National Insurance Contributions (Secondary Class 1 Contributions) Bill

Graham Stuart Excerpts

Committee of the whole House & 3rd reading
Tuesday 17th December 2024 Commons Chamber

[Joe Morris]

I thank the hon. Gentleman for his guidance on the correct form of words to use. The reason that I used the term “ultimately” is that it is the fundamental goal of Government to improve the lives of our constituents. That is why I choose to use the form of words that I am using, and why I am focused on the eventual outcome for my constituents. As I said, we did not want to inherit the country in the circumstances that we did. That is fault of the Conservative party, its record and the inheritance it left. We need to bear in mind the context, because that shapes everything and how we go about this.

[Graham Stuart (Beverley and Holderness) (Con)]

Further to the question from my hon. Friend the Member for Hinckley and Bosworth (Dr Evans), we hear the hon. Gentleman’s critique of the previous Government, but we are trying to understand how imposing these costs on GPs at one end of the service and hospices at the other will remotely help the NHS and, more importantly, the people who rely on it. We would like him to explain that, not just slag us off, however much he might enjoy doing so.

[Joe Morris]

I have never turned down an opportunity to slag off the Opposition. I am always happy to do so.

The ultimate reason that the Budget was necessary was to raise the extra money to invest into the NHS. The extra infrastructure investment will support our rural communities, our rural GPs and our care homes. That is the fundamental point of the Budget. It is a reset moment to properly support our public sector once more, which the Conservative party failed to do, as the right hon. Gentleman well knows. We need to restore faith in our NHS and our small businesses that were so badly let down. I have spoken to many across my constituency who share my optimism about this Government and who are convinced of the need for that investment. [Interruption.] Opposition Members can chunter all they like, but it is true. Ultimately, those businesses know that we need to invest in the state in order to drive up standards and confidence and provide the stability that the country so desperately needs.

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[Gareth Davies]

My right hon. Friend—a Lincolnshire colleague and Father of the House—puts it perfectly. Labour says that it supports public services and that those services are apparently being trashed, so why on earth would the Government then go and tax them? Why add to their cost base, which they have very clearly said will reduce services across every constituency? Labour Members will all walk through the Lobby tonight and add to the cost burden of those services. It does not make sense. Charities have also signalled the alarm, with more than 7,000 writing to the Chancellor to warn of the £1.4 billion hit that they will face next year.

[Graham Stuart]

Does my hon. Friend agree that Labour Back Benchers need to speak to their Ministers? As my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) suggested, the Government cannot have meant to do this deliberately. They could accept our amendments today or move some of the funds for the NHS—the £22 billion or £25 billion, whatever it is—across to this, because the NHS depends on social care and other services. At the moment, the Government risk turning something that could be a triumph for them into a disaster, both for the NHS and, more importantly, for patients and those most in need.

[Gareth Davies]

Once again, my right hon. Friend makes a valid point. As I have said already, I am not sure that this was intended. I do not think the Government understand what these measures will do to our communities, to the sectors I have outlined and to the businesses that I will speak about in a minute. The Minister will have to address my right hon. Friend’s point. What will the Government do to mitigate the damage of the Bill on the communities and organisations that I have highlighted?

A sector I have not yet highlighted is childcare, without which millions of parents across the country could not go to work—including, by the way, many in this House. The Bill will contribute an average of £47,000 in additional costs per nursery next year, according to the National Day Nurseries Association. The previous Government did so much to extend childcare to more families, boosting workforce participation and economic growth, but this tax hike will pull us back from that progress. That is not what people voted for. There is no mandate for this harm. I urge the Government to think again.

Ideally, all employers would be made exempt, which is why the Conservatives voted against the Bill. At this time of year, people should be reflecting on another year gone by all too soon and looking to the new year with hope, ambition and optimism, but so many employers will now enter 2025 with fear. Many will be thinking again about that planned expansion or the investment in new equipment or premises. Worse, some will be thinking about who they need to let go—never mind awarding the pay rises in the spring they once hoped to give.

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[Yuan Yang (Earley and Woodley) (Lab)]

Today I stand proud to welcome the Budget, which takes long-term fiscal planning seriously. I welcome a Government who will take us away from the course the previous Government steered, away from austerity, and away from the chaos and confusion of the past few Budgets.

First, I want to make a brief point about tax simplification and the confusion across the Chamber in this debate and in the many amendments. The way to reform a tax system is not to argue for various exemptions, reliefs and get-out clauses for different subsectors, but to have a consistent approach to collecting tax applied across the whole economy and then to fund those sectors of the economy, such as healthcare, transport and so on, which we should be funding. That is the approach the Budget has taken. Many Members of successive previous Governments have said that we need to simplify our tax system. I suggest that asking for dozens of small amendments to a Bill is not a way to achieve that aim. As my hon. Friend the Member for Cities of London and Westminster (Rachel Blake) pointed out, that is not the way to run any tax system, not even on local government level.

[Graham Stuart]

Will the hon. Lady give way?

[Daisy Cooper (St Albans) (LD)]

Will the hon. Lady give way?

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[Yuan Yang]

I thank the hon. Member for his intervention and for highlighting the perilous state of GPs in my constituency of Earley and Woodley after 14 years of the previous Government stripping away the NHS. I am very confident in the announcements made by my right hon. Friend the Secretary of State for Health, which he has made several times in this Chamber, to take all funding decisions in the round. I very much look forward to seeing the quality of GPs improve. I also highlight the funding already announced for increasing the number of practitioners in GP surgeries. I expect to welcome them in my constituency, as well as across the UK.

I return to my point about long-term fiscal planning. The hon. Member for Hinckley and Bosworth (Dr Evans) made the point that we need to make choices. Over and over again on the doorstep I have been told that public services are broken, that crime too often goes unpunished on our high streets, and that mortgage rates, which have shot up wildly over the past few years, are too much of a burden on everyday families. All that creates uncertainty and it is that economic uncertainty that hurts businesses. That is why I welcome, for the first time in many years, a credible Budget that addresses the fundamental problems facing our society. Yes, we have to understand the current fiscal situation in the context of the bad decisions that were made before us. We all know about the tax giveaway mini-Budget under Liz Trust and the perilous effects it had on gilts, pension funds and, of course, mortgages, for which we are all now paying the price.

[Graham Stuart]

Will the hon. Lady give way?

[Yuan Yang]

I will give way in a moment.

I add to that the bad decisions made in the previous two Budgets under the right hon. Member for Godalming and Ash (Jeremy Hunt). Those decisions were not credible. It was not credible, on the March 2024 OBR forecast, that the next Government would do anything about schools, special educational needs and disabilities or the NHS. Those were not credible promises made in the last two Budgets. Those giveaways were made by Governments without a plan; Governments who literally cut and ran by calling an early summer election so they would not have to face the consequences of their bad fiscal choices. They left us with a bill to pay and this Government are now making that possible in a considered way.

[Graham Stuart]

I am extremely grateful to the hon. Lady. She rightly highlights interest rates and mortgage payments. Was she disappointed when the OBR’s assessment of the Budget suggested that interest rates were going to stay higher for longer as a result of these measures? I invite her to discuss the topic under discussion today, rather than the past Conservative Government. We can have debates on that, but what we are trying to drill into today are the actions of this Government and their real-world impact on those who can least afford it.

[Yuan Yang]

I thank the right hon. Gentleman for his point. I always welcome conversations with the OBR, whose representatives came before the Treasury Committee only a few weeks ago. In that Committee discussion, we had a full debate on its forecasts. It found that the long-term infrastructure and capital spending in the Budget, which is made possible by the different tax announcements the Government have set out, means that the economy will, in the long run, be 1.5% larger. I would add that the forecasts in the OBR’s assessment of the Budget have not yet taken into account all the various details of the measures that will be announced in the forthcoming months. I expect those forecasts to improve.

To return to the bill that the Government are now paying, we need to build back our economy and public services. That task requires at least a decade of national renewal. That is why in the Budget we set out credible long-term funding commitments and plans for where the money comes from.

On small businesses, I recently spent Small Business Saturday out and about visiting local employers across my constituency of Earley and Woodley. I agree very much that those small businesses are the backbone of our local economy; they bring character and jobs to our high streets. One such shop I visited is called UnderTwoK, a shopfront on Wokingham Road. I asked the owner, Mark, what the Government could do to help small businesses like his. He said:

“keep going with the focus on economic stability and clean energy. That’ll bring more people our way.”

Small businesses know that the Government are on their side. They know that, because the Chancellor increased the employment allowance from £5,000 to £10,500, ensuring that the rise in employers’ national insurance contributions will not hit the smallest businesses. Those employing four members of staff on the minimum wage will not be hit by the measure. That means that 865,000 employers will not pay any NICs at all next year and over 1 million will pay the same or less than they did previously. The changes have been very much welcomed by the Federation of Small Businesses.

The top concern I heard about from those retail businesses is not about NICs, but about shoplifting and crime on our high streets, which all too often goes unpunished. The funds raised in the Budget allow us to employ over 13,000 additional neighbourhood police officers, police community support officers and special constables by 2029. They will also fund 1,200 new police officers. Introducing the specific offence of assaulting a shop worker and attaching prison time to that offence is backed up by the commitment to put £2.3 billion towards prison builds over the next two years. That is an example of how we are helping small businesses: not just by talking the talk, but by walking the walk fiscally.

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[Dr Jeevun Sandher (Loughborough) (Lab)]

This Labour Government will invest to rebuild our broken nation. Investment in our future will be paid for by tax revenue, and today we are debating the largest revenue-raising policy in our Budget. I am proud that revenue will be raised from the largest businesses to fund the homes, jobs and skills that we need to create a good, affordable life for us all. For those of us in our nation who cannot afford a decent life, the picture has become increasingly bleak: non-graduates and the young are locked out of the opportunities that previous generations had, and there are not enough homes, good jobs or skills.

We are raising the money for investment in homes, jobs and skills from those who are most able to afford it. We are raising £23 billion—investment that every business, family and young person will benefit from—and 75% of the revenue is from the largest 2% of businesses. We are raising that money while protecting the smallest businesses by increasing the employment allowance; the Federation of Small Businesses has said that that is a huge help as we bring in this revenue raiser. Half of all businesses will pay the same or less, and a quarter of a million will see their tax bill fall.

[Graham Stuart]

The hon. Gentleman is most gracious for giving way. He is also a highly distinguished economist. He has talked about this record tax-raising element. What will the net value of the £23 billion or £26 billion be, after we have looked at behaviour change, reduction in corporation tax receipts and compensation of the public sector? How much of that will come into the Government coffers?

[Dr Sandher]

I thank the right hon. Member for his incredibly kind words. For me, this is actually rather simple. I follow the Office for Budget Responsibility forecast, which goes through the Treasury policy costing and gets signed off. Those are the numbers I look at, and that is the money that will come in.

We are raising the money, as set out in those forecasts, in a fair way to invest in our future prosperity. We are using that money to build the homes that we need. In the mid-1990s, it took a young person around three years to save for a deposit. Now it is over 14 years, and in London it is nearly 30. That is why nearly half of young people are living at home with their parents, and why we are investing the tax revenue from the measures that we are discussing in the affordable homes programme. That means more homes for young people.

We are also using this money to create good jobs. The idea that someone could leave school and get a decent wage left our nation long ago. There are low-paid and insecure service jobs for some, but many are unable to get a job at all. Today, around 15% of young people are not in education, employment or training. Our warm homes plan, which will upgrade 300,000 homes, will also create tens of thousands of good jobs.

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[Ms Stella Creasy (Walthamstow) (Lab/Co-op)]

It is extraordinary to follow Opposition Members, with their short-sightedness and, frankly, short memory of the damage they have done to this country. Indeed, it is the very definition of chutzpah. I have been in this place for 14 years, and I watched what happened unfold in my constituency and across the country. That is how we got to this Bill today. New MPs may wish to rewrite history, but many of us can give testimony to the damage the Conservatives did.

This country should be grateful that we now have a Chancellor who is facing up to the fantasy public finances that we inherited from the previous Government, and who is trying to rebuild this nation. We finally have a framework for improving our rail services. Anybody thinking about getting on a train this Christmas knows how far we have to go. The damage lies at the door of the previous Conservative Government.

This Government are devolving meaningful powers to local government and generating clean electricity, which are just two things that the previous Government could not even understand, let alone get a grip of. We are certainly developing a better approach to our infrastructure.

In their final years in office, the Conservatives passed tax cuts that the country could not afford. There may have been genuine shocks around the world, but we can see the damage the Conservatives did, and we can see that they chose to compound it with bad choices. They did not just break Britain; they slashed it and burned it to the ground. That means this Government’s first year in office is a salvage operation. The previous Government’s decision to prioritise fake tax cuts over sustained investment in our public infrastructure has cost us all dearly.

Those who are sceptical of what I am saying should stand in an A&E and see the trolleys in the corridors, as 7.9 million people still wait for operations. They should talk to the schools with reinforced autoclaved aerated concrete, to the councils barely clinging on to provide social care, and to the police who just do not exist on our streets.

[Graham Stuart]

Will the hon. Lady give way?

[Ms Creasy]

For donkey’s years, I listened to the right hon. Gentleman try to claim that this country was on the up. I have seen the alternative. Please let him justify that.

[Graham Stuart]

As the hon. Lady knows, 4 million jobs were created under the last Conservative Government. She has just talked movingly about patients stuck on trolleys in corridors. Could she explain to the Committee how the Labour Government’s policies in England will differ from the policies of the Labour Government in Wales, which has far worse outcomes and worse waiting lists than anywhere in England.

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[Gareth Snell]

I wish to start by reflecting on something that the hon. Member for Grantham and Bourne (Gareth Davies) said in his opening speech. He talked about socialists thinking that taxes just flow in. Given that he was a member of a Government that raised taxes to their highest level in history, perhaps this season it is less secret Santa for him, and more secret socialist. Perhaps, if he is lucky, under his Christmas tree on 25 December he will find a red flag that he can fly. I jest, Madam Chair, but the point is that that Government agreed with tax and spend—they taxed; the trouble was what they chose to spend the money on.

That is the difference between this Government and the Government that came before: we have made clear commitments about what we will spend the money raised by this national insurance Bill on. We will make investments into the NHS and our public services, such as our schools and hospitals, and we will fix the railways. [Interruption.] The hon. Member for North Bedfordshire (Richard Fuller) chunters, but I cannot actually hear what he is saying. If he wishes to intervene, I will happily give way—no, I thought not.

The fact of the matter is that although this is not a decision that I would particularly have liked the new Government to make, having looked at the levers available to us and having made a political choice to protect the pay packets of individuals in work, this is a way of raising revenue.

[Graham Stuart]

Will the hon. Gentleman give way?

[Gareth Snell]

I often think that we do not hear enough from the right hon. Gentleman, so on this one occasion I will give way.

[Graham Stuart]

Given the competition on the Labour Benches, the hon. Gentleman is one of the more honest and up-front Members in addressing some of the issues. Does he regret the exclusion of the various groups we have heard of today, from hospices to social care and childcare? Will he urge Ministers to look at whether they can create a more coherent and joined-up approach, so that the £22 billion—or whatever it is—going into the NHS actually works to improve the healthcare of the nation?

