children in particular need will pay the price of this ill-thought-through measure.
James Wild
My right hon. Friend is consistently absolutely right. There are more than 100,000 pupils in independent schools with special educational needs and disabilities who do not have an education, health and care plan. They will have to pay VAT on their school places—that is not covered by the Government.
Daisy Cooper
We disagree on this point. Fundamentally, Liberal Democrats have said that we should rise the tide for all children, not lower the tide for some. We had a very ambitious education agenda in last year’s general election manifesto. Some areas we had in common with the Labour party, and some not. Our very ambitious agenda for education included a ringfenced high needs budget. I have campaigned relentlessly on improving SEND provision for the past five or six years in this Chamber, in Westminster Hall debates and in various meetings. We do not think that this particular measure is needed to improve SEND funding. Other measures could be used. We have a difference of opinion about how to raise that money.
Graham Stuart
The hon. Lady’s response to that intervention is perfectly good in its own way, but her new clause simply asks to measure the impact and look at whether the damage is too great to justify it in that broader sense. I hope that the Government consider looking at it, take it seriously and follow the hon. Lady’s arguments.
Daisy Cooper
I am grateful to the right hon. Member for highlighting that the new clause is about an impact assessment. Labour colleagues will be aware that the VAT provision will come into effect very quickly, but it will not provide the instant support that many children need. If children’s education is disrupted, they immediately suffer disadvantages in their life. If the Government had really wanted to pursue this measure, I would have hoped at the very least that it would have happened in a few years’ time to allow for adjustment. But we are where we are. We do not support the measure, but at the very least we request an impact assessment, as the right hon. Member suggested.
New clause 8 on alcohol duties would require the Government to produce an impact assessment of the Bill’s measures on distilleries, wine producers and the hospitality industry. Since 2022, I have tabled numerous questions in the House and written letters to the Treasury with evidence of falling tax receipts and sales as a result of the measures that the Labour Government are now introducing. They will introduce huge amounts of red tape, which will be very complicated, very costly and, ultimately, will push up prices for consumers and the industry.
Jim Dickson (Dartford) (Lab)
It is a pleasure to contribute once again to a debate on this important piece of legislation. A number of amendments have been tabled by hon. Members from across the House and, while I do not have time to cover them all, I will address the key ones.
As I said in Committee of the whole House, this is a crucial Bill that underpins the new Government’s aim of fixing a tax system that has become less fair and less sustainable over the last 14 years of Conservative government. I am conscious of the need to confine my remarks to the amendments rather than speaking to the Bill itself, but I remind everyone that the Bill was necessary because of the dire economic inheritance that the Government found on entering office last year.
Graham Stuart
The hon. Gentleman said that the tax system had become less fair over those 14 years. Does he oppose the increase in the tax burden paid by the higher paid? That is what happened over those 14 years. Does he not see it as fair that those on lower and average earnings saw their share of the tax take go down? Is he opposed to that? In what way precisely, from his deep understanding of the tax system, has he concluded that it has become less fair over the last 14 years?
Jim Dickson
When the last Government left office, taxes were at their highest level for 70 years. Thresholds have been frozen, bringing more workers into higher tax rates than was fair on them. The Labour Government are dedicated to trying to ensure that taxes are paid by those with the broadest shoulders and those best able to pay them.
Jim Dickson
If I might make a little progress before the right hon. Gentleman intervenes once more, that would be lovely.
Opposition Front-Benchers have tabled new clauses 1 to 8, which would require the Government to undertake a number of reviews of the impact of measures in the Bill, ranging from a requirement for the Chancellor to commission and publish an assessment of the expected impact of changes to energy, oil and gas profits levy on domestic energy production, the UK’s energy security, energy prices and the UK economy to a requirement on the Chancellor to publish an assessment of the impact of the changes in the Bill on the finances of households at a range of income levels. I gently remind Opposition Members that much of the information requested is already available. Details on tax liabilities are published by HMRC, the Department for Work and Pensions and the Office for Budget Responsibility, and the impacts of the changes set out in the autumn Budget are published in documents including the tax information and impact notes and the “Impact on households” report.
Nesil Caliskan
I want to thank the Members who have spoken so far. I have great enthusiasm for the Finance Bill, and I thank the hon. Member for North West Norfolk (James Wild) for his contributions, alongside the Minister at the time, over the several days I sat through the Bill’s Committee stage. I speak in favour of the Finance Bill as a member of the Committee. I recognise that it is part of the Government’s mission to turn the page on what was a period of decline for the country.