[Gareth Snell]

If the right hon. Gentleman hangs fire, he may be surprised by some of the things I will say as I try to progress my speech. Although, in that context, is it not laughable and ludicrous that some of the most important parts of our social care sector—our air ambulances and our hospices—are dependent upon charity; that they have to rattle tins in supermarkets, dependent on handouts and philanthropic grants on a non-reoccurring basis, just to continue the service they deliver? There is a much broader conversation that we have to have as a nation about how far general taxation should fund some of those programmes. The right hon. Gentleman rolls his eyes, but I would rather make a small contribution to ensure that hospices and air ambulances can run than to have to watch people sit in baths of beans to try to ensure that vulnerable people get the help and support they need when they need it. He may disagree with that, but we should discuss that broader point of how we fund some of those things and whether we consider them to be vital infrastructure to our health and care system.

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[Graham Stuart]

It is a pleasure to follow the hon. Member for Stoke-on-Trent Central (Gareth Snell), who I am pleased to say honoured his words at the beginning of his speech, quite rightly. I think that is because he has been in this House for some time and knows the difference between legislative intent and legislative outcome. No one believes that the Minister on the Front Bench or other Ministers wilfully want to damage GPs and hospices —how could anyone reasonably want to do that? However, that is the effect of this Budget of broken promises overall, and of the particular measure on national insurance contributions that we are debating today.

No one has really explored where this measure came from, but the genesis of it was actually a desire, in the pre-election period, to reassure those with long memories who thought that Labour was not a party of growth. In trying to reassure the nation that Labour was on the side of business, it was saying, “Economic growth is mission No. 1, so if you are an entrepreneur, you can relax, because we are on your side.” The other big fear about Labour Governments over time is that they will come along and raise people’s taxes. Labour therefore came out with very specific pledges and oft-repeated promises again and again, saying that it would not raise an array of taxes, including of course national insurance contributions. That is why Paul Johnson, who is an independent commentator, said that he thought this measure was an absolutely clear breach of that pledge.

On coming into power, the Government said there was this £22 billion black hole, and Labour Members have mentioned it again today. I think the hon. Gentleman was notable in not doing so, because he knows there is no substance to it.

[Gareth Snell]

Will the right hon. Gentleman give way?

[Graham Stuart]

The hon. Gentleman can intervene to rectify that in a moment if he feels the need to do so for reasons of tribal loyalty. Again, the OBR said there was nothing in its calculations that supported or validated—I think the word used was that it did not “validate”—the so-called £22 billion black hole, but let me give way to him so that he can rectify that omission.

[Gareth Snell]

The phrase damned by faint praise springs to mind. To be clear, I think the analysis of the Treasury and the Chancellor of the state in which we found the public finances is absolutely accurate. I think the remedies we are taking, while unpalatable to some, are necessary. I just wish we were able to mitigate some of the worst aspects of them.

[Graham Stuart]

I thank the hon. Gentleman, and it is good of him to show that tribal loyalty. He did not criticise the OBR, but it said that it could not validate the so-called analysis. The £22 billion black hole does not exist, and it is quite clear from the OBR that that is true.

Let us, however, assume that the black hole is true: I think the Government are spending £1,270 billion this year, so let us assume that, in that £1,270 billion, this gargantuan black hole of £22 billion actually has veracity, while it does not. Having gone to the lengths of forcing even someone as up front and candid as the hon. Gentleman to feel obliged under tribal Labour rules to keep backing this measure, and having established the figure, one would think that the Government would want to come forward with a tax rise, if that is what they wanted to do all along. Alternatively, to give the Government credit, perhaps they came into office and found that things were much worse than was thought to be the case beforehand, in which case they would want to come up with a rational way of raising the funds with minimum possible damage.

I suggest it could be said to be a fib, but let us say there is a £22 billion black hole and they need to fill it. The Government should come forward with sensible tax plans. The Government have reneged on their pre-election promises, so why not renege on this one, and come forward with a sensible tax that does not particularly disincentivise those who are furthest from the jobs market? That is what the reduction in the NIC allowance to £5,000 does, and we know that it is particularly going to hurt people are struggling to get back into work, perhaps after a mental health episode, or perhaps because they are young and are struggling to get into the jobs market.

There may be worse taxes than the way this one will work out. I think £26 billion is the headline amount that will be raised and taken out the economy, but 76% of that in year 2 or 3—whichever it is—will come out of wages. By my rough arithmetic that means about £19 billion is going to come out of pay cheques, which is the very thing the Government were trying desperately to avoid doing. This measure will take £19 billion out of pay cheques, and because of the reduction in investment, the reduction in employment and the resulting reduction in profits, it will net only £16 billion.

Then the Government, having got that £16 billion, have decided to compensate the public sector, and we know about this because of the changes the OBR put out at the time of the election. It had to make a correction, because it had clearly been asked and told to allow another £800 million or £900 million for social care, recognising the issues that have been raised so powerfully by colleagues today. However, that was changed and removed, and it had to make an amendment to its response. By the time we have taken off the compensation as currently restricted to the public sector, which I think rises to about £5 billion, that takes the net receipts to £10 billion or £11 billion. That is a £26 billion hit to the economy, a reduction in investment, higher interest rates, lower growth, and £19 billion removed from working people’s pay packets—the people who Government Members believe they are on the side of—yet the measure nets only £10 billion or £11 billion to spend on public services. It is truly a ruinous approach to raising the money.

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[Graham Stuart]

There are so many places where the Government have spent it. Having claimed this £22 billion black hole, they promptly agreed a £10 billion pay rise for their trade union backers. Train drivers on more than £60,000 a year are getting £10,000 pay rises while in talks about a four-day week. Those train drivers are not available for the holiday season, because they are so awash with that backdated pay increase that nobody wants to do any overtime. There are so many other areas. We have GB Energy to invest in renewable energy. I was the Energy Minister until April, and there was no shortage of investment available for renewables in this country. Before anyone points to last year’s failure to get offshore wind, that was because of the price window that we imposed. We did not want to overpay for it. There was no shortage of appetite, as was shown this year. One reason why we moved to an annual programme was precisely to ensure that we did not overpay, but could bring on all the renewables we wanted. There are so many areas where the Government could instead not spend the money that they have chosen to spend.

Fundamentally—we need this conversation, including in my party—one of the things that makes the Conservatives the most successful democratic political party in the history of the entire western world, I am proud to say, is that we believe in proper analysis and deferred gratification. We have to make sure that we have a growing private economy, because that is where wealth comes from. If we allow money to fructify in the hands of those who create wealth, it will duly come back to the Treasury with interest, as the Financial Secretary of Hong Kong said many years ago, in rather more pithy terms. The most important thing is to live within our means, and to recognise the importance of feeding the private sector economy, because it is only wealth from that sector that allows us to deliver the public services that we all want.

I support new clause 1. The hon. Member for Stoke-on-Trent Central made it clear that he has concerns about the Bill’s impact, and I hope that the Minister can acknowledge that impact. At the very least, we should look back and check that the impact is, as I hope it will be, more akin to the growth-producing, foundation-fixing, black hole-removing vision of the Government. However, if by any mischance the combined Opposition parties are right about the Bill’s disastrous impact on the most vulnerable, the people furthest from the labour market and the rest, we should find out the truth, and whether the Minister or his colleague the hon. Member for Stoke-on-Trent Central is correct.

I also support amendments 13 to 18. The NHS is the centrepiece of the tax-raising and spending elements of this Budget, and this rise in national insurance contributions will contribute £22 billion—or £20 billion; I hear different numbers at different times, but I will stick to £22 billion—to the NHS. There are a couple of ways to sort out the problems, because the system is entirely dependent on social care provision, the hospice system and ancillary services, including primary care—the things that make up the NHS. In my area, when an ambulance goes to Hull royal infirmary, it may take an hour to get the patient in. That is because patients in the hospital cannot be got out of their bed—even though they are ready to leave—and into social care provision. The Bill will make that worse. Perhaps funding can be vired over to social care. Through the amendments suggested by my hon. Friend the Member for Grantham and Bourne (Gareth Davies), we are probing the Government and the Minister, who is a decent, honourable man. We are asking them to look at the issue creatively and ensure that the misgivings of those such as the hon. Member for Stoke-on-Trent Central are listened to.

[Daisy Cooper]

It is music to my ears to hear a Conservative Member of Parliament finally recognise the connection between the NHS and social care. The right hon. Member will remember that former Prime Minister Boris Johnson stood on the steps of 10 Downing Street and promised to fix social care for good. Could he let us know why he did not?

[Graham Stuart]

The hon. Lady has not been in the House quite as long as I have. I was first elected in 2005, and in that Parliament I spent a lot of time—mostly in Westminster Hall, as I recall—in debates with then Labour Ministers talking about the importance of having a joined-up, coherent approach to the national health service and social care. It is clearly fiendishly difficult. The coalition Government, of which the hon. Lady’s party was a part, and the Conservatives kept working at it. We changed the name of the Department of Health to the Department of Health and Social Care precisely because of that. It is challenging, because social care is delivered through local authorities, but the opportunity is there. Before the Government get all that wiring and complexity fixed—we were working devotedly at that—they could vire funding over to the sector, or exempt from the Bill the sectors on which the NHS depends. Pouring money into the Hull royal infirmary while it is unable to unload the ambulances coming in, or get the healthier patients out, is a crazy approach. I am sure that the Minister recognises that.

I want to mention the impact on social care. Last Friday, I went to Merrywick Hall, a great example of a small, family-run, residential care home. Its 31 residents are not all elderly, but they all have learning disabilities. Some of them are elderly, making them doubly disadvantaged. The home charges a basic rate of just £699 a week to care for those people, and its staff are stretched. I met Katie, who runs the home, and her husband Carl, who oversees the finances, although the home is owned by another. It was quite clear that that they were not running a business in the way that I would recognise as a former businessman; they were running an institution that was absolutely committed to the welfare of the people in it. Between this jobs tax, which the Minister is foisting on us, and the national minimum wage increase, they have to find an extra £56,000 a year, which is equivalent to the care costs of 1.5 residents. That is the reality. That system and those places are vulnerable. If those places go, there will be a massive knock-on effect on the rest of the system.

I hope that hon. Members from across the House are less interested in the system—although it is our job to worry about it—and much more interested in the people. People cannot get much more vulnerable than the elderly who have learning difficulties.

[Dr Luke Evans]

When it comes to social care and GPs, there is a situation that has been described to me as Schrödinger’s care. Providers are seen by the state as being private, yet their services are commissioned solely by the NHS, which means that they are caught both dead and alive when it comes to NICs. This has happened either by design in the Treasury, or by accident. The answer from the Chancellor, the Prime Minister and the Health Secretary—I expect the Minister to say this—is that funding will be allocated in the usual way. The problem is that that will happen in April, four months away, while decisions are being made now. There are potential closures, and certainly redundancies, or decisions not to employ. How will that be addressed? Does my right hon. Friend agree that the Minister needs to address that, because these institutions are listening now, and need to know that answer?

[Graham Stuart]

I thank my hon. Friend, who is of course a doctor. In this and previous debates, such as Second Reading, it is good to encourage a discursive approach in the Chamber, if we are to be valuable. I hope that we will continue to gather in this Chamber, talking to each other and listening. No one would think less of the Government for making changes. I cannot speak for those on the Opposition Front Bench, but I would seek to give the Government some political cover if they found a way to ameliorate the impact of this measure on the system—and, more importantly, on the human beings on which the NHS relies.

In 2021, the then Leader of the Opposition, now Prime Minister, promised a plan

“to ensure that those with the broadest shoulders pay their fair share.”—[Official Report, 8 September 2021; Vol. 700, c. 295.]

Yet all the analysis available to Government Members shows that those with the least will pay the highest price for this measure. In my constituency, HICA, a large not-for-profit provider of social care homes and in-home care—a brilliant organisation that has had the same chief executive for the past five years—was finally getting a surplus to invest in its stock, some of which is almost as old as me, and to give its staff something above the national minimum wage. But following the changes in the Budget, it faces a bill of £3.5 million, more than offsetting any hope of a surplus, which it desperately needs in order to invest in its people and stock. The money will be taken away from that good social purpose in my local area, and instead will go into the Chancellor’s mythical black hole—for payment of additional sums almost greater than the total income of many pensioners, and for pay rises, for train drivers, so that they can pay their union fees; and so that Labour Members can carry on all too rarely mentioning in the Chamber their sponsorship by people who dictate so much of what they share with us—the hon. Member for Stoke-on-Trent Central aside.

Finally, it is interesting in these debates just how few of the more than 400 Labour Members—they can all cheer on the Government Benches at how many Labour MPs there are—want to come and defend these measures. The hon. Member for Hexham (Joe Morris) spoke bravely, but he looked a little world-weary. I think he has been going out and about in his constituency, so I am sure that he is hearing the same thing as me, but said a little more angrily, because he is responsible for it.

I appeal to those Members who are not here to seek change. The 2012 Budget by George Osborne, crudely and rudely called the omnishambles Budget, included a measure to bring in 20% VAT on static caravans. The Treasury civil servants love dusting these things off—they hate an anomaly more than anything. Those are the very caravans that ordinary working people use to holiday on the coast. I did not, alongside colleagues, run my campaign in the press; instead, I built up support from Conservative Members and coalition colleagues, who realised how damaging that measure would be for jobs in their area, the holiday opportunities of ordinary working people, and an industry that is 95% manufactured in the UK. People told me, “Change is impossible—this has been announced in a Budget. You cannot overturn a Budget measure.” You and I, Madam Chair, having been here some time, know that that is not true. Politics is a matter of arithmetic. If Labour Members can build enough support among colleagues on the Government Benches—they do not need to do it publicly, and they do not need to tell us about it—they have every chance of changing this. The Whips and Ministers start getting spooked when 15 Members turn up. If Labour Members can get 30 or 40, they can make a change. They should not feel powerless.

The Government could make changes. They could move £3 billion or £4 billion over to social care, hospices, GPs and the like. They could agree to our amendments. They could come up with some other solution. They have the power to do it. Stubbornness and perhaps a certain arrogance has crept in because of the size of their majority. Government Members, who go out to talk to their constituents more frequently than Ministers, will be in a great position to tell Ministers that up with this they will not put.

[Daisy Cooper]

The right hon. Gentleman is encouraging the Government to ameliorate their position. Does he agree that there is one very clear way of doing that today? Members on all Benches could vote for Liberal Democrat amendment 1, which excludes all GPs, dentists, hospices and charitable health and social care providers from this NICs increase.

[Graham Stuart]

Liberal Democrats did remarkably well at the election, pretty much on the back of sewage. Between water stunts and sewage, a record number of Liberal Democrats have been returned. I am pleased to say that the Conservative party remains His Majesty’s Opposition. Therefore, I urge the hon. Lady and her colleagues to support amendments 13 to 18, and new clause 1. She will find that exactly the same is achieved, but with the backing of His Majesty’s Opposition.

--- Later in debate ---

[Dave Doogan]

I rise to speak to defend Scotland’s NHS, including our GPs, hospices, care homes and nurseries, from this Labour Government’s national insurance tax hike, as well as to protect the charity and higher education sectors. I am proud of the amendments the SNP has tabled to the Bill to protect these vital services from the increase in national insurance contributions put forward by the Government. The fears are genuine and escalating over the job cuts and service reductions that will be the inevitable and plain and simple consequence of this fiscal madness.

We in the SNP have consistently highlighted the brutal impact that Labour’s tax rises will have on GPs, charities, care homes and other sectors, with organisations warning that deep cuts will be made to the services they provide—vital services that are no less essential to communities and individuals than secondary care services just because they are received in the community or from a charity. That is why we have tabled amendments 4, 5, 6 and 26 in my name and the names of SNP colleagues.

On higher education, the University of Edinburgh was last month reported to have opened a redundancy process for staff as a result of Labour’s tax hike, and Universities Scotland is warning of a potential £45 million tax burden for Scottish universities. Yet again, we see key sectors of the Scottish economy hammered by a London Treasury out of touch, out of ideas and, if this goes through, demonstrably out of control. Higher education, agriculture, and oil and gas are all demonstrably larger elements of the Scottish economy than they are of the English or UK economy. This Government, with NICs and other specific tax increases or allowance removals, are hammering particularly important elements of the Scottish economy. As usual, what England wants Scotland gets.

The Labour Government’s national insurance increase will be a disaster for Scotland’s healthcare providers, voluntary organisations, nurseries, universities and colleges, but who on the Labour Benches has come along to speak up for those organisations in Scotland? Nobody. Not one Labour Scottish MP made a speech to protect Scotland’s interests. But Labour MPs from Scotland were there to nod through and vote through the cut to the winter fuel payment, freezing Scotland’s pensioners; Labour’s bedroom tax, entrenching poverty in Scotland; Labour’s two-child limit, punishing the poorest in Scotland; taxing Scotland’s oil and gas sector to the brink of extinction; attacking Scottish agriculture; and gouging Scotch whisky. They were all here to make sure that that happened and to speak to that, so I will leave the people of Scotland to draw their own conclusions about this particular lack of activity from Scottish Labour MPs.

[Graham Stuart]

I am grateful to the hon. Gentleman for giving way. When did the SNP do an about-turn on Scottish oil and gas? As far as I can tell, it seemed as opposed to its continuation as the Labour party is now in government.

[Dave Doogan]

I thank the right hon. Gentleman for his intervention. I refer him to Hansard from the previous Parliament. The comments I have just made are entirely consistent with the comments I made in the last parliamentary term.

With each day that passes, we learn more about the damage Labour’s Budget will inflict on household bills, businesses and charities, yet despite those warnings the Labour Government are determined not to listen and are ploughing ahead with this devastating proposal. The SNP will always stand up and protect Scottish jobs, Scottish services and Scotland’s people. That is reflected in John Swinney’s budget—a balanced budget in the interests of the people of Scotland and the businesses of Scotland. That is the SNP way. We have done it this year and we have done it in every one of the 17 previous years we have been in the Scottish Government.

Do the UK Government understand how commissioned services work? We have heard that quite a lot this afternoon and it is becoming increasingly clear that, at best, they have a sketchy understanding of why vital services are provided by non-statutory service providers. What is going to happen when this measure unwinds into the real economy is that charities, GP surgeries, hospices and other vital elements of healthcare provision will not have reserves. They are already operating at the very margins of financial sustainability, so when the sums do not add up, they will have two choices. They will approach the commissioning authority that has commissioned their services to ask for an uplift in their fees. The answer will be no, because the money is not there. Alternatively, they will withdraw their services or draw down their services. Either way, it will be enormously challenging and extremely damaging for some of the most vulnerable in our society.

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[Jim Dickson (Dartford) (Lab)]

It is a pleasure to speak once more on this critically important Bill, after an excellent debate on Second Reading several weeks ago. I do not wish to rehearse the entire debate on these national insurance changes, but I will raise a few points about the Bill and why it is necessary.

As we have discussed at some length, this Government inherited public finances that were in a parlous state and public services that were not delivering what residents in Dartford and across the UK need. Yet, from their contributions today and on Second Reading, I do not think that Conservative Members have really accepted that legacy. In the five stages of grief, they are still in denial.

When the previous Government left office—it is painful to repeat these statistics—NHS waiting lists were at 7.6 million, with 300,000 people waiting longer than a year for treatment. Those waiting lists were already growing before the pandemic, with the number of people referred but waiting for treatment doubling between 2010 and 2019.

On crime and community safety, neighbourhood policing was decimated and PCSO numbers were halved, and the number of arrests has halved since 2010, including sharp drops for theft. Perhaps most concerningly, we face a real crisis in our prisons. The National Audit Office recently confirmed:

“The current crisis in the prison estate is a consequence of”—

the previous Government’s—

“failure to align criminal justice policies with funding for the prison estate, leading to reactive solutions which represent poor value for money.”

That is as close as the National Audit Office ever gets to saying, “You wasted money.”

The previous Government also spent a whopping £715 million on their Rwanda gimmick over two years, in exchange for a sum total of four voluntary departures. That is the legacy of the Conservative party, yet Conservative Members still refuse to acknowledge their mistakes. They vote against every measure, including the national insurance changes to raise crucial funding to fix the problems they left behind, without ever saying which investments in public services they would scrap.

In a long and, at times, entertaining speech, the right hon. Member for Beverley and Holderness (Graham Stuart) rehearsed the greatest hits of the previous Government, in which the omnishambles Budget seemed to feature very strongly, but his speech was fatally holed below the waterline by his inability to answer one simple question from the hon. Member for Tunbridge Wells (Mike Martin): “What would you do instead?” We heard a lot of flannel about train drivers, but that was basically it.

[Graham Stuart]

I talked about the need for fiscal discipline, one element of which is taking at least £12 billion of savings out of the benefits system, because we cannot continue with more and more of us out of work and out of the workforce. Most importantly, I also said that we have to grow the economy first, because that is the only way to sustain it. This Budget had the opposite effect, as the OBR has laid out.

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

Order. I remind Members that this debate in Committee is about national insurance contributions.

Finance Bill

Graham Stuart Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[The Exchequer Secretary to the Treasury (James Murray)]

This Government believe that all children should have the opportunity to succeed. That opportunity should not be limited by who they are, where they are from or how much their parents earn. We are determined that a young person’s background should not limit what they can achieve. That is why, despite the dire fiscal situation that we inherited and the numerous tough choices that it has entailed, the Chancellor prioritised investment in education at the Budget in October.

At that Budget, the Chancellor announced real-terms growth of 3.4% in education funding, including a £2.3 billion increase to the core schools budget in England for the next financial year. This funding supports the recruitment of 6,500 additional teachers, in line with the Government’s commitment, and includes £1 billion for the special educational needs and disabilities system, to help the 1 million pupils in the state system with special educational needs.

This Government will make sure that all children get the high-quality education that they deserve, as well as high-quality school buildings; funding has been announced for the school rebuilding programme, and for school maintenance, so that we can begin to tackle the maintenance backlog. These changes are crucial first steps to improving education for all children and meeting the aspirations of parents across the country.

Investment in education has to be paid for, so I turn to the focus of this debate: our decision to end the VAT exemption for private school fees. In July, the Chancellor announced that the Government will end tax breaks on VAT and business rates for private schools. These policies are expected to raise £1.5 billion in their first full year, rising to over £1.8 billion a year by 2029-30.

[Graham Stuart (Beverley and Holderness) (Con)]

Has the impact on the market of children being withdrawn from schools been greater than expected? In my time as a Minister, I always found that the Treasury rather underestimated the dynamic impact of policy change. I would be interested to hear his reflections.

[James Murray]

I thank the right hon. Gentleman for his question on the impact of the policies on children’s education. I will come to the details shortly, but to give him an overview of the forecast impacts, we estimate that ultimately there will be around 37,000 fewer pupils in the private sector. That is a combination of pupils who will never enter the private sector in the first place and those who will leave. They represent around 6% of private school pupils. We expect most of the moves to take place at natural transition points, such as when a child moves from primary to secondary school or at the beginning of exam courses.

--- Later in debate ---

[James Wild]

My hon. Friend makes an important point. He will have been here throughout many of the debates on the Finance Bill, the national insurance and jobs tax Bill, where very few Labour Members have made contributions to defend their first Budget for 14 years. I think we all know why.

Clause 47 removes the exemption for private school fees and spells out what Labour’s education tax will mean from 1 January. As my right hon. Friend the Member for Hertsmere (Sir Oliver Dowden) said, doing that mid-year is a cruel measure.

[Graham Stuart]

Further to that point, I think one of the reasons there may be so few colleagues on the Labour Benches is because they stood on a manifesto that was all about economic growth, protecting farmers and holding down tax. That is what they stood on, but it turns out that they have a leftist Front Bench which has introduced this pernicious tax midway through the year, and we have an Education Secretary so filled with malice and spite that she cannot even bring herself to congratulate the state school that has been No. 1 in the country three years in a row.

[James Wild]

My right hon. Friend makes a typically salient point. I agree, in particular about the lack of congratulations. The Education Secretary was not prepared to congratulate the head of Michaela school, which is the best performing school in the country.

Putting VAT on independent schools will particularly hurt those parents on modest incomes who are saving to send their children to a school that they think will best serve their needs. None of those parents is getting a tax break. They are also contributing to funding places in the state system, whether or not their child takes one up. The clause excludes the teaching of English as a foreign language, education at nursery and higher education courses from the new tax, but the Government have already crossed the line. They are taxing education and learning for the first time. Will the Minister rule out widening the scope of the education tax to include university fees, for example?

The Opposition are deeply concerned about the impact the tax will have on pupils with special educational needs, small rural schools, faith schools and schools taking part in the music and dance scheme. We have consistently warned of the damage it will do to young people’s education, and we voted against the measures in the Budget resolutions. New clause 8, in the name of my right hon. Friend the Member for Central Devon (Mel Stride), the shadow Chancellor, would require the Chancellor, within six months of the Act being passed, to make a statement to Parliament on the impact of the changes on those groups in particular, as well as the music and dance scheme. That is needed because there is such a wide gap between what the Minister is telling us and what the limited impact assessment is saying, and what all hon. Members who are actually talking to schools and parents know will be the case.

--- Later in debate ---

[James Wild]

I entirely agree with that point. Families come together to help out, perhaps to fund a place for grandchildren to give them the best chance in life. We are not going to criticise people who make that choice, but unfortunately the Government are singling them out with their vindictive measure.

This change also represents a significant complication of the tax system. Even HMRC seems confused. The guidance on VAT registration for private schools has undergone seven technical updates since its publication, and there is confusion—as has been mentioned—about the meaning of “closely related supply”.

[Graham Stuart]

On the subject of confusion, my hon. Friend will have observed that the hon. Member for Calder Valley (Josh Fenton-Glynn) appears not to have noticed that VAT was removed from tampons on 1 January 2021 by the Conservative Government. Is my hon. Friend, like me, hopeful that the hon. Member—however ignorant he may be of changes in our tax law—may join us in the Lobby tonight to oppose this pernicious policy? That would be consistent with the views that he tried to espouse a little earlier.

[James Wild]

We can but hope that the hon. Member will join us in the Lobby tonight, and also that he will one day develop the attuned knowledge that my right hon. Friend has of the tax system and the changes that were introduced in the last Parliament.

Let me add that the Association of School and College Leaders has said that there is

“increased anxiety among school leaders”

who are having to deal with the change in the middle of the academic year.

This is the first time an education tax has been introduced, which is why we need to oppose it and review its impact. The Government’s very limited impact assessment estimates that 37,000 more pupils will come into the state sector, at a cost of £270 million a year. It also concedes that there will be a loss of places equivalent to the closure of 100 more independent schools over the next three years than would otherwise be predicted. That assessment is thin, and the Government’s consultation was flawed.

--- Later in debate ---

[Graham Stuart]

Like so many Liberal Democrats, the hon. Lady seems to have forgotten that her party was the first major party to call for a referendum. Brexit was supported by the British people, not the Conservative party. The leadership of the Conservative party at the time was in favour of remain. The people decided. It is about time the Liberal Democrats learned to respect the people’s choice.

[Munira Wilson]

I remind the right hon. Gentleman that it was his Government who negotiated the Brexit deal. I want to put that on the record.

Colleagues from across the House have spoken frequently in recent months about the crisis facing SEND provision in this country, and we have heard so many stories of struggling families fighting within a failing system to get their children the education they deserve. After years of Conservative neglect, the system is on its knees. Just this week, we have heard from the Institute for Fiscal Studies about the scale of the problem. Once again, its report laid out clearly the huge costs that have left local councils on the brink, while failing to deliver better outcomes for children. Two out of every three special schools are oversubscribed. Just half of education, health and care plans are granted within the statutory 20-week limit, and 98% of those rejected are granted on appeal when parents go to tribunal.

It is clear that the system is failing families and our vulnerable young people, so is it any wonder that parents who feel that their children’s needs cannot be met in the state system are turning to the independent sector if they can just about manage it? Small schools of less than 100 pupils make up some 40% of the independent sector. In so many cases, those are the schools that struggle and strive each day to provide desperately needed support for SEND pupils—support that, sadly, is all too often unavailable in their local state school. Those are the schools that will be punished under this measure, and the families who will need to bear the load. The Government have said that pupils who have been placed by a local authority in an independent school to fulfil the terms of their EHCP will be exempt from the VAT hike. Taken in isolation, that is a welcome mitigation to this damaging policy, but there are a whopping 100,000 SEND pupils in the independent sector who do not have an EHCP, and their families will be saddled with this VAT hike.

One such family came to see me in my surgery a few weeks ago. The parents were in tears in front of me. Their son has autism and various other needs. When he was in an excellent local state primary school, he was at risk of exclusion because of the behaviours that were manifesting as a result of his additional needs, which could not be supported in that state primary school. Those parents made the difficult decision to remove him and put him in a local private school, where he is thriving. He is coping well and his conditions are being well managed. His parents are not just paying the basic school fees; they are paying an extra £18,000 a year on top of the school fees for the additional support their child needs. All of that will be subject to VAT, which is why they were in my office in tears. They do not know how they are going to meet those costs to keep their child, who was at threat of being excluded from a state school, thriving. That is the individual human reality of this policy, which the Minister just waves away with numbers, as if these statistics do not have human stories and faces behind them.

--- Later in debate ---

[Dr Sandher]

The difference in our approaches is that I do not believe in running down the state sector so people have to use the private sector to get a decent education. Half of schools do not have the specialist maths teachers they need and a third of students fail their maths GCSE. We do have a difference in our governing philosophies.

[Graham Stuart]

I join everyone else in congratulating the hon. Member. He has talked about trying to create a fairer society. Does he want to see one in which the 100,000 children with special educational needs who attend independent schools cease to do so? As he will remember, another great economist, like himself, Milton Friedman said, “If you want less of something, tax it.”

[Dr Sandher]

I thank the right hon. Member for his kind words. As he will know, the Government are fixing things for those who need special education—there is a huge amount we have to fix in this country—and he should remember the VAT exemption for those with EHCPs.

For those who cannot currently afford a decent life, the situation has become increasingly bleak. Non-graduates and young people are locked out of the opportunities their parents had. Before the 1980s, non-graduates could leave school and find good jobs with decent wages in their local factory. Then came deindustrialisation that destroyed mid-pay manufacturing jobs and led to a divided nation, where non-graduate men have seen their employment rates fall by 20 percentage points since then. Today, twice as many young men as young women are unemployed and we see the political shocks reverberate around us. Manufacturing jobs have been destroyed and replaced by low pay and insecure service jobs that do not pay enough to live on.