There are several aspects of the Bill that I would like to focus on. To begin with, I see the Government’s proposals on non-dom status as a crucial part of our agenda to ensure that we are delivering a fair approach to taxation in this country. Closing the non-dom loophole, alongside extending the levy on oil and gas companies and ending the VAT exemption for private schools through this Bill, will raise the necessary income to deliver what the Government are trying to do: achieve a balanced budget that will stabilise and then grow the economy.
Graham Stuart
If it turns out that the energy profits levy, lugged up to even higher levels, leads to a lower tax take than there would have been if it were at a lower level, would the hon. Lady think that that was a mistake and urge her colleagues to change course?
Nesil Caliskan
Ministers have provided an assurance of their assessment, and they do not believe that will be the case. The Government are taking a rounded approach to energy that, alongside our commitments to GB Energy and to a transfer to more renewable energy, will allow there to be a more mission-led approach. I take the right hon. Member’s point, but the Government have provided assurances that there will be constant monitoring and that if changes are required they will deliver them.
Graham Stuart
It is a pleasure to take part in tonight’s debate on the Finance Bill, and on the amendments and new clauses that have been tabled. The debate follows several remarkable days and this afternoon’s session when pretty much the whole House came together to congratulate the Prime Minister on his composure and leadership on Ukraine. The need to rebuild our military capability and our hard power as this decade goes on, if we are to ensure the security of Ukraine, Europe, including the UK, and the wider world, was made clear. The Finance Bill has been introduced in that context, because the only way to deliver that security is by having a strong economy and the economic growth that colleagues from across the House have discussed, yet this Budget is the most growth-destructive Budget imaginable.
As we look at the amendments and new clauses, it is worth going back over the context of the Bill, following the pandemic and the energy crisis, which continues in some ways. Thanks to the hard decisions made by the Conservatives, which did not always lead to our popularity and in fact contributed to our electoral disaster last July, inflation was back on target at 2% when the election came. We were the fastest growing economy in the G7 and some 4 million additional jobs had been created. That was the legacy. The incoming Labour Government, with their unprecedented majority and the good will to get on and do something, needed to hold their nerve and recognise that the key components for economic growth had been put in place, which was vital to meet the demands of the NHS, an ageing population and an ever more dangerous world. Instead, what we got from this Labour Government was the most disastrous economic suicide note in history, which has been devastating for the popularity of their party. Never has such a huge majority been squandered so quickly.
New clause 1 addresses the tax that will be taken from a state pension. The Labour Government propose that someone whose only income is the state pension could pay tax on that income. Forget the winter fuel payment being taken away as well—is that really what Labour Members came here hoping to do? I do not think they did, so new clause 1, which would ensure that we look at that, understand it and look for opportunities to change it, is sensible.
New clause 3 looks at the overall tax impact on households and sets our an approach that has to be right. My hon. Friend the Member for North West Norfolk (James Wild) gave a powerful speech at the beginning of the debate and I fully support the points he made.
We have heard powerful speeches from across the House on special educational needs. Again, I say to Labour Members, did they really get elected to come here and target children with special educational needs? Some 100,000 children who are in the private sector do not have an education, health and care plan, even though they are eligible for one. They will be forced out of their schools with no notice and no time to change and plan. It is a cruel policy that the Labour party should be ashamed of. I fully support amendments 67 to 69, which focus on VAT on private school, as well as new clause 7 proposed by the Liberal Democrats, which was spoken to powerfully by the hon. Member for St Albans (Daisy Cooper).
On non-doms, it is ironic that, as colleagues have said, the Government have not listened to pensioners, small businesses, farmers and all those with domestic interests. One might have thought that the Government would want to listen to them, reflect and make some changes to lower the negative impacts, but none of them has been listened to in the least. But non-doms in Davos? The Chancellor has gone off there and there is some change on non-doms, but let us not let the Government off entirely on that, because driving out the very rich, who bring us a massively disproportionate amount of revenue, is not sensible.
Socialists often put equality above all other values. As Churchill said:
“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”—[Official Report, 22 October 1945; Vol. 414, c. 1703.]
One of the greatest ways of creating more equality in this country is to drive all the rich people out; drive all the people out who invest, give us jobs and take little from public services, but contribute enormously to them. That always goes down well with the union backers of the Labour party.
Naushabah Khan (Gillingham and Rainham) (Lab)
On that point, will the hon. Gentleman give way?
Graham Stuart
I promised I would not go on for too long, so I am going to sit down—[Interruption.]
Graham Stuart
I said I would speak for six minutes and I have now spoken for six minutes, but interestingly I have not talked about the main topic I was going to touch on: oil and gas. I made my point in an earlier intervention, but I appeal to the Government because putting up taxes on oil and gas in the North sea will mean that there will be tens of thousands of job losses, and a loss of engineering and other capacity in this country, which is vital to the transition to net zero. In response to my interaction with the hon. Member for Barking (Nesil Caliskan) earlier, no one expects the tax take from this sector to go up in the coming years as a result of the measure; the tax take will go down. The rate can be put up to such a level that it means there will be a lower tax take; the hon. Member for Angus and Perthshire Glens (Dave Doogan) spoke powerfully about that as well.