A couple with two children, both on average wages, do not currently earn enough for a decent living. On top of that, young people cannot afford the homes they need. Around 40% of my generation are living with their mum and dad.

--- Later in debate ---

[Dr Sandher]

I will make some progress. We are creating good jobs through our measures in the green transition and the caring economy and yes, building homes for the young to live in. Our warm homes plan will upgrade 300,000 homes and create tens of thousands of good construction jobs. Our expansion in early years childcare will see more women in work and tens of thousands more jobs. Our affordable homes programme means more homes for young people, and for those who are struck down by hopelessness—

[Graham Stuart]

On a point of order, Madam Deputy Speaker.

[The Chairman]

I assume that this is an appropriate point of order.

[Graham Stuart]

Is this what we are supposed to be discussing this afternoon? I obviously fail to follow its relevance to VAT on private schools, which is what I thought we were discussing, but I may be mistaken.

[The Chairman]

We are discussing private schools and VAT. I do not think that is an appropriate point of order, but, Dr Sandher, there is no doubt that you will bring your contribution very close to VAT and schools. I look forward to hearing that.

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[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats do not support imposing VAT on private school fees. We do not support treating independent schools differently from other independent education providers for VAT purposes, and that is why I wish to speak in favour of new clause 9, tabled by my constituency neighbour and hon. Friend the Member for Twickenham (Munira Wilson). I thank her for tabling the amendment, which would require the Government to produce an impact assessment of the effect of the VAT provisions in the Bill on pupils with special educational needs but who do not have an education, health and care plan. Of the 615,000 children in private schools in this country, almost 100,000 are being educated privately because they have special educational needs but do not have an EHCP.

The Lib Dems are glad that the legislation exempts from VAT on school fees those privately educated pupils who have an EHCP that requires the local authority to fund a private school place. That is a welcome step, but it does not protect those who do not have an EHCP from a steep rise in fees. The parents of many of those children will find that they cannot afford the increase, throwing the future of their children’s education into doubt.

Moreover, there will be an increase in demand for local authorities to issue EHCPs stating that the local authority must fund a private school place. Local authority resources for special educational needs and disabilities are already stretched to breaking point, and additional demand will be impossible to manage.

[Graham Stuart]

The hon. Lady is right. The Government share the analysis that our special educational needs provision in our state schools is under massive pressure already and there is a shortage of capacity, notwithstanding the vast increases in expenditure since 2019. However, the Government’s policy, recognising that, is to tax and therefore deter and reduce expenditure on children with special educational needs out of people’s private pockets. It does not make any sense, does it?

[Sarah Olney]

I trust that that means the Liberal Democrats can look to the right hon. Gentleman to support our new clause today, because the inevitable result of the legislation, if unamended, will be thousands of children with SEND forced into the state sector all at once, which will be enormously disruptive, and not just for them but for pupils already in the state sector. It will be potentially traumatic for those children, as well as being immensely difficult for the state schools to manage. New clause 9 would protect both the children and the schools affected by the impact of these measures—the children who have special educational needs but do not yet have an EHCP, as well as the children of families who have applied for one.

However, it is not just children with SEND who will be affected. The parents of many thousands of other children across the country will find that they can no longer afford to keep them in their current school, and those children will experience enormous disruption to their education as they are forced to change schools. Many will face the upheaval of being separated from their friends and a familiar environment. The Government should reflect carefully on whether the benefits of this policy that they are intent on pursuing are worth the damage caused to these children’s education and wellbeing.

The influx will not be evenly distributed. In my constituency of Richmond Park, more than 45% of children attend a fee-paying private school. In common with other parts of London, demand for state primary places is down, so younger children will be easily accommodated, but secondary schools are experiencing great pressure for places and a rise in requests for in-year admissions will be difficult to meet. There may only be a small proportion of children whose parents are no longer able to meet the fees, but a drop in headcount at private schools could see them closing because they become unviable. That means that the effect of children needing to transfer out of independent schools and into the state sector could be much greater than is currently forecast.

I want to reflect on what the shadow spokesperson, the hon. Member for North West Norfolk (James Wild), and others have said about the music and dance scheme. The Royal Ballet school at White Lodge in the middle of Richmond park in my constituency is a world-leading ballet school, and it has expressed great reservations to me about the effect of this policy, and I would very much like the Government to reflect on that.

If the survey done by The Times of private school parents earlier this year is accurate, and 25% of parents have to withdraw their children from private education due to the Government’s proposals, that could have a huge impact on children in communities such as mine across the country. The Government propose that their new tax treatment should be applied only to the provision of private schooling, but taxing some forms of education and not others will almost inevitably create loopholes.

Creative accountants will find ways of delivering education services that fall outside the VAT legislation while other education providers that the Government did not intend to tax will unwittingly find themselves caught up in it. The risks of these distortions increase if legislation is hastily framed with insufficient time for scrutiny. Between parents who cannot afford to pay their children’s fees and schools that cannot keep their doors open, the state will need to find space and resources for an influx of new students.

The Liberal Democrats are opposed to the Government’s plans to impose VAT on private school fees because we believe it is wrong to tax education. Imposing this increase in fees will have a disproportionate impact on children with SEND, which will create not just hardship for those children and their parents but enormous difficulties for the local authorities and state schools that will be required to provide alternative schooling. That is why I join the calls of my colleagues to urge the Government to back new clause 9.

--- Later in debate ---

[James Murray]

The way that we treat private school fees and the other charges that private schools may levy has to be consistent with the VAT principles more broadly, which is why I have tried to explain how the supply of education and the supply of other elements would interact with the VAT system more widely. I will hold back from giving specific advice about that individual school, but I would encourage it to contact HMRC to get advice about its specific registration. If the school staff read what I have just said in Hansard, I hope they will see some information that will help them to understand how to approach this issue.

[Graham Stuart]

As ever, the Minister is being very gracious in giving way. If someone were to establish a new educational establishment providing entirely modular educational elements that people could choose between, would that be subject to VAT, individually or collectively, or not?

[James Murray]

The right hon. Gentleman is tempting me into hypotheticals and into trying to give advice to a school that does not yet exist—I will hold back from that, because I think the principles of our Bill are very clear on what VAT at the standard rate is applied to and what can be made exempt, in line with the existing rules on VAT.

We heard several times from the right hon. Member for East Hampshire (Damian Hinds). I assure him that the Government costing has, of course, been fully scrutinised and certified by the Office for Budget Responsibility. He also spoke about capital funding. Obviously, pupil numbers fluctuate for a number of reasons. The Government have already announced more than £700 million to support local authorities over this academic year and the next to provide places in new schools and expand existing schools. I did note, however, that in response to an intervention by my hon. Friend the Member for Hartlepool (Mr Brash), the right hon. Gentleman seemed implicitly to admit to his Government’s failure to improve high-needs education in the state sector, which is precisely why our measures today are so important.

Employer National Insurance Contributions

Graham Stuart Excerpts

Wednesday 4th December 2024 Commons Chamber

[Mel Stride]

If the hon. Gentleman has a look at the history of that time, he will see that I was the Chair of the Treasury Committee, and I had a great deal to say about the economic policies that were pursued in the so-called mini-Budget, so I will leave it at that.

[Graham Stuart (Beverley and Holderness) (Con)]

On that point, will my right hon. Friend give way?

[Mel Stride]

How could I not?

[Graham Stuart]

My right hon. Friend is giving a powerful speech. Does he share my feeling of pity for the—in some cases, distinguished—new Members of Parliament on the Government Benches? They want to talk again and again about the past, and about what happened as we recovered from the pandemic and got through the energy crisis, but not a single one wants to defend the appalling employer NICs increase, which will take £26 billion out of the economy but ultimately provide only about £10 billion or £11 billion in revenue for public services. It is an extraordinary misstep, is it not?

[Mel Stride]

My right hon. Friend is right. They avoid the present and run away from the future, and there is no surprise about why that is the case.

--- Later in debate ---

[Darren Jones]

Thank you, Madam Deputy Speaker. To be very clear and to correct the record, the Conservative party should tell the country what its choices are. I am all ears.

The Labour party inherited a mess and we, as a responsible party of government, have needed to take measures to fix the public finances, fund the national health service and other public services, and deliver economic stability. We have been determined to take those decisions while protecting working people, which was our manifesto commitment. That is why the Budget made no changes to income tax, the rate of VAT or the amount of national insurance working people will pay. As a result of our Budget, people will not see a penny more in tax on their payslips. Yet keeping those promises while getting the country back on track meant tough decisions elsewhere in the tax system—choices and decisions that we are willing to take.

[Graham Stuart]

Perhaps with the assistance of the Exchequer Secretary to the Treasury behind him, the right hon. Gentleman might be able to answer a question that other Treasury Ministers have not been able to: why did the OBR make a correction in table 3.2 in chapter 3? It was originally suggested that £5.5 billion would be provided for compensation

“to public sector employers and adult social care”.

That was then corrected to remove any reference to social care and the number was cut by £800 million. Can the right hon. Gentleman explain what caused the OBR to make that correction and when it was decided that social care was not worth support?

[Darren Jones]

The right hon. Gentleman might in future give me advance notice of specific references to documents so that I can refer to them. I cannot tell him about table 3.2 in the OBR document because it is not here, but we will of course get an answer to him. He may wish to consider why the OBR said that had the Conservative party been more transparent about its time in government, its forecast would have been materially different. The shadow Chancellor was unable to provide an answer to that in response to interventions from colleagues from around the House.

That inheritance is why, at the Budget, we took the decision to increase national insurance contributions for employers while increasing protections for small businesses and charities. The Government increased the main rate of employer secondary class 1 national insurance contributions from 13.8% to 15%.

--- Later in debate ---

[Kevin Bonavia (Stevenage) (Lab)]

After inheriting the ruins of 14 years of Conservative failure, this Government have had to make tough decisions to balance the books.

[Graham Stuart]

I love the originality.

[Kevin Bonavia]

And I will keep it coming until the right hon. Gentleman gets the message.

After 14 years of working people footing the Bill, this Government are choosing to spread the load in as fair a way as possible. In the spirit of building an economy driven by collaboration between productive workers and thriving businesses, a balance has to be struck. While we are asking employers to contribute more, this does of course come with protections for small businesses. While employer national insurance contributions will increase by 1.2%, this Government are choosing to protect the smallest businesses by increasing the employment allowance to £10,500 and expanding this to all eligible employers.

Let us therefore stop the politically expedient outrage and check the real-life impact. Changes to the employment allowance mean that the Office for Budget Responsibility expects that 250,000 employers will gain and an additional 820,000 will see no change. We have also committed to provide support for public sector employers for additional employer cost. This also means that, unlike the previous Government, who gave us the highest tax burden since the second world war, Labour are able not to ask for a penny more out of workers’ pay packets. While we must listen to the genuine concerns from businesses, which, like the rest of society, are feeling the brunt of 14 years of Tory austerity and decline, I am in no doubt that these decisions are the right and necessary ones that will fix the foundations of our economy and unlock the funding to rebuild our public services.

--- Later in debate ---

[Louise Jones]

I could not agree more. I have heard from so many small business owners in North East Derbyshire who are so thankful for the changes that we are making to support them.

If we fail to make these decisions today, we risk the prospect of cuts to crucial services or an increased burden on future generations, which would fall on the most vulnerable in society.

[Graham Stuart]

The hon. Member talks about cuts to vital services. Does she agree that no one would think less of the Government if they were to take £3 billion or £4 billion out of the £22 billion for the NHS and ensure that social care, hospices, GP surgeries and the like do not lose out, to have a holistic and positive input into the health service rather than the disjointed one that we are at risk of right now?

[Louise Jones]

I am sure that the health team will listen to all and any contributions, and will make a decision.

The Labour Government refuse to balance the books on the backs of the poor, workers or people striving for a better life.

--- Later in debate ---

[Danny Beales]

I thank the hon. Gentleman for that intervention. What we have both heard on the Health Committee is that the NHS has been left on its knees after 14 years. All sectors of the health service are crying out for investment. I hear in my constituency from doctors and nurses who are thankful that, finally, they are being recognised with decent pay. Opposition Members declare them to be trade union barons. No. They are nurses, doctors, teachers and police officers.

As I said, we need to invest. Ministry of Defence homes in my constituency must be invested in. My old primary school, Deanesfield, with its crumbling classrooms needs to be invested in. The Labour party has a plan to make that happen and it is vital that we fund those measures—measures that any responsible Government would take. Therefore, we do have to make difficult but necessary decisions and ask the largest businesses to pay slightly more to help fund those vital public services. I understand the concerns that have been raised, but as the Minister put forward, half of businesses will not pay the extra contributions and some, the smallest, will pay even less.

[Graham Stuart]

Will the hon. Gentleman give way?

[Danny Beales]

I have given way a number of times already and I want to make some more progress, if the right hon. Gentleman will allow.

It is a bit rich for the Conservative party to suddenly discover the charity sector and claim to be the party of the third sector. Having worked in the third sector for 10 years, I remember nothing but the Conservative party slamming the charity sector year after year after year. The charities I meet want us to fix the NHS, to fix homelessness, and to fix the social and economic problems we inherited from the previous Government. Locally in Hillingdon, the Conservative council has not been a champion; it has cut them to the bone. Most of the charities I meet have a handful of employees left, at best. Under this Government’s measures, they are likely to see support.

Fundamentally, in this Budget we face a choice and we have chosen to protect the most vulnerable in society. However, it appears that the Conservatives still fail to understand basic economics. They want all the benefits of the Budget—at least, they do this week—but they do not seem to know how they will pay for them. They drove our public services into crisis and now oppose the very measures we are taking in the Budget to rebuild them. Nothing has changed. They are not a serious, responsible party of government. They are still addicted to endless cuts to public services, paying more and getting less, constantly taking the short-term, easy approach. It would be immensely irresponsible for any Government to just ignore the crisis in our public services, and to return to austerity, instability and decline. We choose investment over decline. That is what my constituents voted for: more doctors, more nurses, fair pay and investment, not decline.

Oral Answers to Questions

Graham Stuart Excerpts

Tuesday 3rd December 2024 Commons Chamber

[Darren Jones]

I thank my hon. Friend for her question. As she said, the Scottish Government’s spending review settlement for 2025-26 is the largest, in real terms, of any settlement since devolution began. The Scottish Government are receiving at least 20% more per person than equivalent UK Government spending in the rest of the United Kingdom. That translates to over £8.5 billion more in 2025-26 alone. This Labour Government are delivering for the people of Scotland by giving the Scottish Government the power and money to get on with the job, and it is for the SNP to be accountable for what it delivers for the Scottish people.

[Graham Stuart (Beverley and Holderness) (Con)]

Can the Minister confirm that of the £26.4 billion tax rise through the increase in employer NICs, £19 billion will come directly out of people’s pay packets? Secondly, can he confirm that the net amount that the Treasury will actually get from that £26.4 billion after behavioural change and public sector compensation is just £11 billion?

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Graham Stuart Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[Daisy Cooper]

I agree with the hon. Gentleman that GP services, dentists and hospices are having to make decisions now on freezing recruitment and not providing wage increases, so there is real urgency to this measure.

The changes go beyond health and care. They will also affect early years providers and education providers, at a time when we should be reducing the costs of childcare and care services and supporting parents back into work. The measure will undermine that. I have heard from housing associations, Citizens Advice and hospitality companies that the pressure from this measure will make life incredibly difficult for them. Hospitality in particular relies on a lot of part-time workers, and the changes to national insurance contributions will have a terrible effect. Many of them tell me that at the moment—before the changes have taken effect—employer national insurance contributions liability is incurred only once a part-time worker starts earning £9,100 per annum. That is 15 hours a week on the current national minimum wage. Once the changes take effect, however, liability will be incurred at only £5,000 per annum, or the equivalent of 7.5 hours a week on the new national minimum wage. That will disincentivise small businesses from taking on part-time workers. Let us be honest: many people can only work part time because they are picking up the pieces of a broken health and social care system.

[Graham Stuart (Beverley and Holderness) (Con)]

The hon. Lady is making a powerful speech. Someone coming back from a mental health crisis who manages to get one day’s work a week—that may initially be all that they can manage—will, under this so-called Government of workers, find themselves hit by the measure and so will be less likely to be employed. Also, most of the cost of the measure will come out of their wages.

[Daisy Cooper]

I thank the right hon. Gentleman for that point. Many people work part time, for all sorts of reasons. They could be coming back from a period of poor mental health. They could be returning to work after bringing up their children. They could have a fluctuating health condition, be recovering from surgery or, as I was saying, be picking up the pieces of a broken social care system, having become a family carer. We all know these people. They live among us. They are our friends, our neighbours and our family members. Many people need to work part time in order to contribute to the economy and be productive, and it is also good for their self-esteem.

A number of Labour Members have rightly challenged the Conservatives on how they would pay for this investment in the NHS, and they are right to do so, because the Institute for Fiscal Studies gave a damning account of the Conservatives’ manifesto. It said that it contained

“giveaways paid for by uncertain, unspecific and apparently victimless savings.”

Also, the Conservatives could not say where the £20 billion-worth of cuts could come from, so Labour Members are right to point to the fact that the Conservatives have not answered that question. We should hold their feet to the fire on that point, because we heard time and again in the run-up to 4 July that everything was broken and that the Conservatives had driven our economy into the ground and left our public services on their knees.

By contrast, we Liberal Democrats have set out how we would fund many of these services. The Labour party says that its measures will amount to £28 billion for investment in health and social care, or at least in the NHS, but the Office for Budget Responsibility says that once the amount is adjusted for behaviour changes and public sector rebates, it comes to only £10 billion. We have suggested a number of measures and, in the spirit of constructive opposition, I urge Labour Members to look at them, if not for this Budget, then at least for the next.

If the Government had reversed the Conservatives’ tax cuts for the big banks, that would have raised £4 billion a year. If they had doubled the remote gambling duty, that would have raised up to £900 million a year. If they had trebled the digital services tax, that would have raised £2 billion a year. We have pointed to examples of ways that the Government could have raised funds from those with the broadest shoulders. In the spirit of constructive opposition, I urge Labour colleagues to look at those measures.

--- Later in debate ---

[Dr Jeevun Sandher (Loughborough) (Lab)]

It is a pleasure to be called to speak in this incredibly important debate. On 30 October, the Chancellor delivered a Budget that will rebuild the foundations of our broken economy through public investment paid for by tax revenues. We are proud that those revenues will be raised from both the largest businesses and the wealthiest individuals. Public investment will be paid for by those who can best afford it, to benefit us all and make our nation more prosperous.

We entered office with the worst economic inheritance since 1945, after years of under-investment—the lowest rate in the G7—years of failure, the worst fall in wages since Napoleon, and years of chaos. In 2022, we built fewer onshore wind farms in England than we had Conservative Prime Ministers.

The Conservatives left our nation far weaker than they found it—a nation where 3 million people are too sick to work because one in 10 nursing jobs is unfilled; a nation where one in three young people fails maths GCSE because around half of our schools do not have the maths teachers that they need; the nation with the highest energy bills and inflation, because we have the worst-insulated homes in western Europe. That is what we were elected to change.

As well as having a mandate to rebuild this nation, we were also elected to rebuild hope by creating a country that, once again, gets better rather than worse.

[Graham Stuart]

In the spirit of hoping for growth, the hon. Gentleman will be interested to know that I sent a survey to all the businesses in my constituency. Perhaps we are an outlier, but 95% of businesses in Beverley and Holderness said that they expect things to be worse as a result of the Budget. It might be different in the hon. Gentleman’s constituency, especially if he stays at home.

[Dr Sandher]

I politely suggest that the right hon. Gentleman should not set up a polling company, as that is not an effective sampling strategy. Deary me. Where do I start?

Anyway, we are insulating our homes and hiring more nurses and teachers—and yes, we will pay those nurses and teachers enough money to keep them, because that is what responsible Governments do. All that investment needs to be paid for. That is why we are raising national insurance contributions for the largest employers, with £3 out of every £4 raised coming from the largest 2% of businesses. That will raise some £23 billion of investment that every family and business will benefit from. Crucially, we are raising that money while protecting the smallest businesses.

--- Later in debate ---

[Paul Waugh (Rochdale) (Lab/Co-op)]

My hon. Friend the Exchequer Secretary rightly said that this Bill was about tough decisions. The Conservative party used to be about taking tough decisions. We may not have liked them, but we respected them because we thought that they were doing things in a pragmatic and consistent way. Earlier this year—in my former life as a journalist—I interviewed the former Chancellor, Ken Clarke. He said this about tax:

“I didn’t have a fixation on taxation. Taxes sometimes have to go up. Taxes sometimes have to go down. It depends on the needs of the macroeconomy and the public need…And, yes, I raised taxes quite frequently and I cut some taxes…I made my mind up on what was necessary.”

Sadly, that Tory party is long gone, replaced by the libertarian ideological collaborators of chaos whom we see on the Opposition Benches. Worst of all, their sums simply do not add up, and, as a result, it has been left to Labour to clean up the mess they left behind.

The economic situation that we inherited in the summer was much worse than anyone anticipated, so much so that Richard Hughes of the Office for Budget Responsibility said that Treasury Ministers “failed their statutory duties”. He told the Treasury Committee that there was about

“£9.5 billion worth of net”—

spending—

“pressure…which they did not disclose to us…which under the law, and under the Act they should have done.”

That is what he said to the Treasury Committee. If the hon. Member for Grantham and Bourne (Gareth Davies) wishes to dispute his words, will he please get up and say so?

I remember that Liz Truss and her Cabinet, some of whom are now in the shadow Cabinet, were in favour of fracking. Well, her mini-Budget certainly fracked our economy. It was a high pressure injection of debt-fuelled tax cuts made in the hope of extracting hidden growth. Instead, it created an earthquake on the money markets and led to rocketing mortgage bills that many are still feeling the aftershocks of today.

One thing that struck me most about that “Kami-Kwasi” Budget—yes, I do claim copyright on that phrase—was that the alleged tax cutters on that day were actually increasing the tax burden for millions through fiscal drag. Yes, buried away in that growth plan was the continuation of the previous Government’s plans to freeze tax thresholds, and they all backed that massive increase in the tax burden. I am pleased to say that this Government will end that fiscal drag act in 2028, uprating personal thresholds in line with inflation once again.

The chaos did not end with the Truss-Kwarteng double act, who drove themselves and the economy off a cliff like the Tory “Thelma & Louise”. Sadly, even the normally sensible right hon. Member for Godalming and Ash (Jeremy Hunt) put his own last desperate tax cuts before public services. His spending plans were incredible in that they lacked credibility.

[Graham Stuart]

On a point of order, Madam Deputy Speaker. I would never dare to tread on your toes, but perhaps something is wrong with the electronic equipment because the screen says that this is a national insurance debate, rather than some generalised debate. I sympathise, though, with the hon. Gentleman and other Labour Members for not wanting to talk about their own policies—they would rather slag us off.

[Madam Deputy Speaker (Caroline Nokes)]

The right hon. Gentleman will be aware that that was not really a point of order. I am sure the hon. Member for Rochdale (Paul Waugh) is getting to the point on the Second Reading of the National Insurance Contributions (Secondary Class 1 Contributions) Bill.

--- Later in debate ---

[Ben Lake (Ceredigion Preseli) (PC)]

It is a pleasure to follow the hon. Member for Rochdale (Paul Waugh). I rise to relay some of the concerns that have been raised with me by constituents and businesses. They are concerned not only about the impact of the Bill’s proposals on small businesses in my constituency, but about the provision of public services there.

It has been interesting to listen to various opinions on this matter, but I will begin by pushing back on the implication made by some that the changes in the Bill will not have an impact on small businesses. The fact is that the Office for Budget Responsibility estimates that from 2026-27 onwards, 76% of the total cost of the increased employer national insurance contributions will be passed on through lower real wages. That tells us not only that there will be an impact on businesses, but that contrary to what has been suggested by some in the Chamber, there will be an impact on workers.

Much has been said about the impact on businesses, and I very much agree with those concerns, but I will concentrate my remarks on the impact on public services in Wales. It is worth noting that 30% of the Welsh workforce is employed in the public sector—a much higher proportion that the rest of the UK—so the proposed increase in employer national insurance contributions equates to some £380 million. Clearly, the Bill will therefore have significant consequences for the provision of public services, and it remains unclear whether the additional Government support—or the reimbursement—will meet the increased cost.

Local authorities across Wales already face budget shortfalls of over half a billion pounds. At a time of significant budgetary pressure, Ceredigion county council—one of the county councils in my constituency—estimates that the increase in NICs will total over £4 million in one year alone. Communities deserve assurances that essential services will not be further jeopardised because funding gaps are exacerbated by the changes in the Bill. Can the Minister confirm that the full cost of the increased national insurance contributions will be reimbursed to local government in Wales? Furthermore, will that additional support be recurring? The last thing we want is for additional costs to be covered in years one, two and three, only for local government to face a funding cliff edge after that.

In addition to the direct cost to public authorities, for which the Government have suggested they will provide additional support, we should also bear in mind the other organisations—public and third sector organisations—that are integral to delivering many of the public services that we consider valuable to society. Social care providers are one example. They care for the vulnerable and help to alleviate pressure on the NHS, yet the cost of the NICs increase could be devastating for them. Care Forum Wales estimates that the cost to its members across Wales will total a staggering £45 million. I heard what was said from the Treasury Bench about additional support being allocated in the usual way, but I would like to know how that additional cost will be allocated to Wales. I understand that, in their conversations with the Welsh Government, the Government in Westminster are discussing the additional costs of only the public sector organisations that will be reimbursed directly. There are other examples in the third sector, including citizens advice bureaux, which, although they provide invaluable support to some of the most vulnerable in society, are facing significant additional costs without there being any talk of Government support.

[Graham Stuart]

The hon. Gentleman may have noticed that the OBR had to amend the numbers that it produced after the Budget because it had reduced the cost of compensating the public sector and social care by around £800 million a year. Does he, like me, want the Minister to clarify whether the Government intended to put nearly £1 billion extra into social care costs, and when it was decided, and by whom, that they should not go ahead and should leave social care in the parlous position it now finds itself in?

[Ben Lake]

I very much agree. I hope that the Minister will return to that in her summing up.

I labour the point about the third sector and public sector organisations that do not stand to receive reimbursement from the Government because they are so crucial to delivering many of the public services that we have heard so much about in the debate. There is a real risk that if our social care hubs, hospices, dentists and GPs are not adequately reimbursed, all the Government will do is erode the value of the investment that they claim to be making in those services.

I could also say a little bit about the university sector. Higher education is a very important sector in my constituency: Ceredigion Preseli is home to two universities, Aberystwyth University and the University of Wales Trinity Saint David. Both organisations are currently facing very difficult times, as are most higher education institutions, and both state that they will be dealing with quite significant additional costs next year when the Government’s proposals come into force. There is no talk of additional support for those institutions, so I worry very much that we will lose the incredible economic contribution they make to my constituency, let alone their important social and cultural contribution.

--- Later in debate ---

[Andrew Lewin (Welwyn Hatfield) (Lab)]

The Budget delivered in this House a few weeks ago was a Budget for growth, investment and public services. It was a Budget delivered by a Chancellor who was direct about the scale of the challenge that we inherited from the Conservative party, and who was clear and optimistic that we can build a better country, but only with honesty and clarity about how we raise the revenue we need. The increase in employer national insurance contributions will raise £25 billion. That is a choice made by this Labour Government, but it was the only responsible choice available to us on discovering the depth of the damage done over the last 14 years.

[Graham Stuart]

The cost to the economy is over £25 billion, but the net cost, having adjusted for behavioural change and compensating the public sector, is more like £10 billion or £11 billion. Does he regret that this particular vehicle was chosen? It damages the economy, it will take nearly £20 billion out of people’s wages, and it raises only £10 billion or £11 billion. It is about the worst tax imposition we could think of.

[Andrew Lewin]

I do not regret the vehicle we have chosen. I have faith in the figures in the Red Book. Interestingly, I have heard colleagues on the Opposition Benches cite the OBR, and that is from the same party who, just two years ago when it was in government, wanted to get rid of the OBR and not listen to expert voices at all. Indeed, I remember them saying that they had “had enough of experts”.

We have heard lots of supposedly deep concern for business from Conservative Members. Of course that was not so much of an issue for the former Member for Uxbridge and South Ruislip, who as Prime Minister told his Government to “eff business”. Or indeed for his successor, the former Member for South West Norfolk. Her one fiscal event as Prime Minister was called a “mini-Budget”, but the lasting damage that it did to our economy was anything but small—markets in turmoil, higher mortgage repayments for thousands of my constituents in Welwyn Hatfield, debt rising, debt interest payments up, and of course not even a hint of an apology.

As for the most recent Administration, I am sorry not to see the shadow Chancellor in his place. During the election campaign I hugely respected how many times he hit the airwaves of TV and radio stations to defend the manifesto that the Conservatives put to the country. For a verdict on that manifesto I defer to Paul Johnson, director of the Institute for Fiscal Studies, who said:

“What the manifesto did not tell us was where the £10 to £20 billion of cuts to spending on unprotected public services…might come from. This manifesto remains silent on the wider problems facing core public services.”

The Labour party will not stay silent on the problems facing our public services. Opposition parties can choose fantasy economics; we choose a change to national insurance to fund the rescue and reform that our public services need. That change starts with paying our public servants properly. When I go through the Lobby to support this national insurance Bill, I will think of the serving members of the armed forces, who received a 6% pay rise from this Labour Government, the biggest in 22 years. I will think of the extra money in the pockets of the police, who faced down the shocking disorder in our communities across the country this summer. I will think of Daisy and Jake, the two paramedics I joined on a shift in Hertfordshire a few months ago.

--- Later in debate ---

[Alison Bennett (Mid Sussex) (LD)]

On Saturday evening, I was lucky to attend Sussex Chorus’s performance of Handel’s “Messiah” at St Andrew’s church in Burgess Hill. There was a collection at the end for the St Peter and St James hospice, which looks after many people in Mid Sussex. As I put my donation in the bucket, the lady holding the bucket thanked me, and she told me that her husband had spent his last days at St Peter and St James. When she realised that I was the local MP, she grasped my hand tightly, and said, “You have to do something about NICs.” I said that I had been trying to, and had been raising the matter in the Houses of Parliament, but having not been heard so far, I will raise it again today.