The hon. Member for Barking appeared to accept that point, and she seemed to have a belief in the Minister on the Front Bench that they would listen if it turned out that that was a short-sighted move. If it means that we import more oil and gas from abroad—by the way, that almost always has a higher embedded carbon content than domestically produced oil and gas—that does not benefit the environment, it certainly does not benefit all the jobs that we would have in this country, and it loses us tax revenue. It is truly a crazy policy.
I appeal to Labour Members, especially the new Members, on this point. We heard from the distinguished economist the hon. Member for Loughborough (Dr Sandher) earlier, who was retreading his speech for about the fourth time, little realising it was supposed to be focused on these particular amendments—[Interruption.] Anyway, he did it with great good humour. But I would ask him to take his finely honed mind and address these issues. If the oil and gas policy is as crazy as every expert witness says it is, then he and others should suggest that the Government change course. The hon. Member for Barking said that the Government should consider changing course if the policy did not deliver what it was supposed to deliver, so I ask Government Members to support the amendments that we have put down tonight and oppose this ridiculous Bill. I look forward to hearing from the Minister.
The Exchequer Secretary to the Treasury (James Murray)
At the heart of the Prime Minister’s plan for change is our mission to grow the economy to put more money in people’s pockets. We are determined to make people better off. We know that investment and growth depend on the essential foundations of economic stability, fiscal responsibility and public services being on a firm footing, but this Government inherited a challenging and unsustainable set of future spending plans based on unfunded commitments that had not been shared with the OBR or the British people.
No responsible Government could have let things carry on as they were. That is why at the autumn Budget, my right hon. Friend the Chancellor set out the Government’s plans to fix the foundations of the economy and deliver change—a plan to protect working people, fix public services, including the NHS, and rebuild Britain. That has meant taking difficult decisions on tax, spending and welfare to repair the public finances and support investment in public services, and the Government have done that while protecting people’s payslips. We have also ensured that the UK is one of the best places in the world to grow a business, with corporation tax capped at 25% and reforms that will support small businesses and the British high street. This Finance Bill represents the next step in delivering on the autumn Budget by legislating for several key manifesto commitments, supporting businesses to invest and implementing reforms to the tax system.
I thank all hon. Members for their contributions during the debate; before I turn to the individual amendments, I will briefly address some of the points that they made. I thank my hon. Friend the Member for Loughborough (Dr Sandher) for setting out the importance of growth and making people better off, and for his thorough analysis of all the amendments and new clauses to the Bill, which I seem to recall. Perhaps that was in fact my hon. Friend the Member for Dartford (Jim Dickson), who did go through all the new clauses—I thank him for his contribution. I also thank my hon. Friend the Member for Barking (Nesil Caliskan) for being on the Finance Bill Committee, although I note her description that she “sat through” it, rather than thoroughly enjoying the episode.
I also thank Opposition Members for their contributions to the debate. The hon. Member for Bridgwater (Sir Ashley Fox) recognised that even in his view, he could agree with a few points in our Bill, which I welcome.
Graham Stuart
The Minister is gracious, if not always in the Whips’ best books. Does he expect pensioners who are solely reliant on the state pension to get drawn into tax and the need to produce a tax return? Has he made an assessment of that, and what kinds of numbers would there be?
James Murray
As the right hon. Gentleman will be aware, in the coming financial year 2025-26 the personal allowance will be above the level of the new state pension, so what he said should not apply when it is people’s sole income. However, there are already cases of individual pensioners who do owe tax; indeed, around two thirds of pensioners pay tax, because they also have private pensions. They pay via pay-as-you-earn or self-assessment.
I will not go into detail about the Government amendments to visual effects relief, because I assume they have the consent of the whole House. However, I will briefly speak to some of the amendments tabled by Opposition Members, as I feel I should address them. I will take together new clauses 1, 2, 3, 5, 6 and 8, which would require the Government to review the number of individuals receiving the full state pension and their income tax liabilities over the next four years, and to publish various impact assessments regarding the impact of changes to the energy profits levy, as well as the impact of the Bill on households, small and medium-sized enterprises, distilleries, wine producers and the hospitality industry.
The Government remain opposed to all of these new clauses, for the same reasons that I gave in Committee. First, the relevant information on those receiving the state pension and their tax liabilities is already published by HMRC, the Department for Work and Pensions and the OBR, and is publicly available.