Our hospices and social care providers do hugely difficult, often invisible work. They look after the weak, the vulnerable and the dying, but these organisations are themselves even more vulnerable than they were as a result of the Government’s proposed changes to employer national insurance contributions, announced in the Budget. That jobs tax jeopardises the quality and reach of the services that will be available in my constituency and across the country. The children’s hospice charity Together for Short Lives estimates that the rise from 13.8% to 15% in April 2025 that was announced in the Budget will increase costs for children’s hospices, which provide lifeline care to seriously ill children, by nearly £5 million annually. Combined with inflation, falling local NHS and council funding, and uncertainty around the NHS children’s hospice grant, this policy risks reducing or even closing essential services. In the social care sector, MHA, which supports more than 17,000 older people across 80 care homes, 59 retirement communities, and 43 community based hubs, estimates that it will face an additional £4.6 million in costs in the first year alone.

[Graham Stuart]

Will the hon. Lady give way?

[Alison Bennett]

I would like to make progress. Around 18,000 private social care providers operate in the UK. We must help them to help those in need, and we cannot afford to put up more barriers for them. How can we expect those providers to survive if we impose higher taxes on them? This is not making the most of an opportunity for long-term positive change; I am sad to say that it is squandering it.

The Government could have found better ways to raise the necessary funds. They could have reversed tax cuts for big banks, increased digital services taxes, or even reformed capital gains tax to ensure that the wealthiest pay their fair share. My Liberal Democrat colleagues and I have repeatedly urged the Government to exempt social care providers and hospices from the tax rise, and I do so once again today. Let us do right by those who work tirelessly to support and protect our most vulnerable, and in doing so, let us build a healthcare system fit for the future.

--- Later in debate ---

[Tulip Siddiq]

I do have the faintest idea how it works, which is why I am on this side of the House and the hon. Gentleman is on that side. That is why I am a Treasury Minister and he is not, and probably never will be.

The hon. Member for Huntingdon (Ben Obese-Jecty) spoke about hospitality. Without any Government intervention, retail, hospitality and leisure relief would have ended entirely in April 2025, creating a cliff edge for business. [Interruption.] I know the truth hurts, which is why the hon. Member for Thirsk and Malton (Kevin Hollinrake) is chuntering from the Opposition Front Bench. Our Government have decided to offer a 40% discount to RHL properties by introducing a cash cap of £110,000 per business in 2025-26, and we have frozen the small business multiplier. This package is worth over £1.6 billion in 2025-26 and is aimed at supporting the most vulnerable businesses, ensuring that over 250,000 RHL properties receive the full 40% support.

[Graham Stuart]

Will the Minister give way?

[Tulip Siddiq]

I am reluctant to do so, but I will.

[Graham Stuart]

I thank the Minister for giving way. The OBR had to issue a correction to table 3.2 in chapter 3 of its report. Originally, there was RDEL compensation for public sector employees and for adult social care. The correction was made to reduce the sums by £800 million, typically per year, for RDEL compensation just for public sector organisations. Why did the correction need to be made, when was it made, and why was the OBR told so late that social care was not getting the support that it clearly needs?

[Tulip Siddiq]

As far as I am concerned, the current numbers are the correct ones.

Finance Bill

Graham Stuart Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[The Exchequer Secretary to the Treasury (James Murray)]

I beg to move, That the Bill be now read a Second time.

Four weeks ago today, my right hon. Friend the Chancellor delivered the first Budget of this new Government. It was a historic, once-in-a-generation Budget—a Budget to deliver economic stability, to fix the public finances and to secure a step change in investment. It was a Budget to lay the essential foundations for growth, which is this Government’s No. 1 mission.

And let’s face it, after 14 years under the Conservatives, the foundations needed some fixing. That is why our Budget is built on tough new fiscal rules that will put a stop to borrowing for day-to-day spending and get debt falling as a share of GDP. Our Budget delivers fiscal responsibility while getting the NHS and other public services back on their feet and protecting working people. That is the difference a Labour Budget makes. That is not to say that the decisions have been easy. The very opposite is true. We have taken difficult decisions on spending, welfare and tax, and this Finance Bill begins to implement some of those decisions.

Before I turn to the measures in this Bill, I will speak about what the Bill does not include. When I was a shadow Minister, shadowing the tax brief, I covered a total of six Finance Bills and probably as many Ministers. Through those Finance Bills, we saw the Conservatives repeatedly extend the freeze in the personal allowance and the higher rate threshold for income tax. The Finance Act 2021 froze income tax thresholds from 2022 until 2026, and then the Finance Act 2023 extended those freezes by another two years until 2028. The Conservatives were responsible for six consecutive years of rising taxes on working people’s payslips.

Our Government will not follow that path. In this Finance Bill, there are no tax rises on working people’s payslips, nor on many pensioners’ incomes, like those the Conservatives put into law. We have made no changes to the basic, higher and additional rates of income tax. We have made no change to the rate of VAT. And in next week’s National Insurance Contributions (Secondary Class 1 Contributions) Bill, we will make no increase to working people’s contributions. We said that we would fix the public finances while protecting working people, and that is exactly what we are doing.

We also said that we would provide stability for businesses making investment decisions, and that we would cap the rate of corporation tax. This Bill delivers on those commitments, too.

In the last Parliament, we repeatedly saw Finance Bills being used to put temporary measures in place, leading to an unstable and ever-changing investment allowances regime. At the start of the last Parliament, the annual investment allowance had been temporarily raised to £1 million. That level was extended twice on a temporary basis before finally being made permanent. Meanwhile, full expensing for expenditure on plant and machinery was also introduced on a temporary basis. And, over the last Parliament, the super-deduction came and went entirely.

We are doing things differently. Our corporate tax road map, which was published at the Budget, and the Finance Bill before us today both make it clear that we are prioritising the stability that we know businesses need to invest.

[Graham Stuart (Beverley and Holderness) (Con)]

Does the Minister agree with Gary Smith? This was supposed to be a Budget for growth and jobs. The increased energy profits levy is driving investment out of the North sea and will not make the slightest difference to how much oil and gas we consume, yet it is estimated that it will lose £13 billion of much-needed revenue for the taxpayer. This means we will lose environmentally, fiscally and in terms of jobs. Surely even the Minister can recognise how wrong that is.

[James Murray]

I will come to the energy profits levy in a moment, but we have engaged with the oil and gas industry to ensure that we raise the money we need for the clean energy transition while supporting investment and jobs in that industry. We recognise that oil and gas will play a part in the energy mix for years to come, but we also recognise that the industry must contribute to this essential transition.

This Bill maintains the 25% cap on corporation tax that we set out in our manifesto. It also makes no changes to the permanent full expensing regime or the annual investment allowance.

Before turning to other measures in the Bill, I note that the Leader of the Opposition has already committed to reversing several of them. If Conservative Members disagree with the difficult but necessary choices that this Government have had to make to repair the public finances and protect working people, they have every right to oppose our plans, but they must explain what choices they would make instead. So far, their new leadership has fallen at the very first hurdle of being a credible Opposition by trying to have it both ways. [Interruption.] They make plenty of noise, but I do not hear any alternatives.

The Leader of the Opposition has said that she opposes the measures in this Bill, but she also claims to support the investment that those measures fund. She says that reintroducing the VAT tax break for private school fees would be the very first thing she does if she became Prime Minister, yet she also appears to support the extra £2.3 billion that our Budget puts into state education. In fact, we have calculated that she has made unfunded pledges worth £12 million for every hour since she was appointed. By my reckoning, that is £1 million-worth of pledges since I began speaking five minutes ago.

By behaving this way, the Conservatives simply remind people how very far away they are from being a credible Opposition, and they are getting further away by the day.

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[James Murray]

I am afraid I will not give the hon. Gentleman inside information on any ongoing discussions between the Treasury and devolved Governments. The policy for reimbursing increases in employer national insurance contributions is well established. The last Government followed a similar process in relation to the health and social care levy, whereby Departments, employees and other direct public sector employees are typically refunded the entire increase and third parties, contractors and so on are not. As for the devolved Governments’ settlements, they have their own process to go through with the Treasury. I am sure the hon. Gentleman will understand why I cannot give a running commentary on that, but I am sure that his colleagues will pick that up.

[Graham Stuart]

Will the Minister give way?

[James Murray]

I will make some progress. I have been generous in giving way to the right hon. Gentleman in particular. [Interruption.] All right, go on, then.

[Graham Stuart]

I am grateful to the Minister, who has shown his customary good humour and good will to the Chamber. He is unable to discuss the precise numbers for the devolved Governments, but can he confirm what the overall cost is to the Exchequer of compensating the public sector for the impact of NICs? I believe it is around £5.9 billion, but I want to check with the Minister that that is correct.

[James Murray]

I regret giving way to the right hon. Gentleman. I invite him to return to the Chamber next Tuesday for the Second Reading of the National Insurance Contributions (Secondary Class 1 Contributions) Bill, when I will also be speaking. We can have a full debate on national insurance then, which I am sure he and his colleagues are looking forward to. I hope they will support it in the Lobby because, no doubt, they support the extra investment in the NHS which that decision funds. I thank him in advance for signalling his good grace and support for our measures.

After we were elected, we said that we would take the difficult decisions necessary to fix the public finances. We said that we would close the tax gap, implement our manifesto pledges and protect working people. We said that we would deliver economic stability, fiscal responsibility and the certainty that businesses need to invest and grow. This Bill plays a central role in achieving those goals and I commend it to the House.

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[Mel Stride]

On the Government’s watch. A number of measures in the Bill will further weigh on growth. Capital gains tax will go up, destroying wealth creation. The energy profits levy will destroy jobs, making us less secure when it comes to energy. Stamp duty will go up, and that is one of the worst taxes. The hon. Member for Swansea West (Torsten Bell) will accept that, as he shares that view—I think he makes the point in his recent book. The level of activity in the housing market will be dampened, people will be discouraged from downsizing, which will put pressure on the housing supply, and labour mobility—an important component of growth—will be impacted.

[Graham Stuart]

My right hon. Friend is painting an accurate but bleak picture, as reflected by the IFS, the OBR and all the independent analysts of what the impact of the Budget will be. However, I put it to him that he is understating the weakness that the Budget will create for this country. Look back at the last 14 years. We were recovering from the financial crash. We had the pandemic, Brexit and the energy crisis. We are unlikely to make it to the end of this decade without some form of further shock. Is it not central to the weakness of the Budget that it makes this country so much more vulnerable to what we do not yet know is coming?

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[Phil Brickell (Bolton West) (Lab)]

It is a pleasure to speak in this debate on the first Labour Finance Bill in 14 years, and an even greater pleasure to respond to the very first Budget delivered by a female Chancellor. It is also an honour to speak on Lancashire Day, and I would like to put on record my congratulations to all my constituents in Bolton West and further afield who are celebrating this important day.

As others have done, I congratulate the Chancellor and thank her for blazing a trail for girls in my constituency to follow. In response to the remarks from the shadow Chancellor, the right hon. Member for Central Devon (Mel Stride), I would say that having spent 14 years working in FTSE 100 companies, I believe that the measures in the Bill will be a turning point for our country. They are the first step in fixing the foundations of a broken economy after 14 long years of economic vandalism by the Conservative party.

Let me be clear: the Labour Government inherited a difficult financial situation, with debt above 90% of GDP, millions of pounds of public money wasted during the pandemic, including via contracts awarded through the VIP fast line, inflation at 11%, and a cost of living crisis that bore down not just on the most vulnerable in my constituency, but on working families, young people and many businesses. That is the economic inheritance bequeathed by Conservative Members, and we should take no lessons from them on how to manage the public finances. To that end, I very much welcome the measures in the Bill.

[Graham Stuart]

To take the hon. Gentleman back just a few months, he may remember that inflation was at 2% and down at target, and the level of employment was up by 4 million people on where it was in 2010. It would be fair for the hon. Gentleman, who is new to the House, to want to give a balanced picture, and he may want to reflect on those 4 million additional jobs, the fact that inflation was down, and the fact that the UK was the fastest growing economy in the first quarter in the entire G7.

[Phil Brickell]

I thank the right hon. Member for his contribution, but I will return to the point I mentioned earlier about inflation at 11%. Frankly, the work was not done by the previous Government to mitigate that.

I very much welcome measures in the Bill that will increase stamp duty on those who own a second home. The blight of second home ownership in certain parts of our country has destroyed the housing market for local people, massively inflating prices and denying those otherwise invested in the local area the ability to put down roots. I am pleased to see the Chancellor delivering on our election promise to scrap the non-dom loophole, which has been abused for far too long by those who wish to enjoy all the privileges of life in this country without paying into the system. I applaud the Chancellor’s commitment to delivering fairness into the tax system through the Budget and the Bill.

In the light of the debate we have been having in the country at large over the past few weeks, I wish briefly to focus my comments on three key topics, which I hope the Government will soon revisit at some juncture during this Parliament. The first topic, tax justice, has been overlooked for far too long. According to His Majesty’s Revenue and Customs, the tax gap—the difference between what it should collect annually and what it actually collects—is almost £40 billion. Let me repeat that figure—forty thousand million pounds. Closing that gap by just 20% could pay for 60,000 nurses, 40,000 teachers, and 40,000 police officers. Imagine the transformative impact that could have on our public services, on education, on health, and on tackling crime. Simply put, working people in Bolton West are expected to pay the taxes they owe, so why should big multinationals and the super-rich be able to avoid contributing their fair share?

The renewed focus on tax avoidance and evasion in the Budget is much needed, but we sometimes have to spend money to make money. We all know that tough decisions about public finances have to be made, but that does not have to come at the expense of boosting enforcement through our public bodies, including HMRC, which should be self-funding, with a greater proportion of cash raised from fines, asset seizure and the like returned to the relevant agencies. Our enforcement agencies work incredibly hard to claw back billions of pounds that are lost every year to economic crime in the UK, but they do not have the resources to protect us from all manner of crimes from fraud to money laundering and tax evasion. It should be criminals who are made to pay, not the hard-working taxpayer, and for me, that would be a sensible way to both combat economic crime and bolster our public finances.

We already know that every pound invested in the Serious Fraud Office returns three pounds to the Treasury—a 317% return on its budget—while every pound spent on the National Crime Agency’s international corruption unit results in £21 of illicit wealth frozen. As it happens, research published this month by Spotlight on Corruption—I hope the Minister will take note of this—found that just 17.6% of the £4 billion generated for the Government by law enforcement agencies and anti-money laundering supervisors between 2017 and 2024 was reinvested in those agencies or in crime reduction and community projects. If just 50% of those enforcement receipts had been reinvested, economic crime regulation and enforcement would have received an extra £233 million a year—nearly double the annual investment underpinning the 2023 to 2026 economic crime plan—at no cost to the taxpayer but with potentially substantial rewards.

The second area of focus that I would like the Government to attend to during this Parliament is council tax. For almost three decades, successive Governments have sat on their hands when it comes to reforming the levy, which is regressive and disproportionately targets the wealth of lower-income families and the young, as well as affecting local authorities. Bolton council finds that it does not provide an adequate funding base to provide critical services for my constituents. Last year, a modest property in Hartlepool worth £150,000 would have been taxed at over 1% of its value, while the owner of an £8 million mansion in Westminster would have seen a bill equivalent to just 0.02%.

The Fairer Share campaign has called for a proportional property tax, which would see homeowners pay a flat rate based on current and annually updated valuations, not the absurdly outdated 1991 numbers. It calculates that that would put an average of £600 into the pockets of households in Bolton West and leave 96% of people in my constituency better off. Indeed, in total, Fairer Share reckons that that reform could save households outside central London and the south-east £6.5 billion a year, helping to level up communities and genuinely boost local economies.

Finally, I would very much like to see the spending commitment to 2.5% of GDP on defence reached as soon as fiscally possible. I welcome the Government’s commitment to that effect. The increase of £2.9 billion for defence already announced by the Government is indeed welcome. We must continue to invest in defence to ensure that the UK will have the capacity to keep us safe in what is becoming an increasingly dangerous world.

This Finance Bill demonstrates that after 14 years of dither and delay, the Labour Government are taking the difficult decisions head on. With the measures announced last month by the Chancellor, I am confident that my constituents across Bolton West will be able to realise their full potential and that together we can build the healthier, more prosperous society that I want to see, with tax justice at its heart and those with the broadest shoulders paying their fair share to fix the crises in our schools, our hospitals and our prisons.

[Alison Griffiths (Bognor Regis and Littlehampton) (Con)]

I commend the hon. Member for South Derbyshire (Samantha Niblett) for her maiden speech. She and I share many interests, not least in technology, promoting women in technology and accessibility. I wish her well.

Turning to the matter in hand, the measures in the Bill are in addition to others announced as part of a Budget that has caused serious concern for businesses in Bognor Regis and Littlehampton. Re-energising our high streets has been one of my key priorities, but the Budget pushes us further from that goal.

The Government plan to increase employers’ national insurance contributions from 13.8% to 15% and to lower the threshold from £9,100 to £5,000. That will force businesses to pay more sooner. Meanwhile, business rates relief for retail and hospitality will drop from 75% to 40%. Research shows that that will cause a 140% increase in rates, with the average UK restaurant seeing costs rise from £5,051 to £12,122l, a £7,000 hike that could force closures. Those changes come on top of existing pressures caused by covid, the war in Ukraine and energy price inflation. A local business has shared the impact of that on its profit and loss: its freight costs are up 126% since 2019, raw materials are rising by 6%, warehouse rents were up 24% last year, with another 6% rise in 2024, and utility costs were up 58% in 2023. Businesses already stretched thin cannot absorb the additional costs that the Budget imposes. Piling on national insurance contributions and higher business rates alongside steep minimum wage hikes, without supporting productivity and growth, is a recipe for disaster.

[Graham Stuart]

In painting this stark picture, my hon. Friend has not mentioned the Employment Rights Bill, which is expected to impose particular burdens on hospitality businesses, including those on her high streets—a total of £5 billion in addition to the measures in this Budget.

[Alison Griffiths]

My right hon. Friend makes a valid and important point. I have restricted my comments to the Finance Bill and the Budget, but the Employment Rights Bill places significant additional pressures on businesses, and I thank him for that point.

For towns such as Bognor Regis and Littlehampton where businesses already operate on razor-thin margins, these measures could be existential. Highly regarded local employers, including family-run small and medium-sized enterprises such as Temple Spa and Meridian Medical, are gravely concerned. Entrepreneurs like those take immense personal and financial risks to create jobs and support our economy, yet this Government treat them as an endless revenue source instead of engines for growth. The Chancellor’s projections may work on paper, but they are disconnected from reality. Our high streets, SMEs and family businesses need support, not policies that make survival—let alone growth—harder. I urge the Government to rethink their approach or take steps to mitigate the impact on our communities.

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[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to take part in this debate. Let us travel back in time to those halcyon days for the Labour party: so confidently predicting victory in the election, so far ahead in the opinion polls and so clear on the prospectus they laid before the British people. It had a fully funded, fully costed programme. When the now Chancellor was challenged about whether she had a full insight into the public finances, she assured the interviewer, if I recall correctly, that absolutely she did. Therefore, people could rely on the cast-iron promise, which all Labour Members stood on, that Labour would not raise national insurance, would not raise income tax, would protect farmers and would not cut pensioners’ benefits. That was the promise.

But it is better than that. It is not just that Labour was not going to bring in all those taxes, but that it was going to make growth their No. 1 mission for a mission-led Government. Those who feared a return to a sort of socialist job-destroying and enterprise-wrecking past could be reassured that this was a moderate party that had put the right hon. Member for Islington North (Jeremy Corbyn) well behind it, no matter how many Labour Members had said he was a great friend and would make a great Prime Minister. They had changed their mind. There was a moderate promise.

It was not only members of the public who were led to believe in the Labour mission and what it could bring for the country. Imagine Labour Members, the people who were selected as candidates for the Labour party, who came in not to Jeremy Corbyn’s Labour party but to this Labour party of enterprise, protecting workers and encouraging a low-tax system, but doing so in a way that none the less would prioritise the healthcare system, special educational needs children and the like. That was the promise and it did not just beguile many people in the country—although not that many, as only 34% of people actually did vote Labour, but none the less enough. Imagine what it was like—I say this to Opposition Members—to come to this place and be a part of that fantastic crew of hundreds and hundreds of Labour MPs to deliver that manifesto. And where are we now at the historic Second Reading of the Finance Bill of the central policy measures of this new Government. Where are they?

[Nesil Caliskan (Barking) (Lab)]

Will the right hon. Gentleman give way?

[Graham Stuart]

They have been humiliated in the Budget debate, as one after another repeated their rote words. It was the most intellectually empty Budget debate I have ever taken part in. I listened to Labour Member after Labour Member trot out their “14 years of chaos” and their “£22 billion black hole”.

[Nesil Caliskan]

Will the right hon. Gentleman give way?

[Jim Dickson]

Will the right hon. Gentleman give way?

[Graham Stuart]

It would be entirely wrong of me, given how few Labour Members there are in the Chamber prepared to defend the Budget, if I did not now give way to one of them.

[Nesil Caliskan]

I thank the right hon. Gentleman for finally giving way. I wonder if he might use the opportunity to reflect on the economic record of the previous Government, which saw the highest interest rates and inflation through the roof that affected people’s pockets and their ability to get on in life. Will he also reflect on the fact that his party lost the election and perhaps show some humility?

[Graham Stuart]

I am grateful to the hon. Lady. I am happy to do so, although it is worth pointing out that we are supposed to reflect today on the actual proposals put forward by the Government of which she is now a member.

But the hon. Lady is right to highlight the Conservative’s economic record. I have a criticism of those of us on the Conservative Benches: I do not think we do enough to talk about it. From 2010 to 2024, which economy in Europe grew the most? Was it Germany or the UK? Oh, it was the UK! Was it France or the UK? Oh, it was the UK! Which country in Europe created 4 million more jobs? For which Government did the horrible scar of youth unemployment, which was a permanent feature even in the good years prior to the crash—for those interested in the history of employment—stay horribly high, with its long-term scarring impact on young people? It was the Labour Government.

All that was turned around. People were paying tax at £6,500 when Labour left power. That was lifted to £12,500. They may be decrying and disowning their part in the coalition Government, but the Liberal Democrats should have some pride in what we were able to do together. We inherited an economic basket case. We brought discipline back. But while we were fixing the foundations, we did not lose sight of the fact that we knew where the wealth comes from. It comes from the private sector, not the public sector—from those small shops, those restaurants, all those other businesses on which the country relies for its wealth. This Budget has gone down and damaged each and every one of them, one by one. It has looked around for targets—the “broad shoulders” for the socialist envy to vent itself on—and who better than landowners?

So the Budget focuses on people. I am not an expert on every area of the economic life of this country, but let us suppose that I looked across the entire economy and tried to find people in private enterprise using their own assets. Where would people have millions of pounds in assets and be prepared to receive a 1% return on them? Who would keep that up, year after year, simply in order to feed the nation as part of a pact—a compact—between them and the Government, indeed the whole country? Who would be prepared to do that, and to feed us, while asking so little in return? Attacking farmers, of all groups in society, is one of the most retrograde and regrettable of attacks.

[Joe Robertson (Isle of Wight East) (Con)]

As my right hon. Friend knows, I worked for a charity for six years—or a decade, as the Chancellor of the Exchequer likes to call it. Would he care to reflect on the damage done to charities by this Government’s Budget? They are already in a squeeze, and the Government have squeezed them further through their decisions on employment rights and also through taxation in the Budget.

[Graham Stuart]

We are seeing a kind of socialist envy and attack on misguided targets. For instance, children with special educational needs in private schools will be pulled out of those schools mid-year because their families can no longer afford to send them there. That was not the intent; not only did Labour Members want to stand on an honest prospectus, but that is not, I am sure, what they wanted. Nevertheless, that is what is happening. [Interruption.] It is exactly what is happening.

My hon. Friend is right, however, to point out that this is not just about a class-based assault on people who do not deserve to be assaulted. It is also about sheer ineptitude. Let us consider the £22 billion for the NHS. Why so little for social care? Surely Labour Members, however green and new to the House, must be aware that the NHS depends on the social care system, but because of the increases in national insurance contributions and the minimum wage, its costs are rising by about £2.5 billion and it is getting £600 million. Hospices will be affected, and so will small charities.

[Madam Deputy Speaker (Caroline Nokes)]

Order. I remind the right hon. Gentleman, and indeed all other Members, that this is, specifically, a Finance Bill Second Reading debate. We are not having a general debate on the Budget.

[Graham Stuart]

I am extremely grateful to you for your guidance, Madam Deputy Speaker. I will try not to refer too much to the impact of national insurance contributions, because we will have that opportunity next Tuesday. None the less, my hon. Friend was right to talk about the impact of this Budget overall, and the effect on hospices and charities in particular.

Yesterday I met the chief executive of HICA, a large not-for-profit provider of social care homes and in-home care. HICA is a brilliant organisation, which has made real progress over the last few years. It finally managed to make a surplus last year, so it can pay its staff more than the minimum wage and invest in its stock. Now it is facing a £3.5 million impact on its £40 million turnover as a result of this Budget and this Finance Bill.

As well as farmers, oil and gas have been touched on today. When I was the Minister for Energy Security and Net Zero, it always struck me as absurd to look at the production of oil and gas rather than the consumption. It is the consumption that is the problem. We must change our factories, our vehicles, our buildings, so that they no longer need oil and gas if we are to move away from them. Attacking production when it is driven by demand is attacking the wrong end. In this measure, the Labour Government are raising the energy profits levy, on top of refusing to issue new licences. The net effect of that, notwithstanding the Liberal Democrats’ saying that they support the policy—I do not know why or how they can do so—

[Daisy Cooper]

Will the right hon. Gentleman give way?

[Graham Stuart]

I will in a moment.

This does not make the slightest difference to how much we consume, but it means that we import more from abroad, and, in the case of liquefied natural gas, those imports have embedded emissions four times higher than the emissions of what we produce domestically. We are going to bring this in from places that are less careful than we are in its production. We are going to lose tens of thousands of jobs and £13 billion of tax revenue, and we are going to lose the engineering expertise and companies that we need for the transition. There is literally no way to make that make sense, and I hope the hon. Lady will now do a U-turn and see the logic of my argument.

[Daisy Cooper]

I will resist that invitation. Does the right hon. Gentleman understand the nature of a windfall tax? It raises money on the windfall that a sector was not expecting. We know that the big oil and gas giants base their investment plans on the profits that they were expecting, but clearly they raised a lot more money because of Russia’s illegal invasion of Ukraine. Windfall taxes have been placed on the big oil and gas giants for the profits over and above what they were expecting to receive.

[Graham Stuart]

The hon. Lady did not actually refer to the measure in front of us. I know it is the Liberal Democrats’ policy to have a windfall tax on anyone who does not sound popular—big banks, big tech, and oil and gas. That is their answer. If anyone says, “How would you do it?”, they trot that out and lose not a single vote, because the very definition of not taking a tough choice is suggesting that there is easy money.

The measure in front of us, which the hon. Lady specifically said she supported, is not a windfall tax. It is a further tax, in tandem with the removal of any new licences, which effectively destroys investment in the North sea. I point to Apache—which says it is looking to withdraw by 2029, risking 500 jobs—Harbour Energy, JAPEX and Chevron, to name just a few. They are pulling out, and there is no environmental benefit. We are losing all that tax, all those jobs and all that expertise, which is exactly what we need for carbon capture, and for hydrogen, for the green economy. It is utterly insane.

I note that there are very few Labour Members present. I watched them as they came in for the Budget, full of cherry-cheeked enthusiasm and reading out their Whip-prepared rote remarks about the disaster left behind, which, as we know, was the fastest-growing economy in the G7, with inflation at target, debt coming down and the economy coming up. They are not all mad, socialist loons, and day by day we can see them losing spirit in the Tea Room and in the corridors as they realise that the deceit that their Front Benchers practised not only on the people, but on them, is coming home to roost.

The Government will pour all of the £22 billion into the NHS in the next year—it is in the figures—and we are supposed to believe that public services will rise by 1.3% or 1.4% in the rest of the period up to the next general election. Is that credible? It is not. I think Labour Members know that, which is what they have signalled by their absence, because they realise, as we do, that this Finance Bill and the Budget are ruinous for this country. My right hon. Friend the Member for Central Devon (Mel Stride) was absolutely right to say that they make this country more vulnerable to the shocks that may and most likely will come, and it will be the Labour party that owns the mistakes that are being sown today.

[Alex Ballinger (Halesowen) (Lab)]

It is a pleasure to follow my hon. Friend the Member for South Derbyshire (Samantha Niblett), who gave a wonderful maiden speech. I am sure that her daughter Lillian will look on her as a lovely role model as she moves forward.

Earlier this month, we witnessed an historic moment as the first ever female Chancellor delivered the Government’s Budget—a comprehensive plan that is designed to support working people, rebuild our economy and bring fiscal responsibility back to the heart of Government. The Budget delivered a plan for recovery, a plan to undo the damage left by the previous Government and, most importantly, a plan that will benefit the people of Halesowen and the wider community.

However, let us be clear: this Government inherited a dire financial situation. [Interruption.] It is true. The Chancellor exposed a £22 billion black hole that was left by the previous Government, and a series of undeliverable promises that the Conservatives knew they would never have to keep. The last Government knew that they had no money to deliver their agenda, yet they concealed the truth from the British people, leaving the incoming Government to pick up the pieces. The Budget was about sorting this out, and we are committed to doing just that.

Our economy faces multiple challenges, including high debt, underfunded public services and rising youth unemployment, but the true cost of the past 14 years is felt most acutely by the people who have been left behind. In Halesowen I hear from residents every day: people who have been waiting weeks for a doctor’s appointment; people who are forced to travel miles to receive healthcare; and people who are completely unable to access their NHS dentist. Fourteen years of cuts have left our NHS in crisis, and no matter someone’s political affiliation, no one can deny the challenges our health service faces.

But it is not just in healthcare. Our schools, roads, railways—all of this infrastructure—has suffered from years of under-investment. Our public services are falling apart.

[Graham Stuart]

It is tempting for Members to read out the rote stuff that is given to them—as some of the hon. Gentleman’s colleagues have been prepared to do, but are mostly not prepared to do today—but I just gently point out that there was never a reduction in NHS spending; in real terms it went up in every single year. If there is a belief that the NHS can be magically turned around by having above-inflation increases in spending alone, I can assure the hon. Gentleman that that is not true, because we did it every year and we still had demand going beyond the resource.

[Alex Ballinger]

The right hon. Gentleman will have noticed that we reached record NHS waiting lists under the last Government, more than 7 million people waiting and many of my constituents waiting over two years. If he thinks the investment in the NHS by the last Government was enough, he is completely wrong.

Our roads are literally crumbling, working families are struggling and the hope of upward mobility is slipping further out of reach. We cannot let this continue. The Government are faced with what the Institute for Fiscal Studies has described as a genuinely difficult inheritance. The truth is that the last 14 years can be described as, at best, a period of managed decline; or at worst, wilful neglect. The last Government will be characterised as an Administration that allowed services to erode and future generations to be abandoned.

We must take a different approach and offer real change. We are not pretending that the work ahead will be easy, but we are determined to rebuild and restore. A key part of this recovery is investing in our most vital public services, especially the NHS, which cannot survive on good will alone. The Budget commits to injecting much-needed funds into our healthcare system, securing a lifeline for the NHS that will allow it to begin this recovery.

The Budget is also about presenting an offer to working people who have been neglected for so many years, including a rise in the minimum wage to boost the living standards of 3 million low-paid workers; NHS funding to support 2 million more operations, scans and appointments every year; fuel duty frozen for another year, providing relief to drivers and families; a £500 million investment to fund the construction of 5,000 more social homes; a significant increase in the carer’s allowance earnings limit, because those who care for our loved ones deserve our support; and a crackdown on tax avoidance, fraud and waste, ensuring that the super-wealthy pay their fair share of tax.

The decisions in the Budget, though some are difficult in the short term, are the right ones for the long-term good of our country. This is a Finance Bill that prioritises public services and working people without raising taxes on the majority. It is about restoring fairness, rebuilding trust and setting the country on a new path towards growth. It is also important to remember that fiscal responsibility is central to this Government’s approach. The IFS has praised the soundness of our fiscal rules, ensuring that our efforts to drive growth are sustainable and the public finances remain on a stable footing. Changing the fiscal rule to allow more investment is both sensible and necessary, and this investment will boost long-term growth.

The Bill is not just about recovery; it is about securing a prosperous future. Businesses in Halesowen have been struggling, especially on our high streets, where many have been forced to close their doors in recent years. I have heard the concerns of small business owners and the concerns shared by the Black Country chamber of commerce, and I am pleased that the Chancellor’s plans include support for high street businesses, including business rates reform, which will give local shops the chance to compete against tax-avoiding multinationals.

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[Adrian Ramsay]

If the hon. Gentleman is aware of my campaigning background, he will know that I have been one of the strongest advocates for accelerating to move to renewable energy for decades, with all the benefits that brings for reducing bills. If he heard the Westminster Hall debate yesterday, he will know that we need to combine speed on renewables with bringing communities with us and assessing all the options available, and we had cross-party support in arguing for that.

[Graham Stuart]

Will the hon. Gentleman give way?

[Adrian Ramsay]

Perhaps the right hon. Gentleman would let me make a little more progress first, please.

A wealth tax would go a long way towards funding the public services that our economy relies on and to delivering nature and climate-friendly policies that will benefit us all. For example, by maintaining the winter fuel allowance for pensioners, while investing in the roll-out of the street-by-street insulation programme, we could bring down household bills and carbon emissions and at the same time support the most vulnerable households with energy bills over the winter months, preventing hundreds of avoidable deaths. There are also nature-based solutions that would help to protect against the flooding chaos and misery caused, for example, by Storm Bert recently. Preparedness or adaptation is often neglected when it comes to climate action, yet this week has demonstrated what a difference it can make.

A wealth tax could see charities and not-for-profit health and social care providers, for example, exempted from the planned increases in national insurance contributions for employers, in recognition of the significant work they do in our communities and the significant further strain that this planned change will put them under. As Community Action Suffolk has warned, this financial challenge may be a step too far for some organisations that

“deliver vital services keeping Suffolk residents safe and well”,

and reduce pressure on other public sector systems, including the NHS.

The Government have taken, or have sought to take, some steps towards taxing wealth in addressing the real problem of very wealthy people investing in farmland to avoid paying inheritance tax. However, the way in which they have gone about doing so is resulting in huge problems. It is clumsy because it is impacting on small farms that may, on paper, have assets worth several million, but if the farmer is not actually earning any income, or very little, they never actually see the benefit of that.

The Exchequer Secretary is back in the Chamber, and I would ask him whether, in considering the agricultural property relief—I know it is planned for a further year’s Budget, so there is time for the Government to look at this—he will look at the work of tax analyst Dan Neidle. Dan Neidle has highlighted that the Government’s own intentions of rightly clamping down on tax avoidance will not be met under the current plans, which will impact far more small, ordinary farms than the Government have admitted. His proposals include an alternative suggestion for meeting the Government’s stated aim of clamping down on tax avoidance, not affecting ordinary farmers.

--- Later in debate ---

[Tulip Siddiq]

It was a difficult decision, and I understand the point the hon. Lady is making, but the reforms to agricultural property relief mean that farmers can access 100% relief for the first £1 million and 50% relief thereafter, meaning an effective 20% tax rate. It was a difficult decision, but we had to do it to fund public services.

My hon. Friend the Member for Bolton West (Phil Brickell) talked about tax avoidance and fraud. To stop people taking unfair advantage of our system, the Government announced in the Budget the most ambitious ever package to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30.

[Graham Stuart]

Will the Minister give way?

[Tulip Siddiq]

The right hon. Gentleman has spoken enough times in the debate, so I will not be taking yet another intervention from him.

The hon. Member for Bognor Regis and Littlehampton (Alison Griffiths) raised questions about SMEs and high streets. The Government have been absolutely clear that we need to take difficult decisions to deliver long-term stability and growth, and that stabilising public finances is the only way to create long-term stability in which businesses can thrive. But we recognise the need to protect small employers, which is why we have more than doubled employment allowance—she may like to know that—meaning that half of businesses with mixed liabilities will either gain or see no change at all next year.

The right hon. Member for East Hampshire (Damian Hinds) raised questions about VAT on private schools hitting SEND pupils. To protect pupils with special educational needs and disabilities who can only have their needs met in a private school, the local authorities and devolved Governments that fund those places will be compensated for the VAT they are charged on those pupils’ fees. I hope that reassures him.

The right hon. Gentleman also raised a point about faith schools. Of course the Government value parental choice and recognise that some people want their children to be educated in a school with a particular faith ethos. My hon. Friend the Exchequer Secretary met the Partnerships for Jewish Schools and the Association of Muslim Schools during the consultation period on this policy. To ensure fairness and consistency between all schools that charge fees, faith schools will remain in the scope of the policy. It is worth noting for the right hon. Member that some faith schools are likely to be less impacted by the policy if some of their income is derived from voluntary donations from the community, because donations that are freely given and for which there is no obligation are outside the scope of VAT. As such, not all the income that small faith schools receive will necessarily be subject to VAT. I hope that reassures him a bit.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Graham Stuart Excerpts

2nd reading
Monday 25th November 2024 Commons Chamber

[Adam Thompson]

I will come to some of those points further on in my speech, if the hon. Gentleman is willing to hang on for a few minutes.

I trained as a teacher when the former Member of Parliament for Surrey Heath was Education Secretary. He made significant changes to the education system during his tenure, as the hon. Member for Central Suffolk and North Ipswich (Patrick Spencer) has just alluded to. Those were changes that I and the vast majority of my colleagues at the time strongly disagreed with. Those changes ignored decades of pedagogical research and favoured the metrification of our children over learning. They harked back to the rote learning of 50 years ago and set pedagogy back decades.

Austerity was already being very much felt in the sector. Teachers were expected to put in the same effort, but with fewer resources and with their pay frozen. Now it is worse. After a decade of Conservative Education Secretaries following in the footsteps of the former Member for Surrey Heath, teachers’ pay has taken a significant real-terms cut. In many ways, he inspired me to enter politics as a Labour Member—a sentiment that I know many of my colleagues on this side of the House share. Opposition Members may challenge me about why I raise these points, but I think they are all part of what the Bill is about. They are about keeping teachers in their jobs, paying them fairly and giving them the resources that they need to give our children the education that they deserve.

The previous Government set a goal that all children should finish year 11 with at least GCSEs in maths and English. That is a laudable goal, which has my full personal support, but last year just 45% of children in England—not even half—achieved it. Only one state secondary school in my constituency of Erewash attained results above that average, and even in that top-performing school, just half their children in year 11 attained GCSEs in maths and English. Every other state secondary school in my constituency was below that 45% average, and at the worst-performing the result was fewer than a third.

I should note that I place none of the blame for those issues on the local schools themselves. I have met several local heads and many teachers, all of whom it is powerfully obvious to me have made incredible sacrifices to deliver excellence in our local education system, and all of whom have been burned by the failures of education reforms introduced throughout the past decade. The people of Erewash elected a Conservative Member of Parliament in 2010, 2015, 2017 and 2019, and in return the previous Government let their children down.

I have been talking a lot about state schools, which is only natural when they are the schools that 94% of our children attend, but I would also like to highlight the major independent school in my constituency, Trent college in Long Eaton. In the run-up to the election and since then, I have been around as many of the schools in Erewash as I can, and Trent college is no exception. I have spoken many times to staff and pupils, and this weekend I attended a show put on by the incredible Wildflower community choir at the school’s chapel. It is a wonderful school, with excellent staff led by the brilliant Bill Penty. The staff provide fantastic opportunities to all the pupils who attend. The facilities are the best I have ever seen in a school and the staff do a huge amount for our community, but it is a simple fact that the vast majority of my constituents cannot afford to send their children to Trent college and that many of its pupils come from outside my constituency.

A great part of what this Bill is about is making sure that the incredible opportunities received by the children at Trent college, and the aspirations that they are encouraged to have, are available to all children in Erewash. I want every child in Erewash and the country to receive the best education they possibly can. This Bill will support the extension of those opportunities to every child in every state school in Erewash and the country.

[Graham Stuart (Beverley and Holderness) (Con)]

The hon. Gentleman is giving a thoughtful and impassioned speech. Notwithstanding his support for the Government’s policy, I wonder whether he regrets the fact that it is being introduced midway through the year, so that children, including those with special educational needs, will find themselves struggling to get involved with the curriculum and to fulfil the examinations for which they have put in a lot of effort and preparation.

[Adam Thompson]

I remind the right hon. Gentleman that if Opposition Members did not want us to have to take drastic measures to re-establish our country’s economy, they should not have left a £22 billion black hole in it.

I want to flag a particular failure in the education system that was brought to crisis by the previous Government: the provision of SEND education. It has long been under-supported, and after the past decade, things are worse. Opposition Members will claim that the Bill will make SEND provision worse still. Let me tell them that for SEND children and their families in my constituency and across Derbyshire it is scarcely conceivable that things could get any worse. Some 20% of the casework that I receive in my office relates to SEND problems. The recent Ofsted report on SEND services offered by Conservative-run Derbyshire county council found that it had “widespread” weaknesses, that communication with parents was “poor” and that children’s needs were often not accurately identified or provided for. The report is utterly damning—it is the worst Ofsted report I have ever seen—and Derbyshire county council’s failures are extreme. For my constituents, the local elections cannot come soon enough.

I was very pleased when the Chancellor announced in the Budget an extra £1 billion to support SEND services. Having spoken extensively to parents of SEND children in my constituency, I can say that they are not worried about whether private school fees might increase; they are worried about whether their children will be able to go to school at all. This Bill is about providing equality of opportunity. It is about ensuring that a child’s postcode or their parents’ income does not determine their chances in life. This Bill will provide funds to fix our state schools, reverse the bite of austerity, get more teachers into school and help them to stay there, ensure that all children are properly included, and ultimately provide them with the education they all deserve.

I feel strongly that supporting this Bill is my duty to my Erewash constituents and to its schools, its teachers, its children, their parents and the future of our towns and villages. It is my duty, therefore, to vote for the Bill.

--- Later in debate ---

[Imran Hussain (Bradford East) (Ind)]

I will base much of my contribution on the latter part of this Bill, which deals with private schools. However, before I go into that, I welcome the changes that the Minister is proposing through this legislation that will massively benefit our high streets. The reality is that the past 14 years saw our high streets devastated by the previous Government. In particular, I welcome the permanent lowering of business rates in the retail, hospitality and leisure sectors, which I think will be a huge boost to our high streets.

On the schools part of the debate, it would be remiss of me not to start by mentioning the 14 years of brutal Tory cuts that have led us to this moment, in which state schools are hanging on by a thread. They were abandoned for 14 years by a Government who brought zero investment to schooling—who simply watched the sector struggle through the covid-19 pandemic and left school buildings laden with asbestos or crumbling concrete. They knew that teachers were paying out of their own pockets for school supplies and food for hungry students, but instead of supporting them, the previous Government chose to attack public workers who were close to breaking point. Teachers have long paid the price, leaving the education system in droves, and can we blame them, given the treatment they have had over the past 14 years? In my constituency of Bradford East alone, 95% of schools have faced cuts to per pupil funding—cuts of £15.6 million since 2010. That is over £680 less per pupil.

As such, it is refreshing to finally see a Government share my values and my commitment to not leave state schools at breaking point, with a clear plan to deliver a much-needed lifeline directly to those schools by ending private schools’ eligibility for business rates charitable rate relief and VAT relief. The Minister was right to note that VAT relief is dealt with in a separate piece of legislation that is yet to come before this House, but both are connected in this debate, so I will also make mention of the VAT relief that private schools currently enjoy.

Frankly, the £1.5 billion that will be raised will go towards improving the education and life outcomes of all children by funding the recruitment of thousands more teachers and much-needed breakfast clubs for children. Many will welcome the Government ending the discount on education that the richest schools and the richest parents currently get, because what kind of Government arrange concessions for the wealthiest while working-class children go hungry as they learn? Despite some of the arguments we have heard and will hear, that is not a society that champions freedom of choice; it is one where the wealth bracket of someone’s parents, their postcode and their school determines the success of their life. If we let this inequality entrench itself any longer, we will never be able to end it.

I fully understand and endorse the spirit of the decision to close the tax loophole on private schools, but I also note the growing fear and concern in my constituency and other constituencies, particularly for the smaller independent and faith schools that, as we should also recognise, provide excellent and often specialised schooling for children. That is why I am pleased that the Government have confirmed that, where private schools are charities that provide education for children with education, health and care plans, they will retain the charitable relief, as they rightly should. My view is that the impact on smaller independent and faith schools should be considered too, and I firmly believe that it is not in the spirit of this legislation to punish them. We should draw a clear distinction.

[Graham Stuart]

The hon. Gentleman is quite right to highlight the impact on small schools, which often have pretty low fees, so is he going to vote against the Bill tonight? The spirit of this legislation is to hit everything in the private sector, as if every institution was Eton, when he knows and we know that they are anything but.

[Imran Hussain]

The right hon. Gentleman is a brave soul because he often tries to defend the indefensible. He and I have often sparred between these Benches, but I would say to him that the place he comes from and the place I come from are distinctly different. I support the spirit and ethos of this legislation because I do not think it is right to give tax concessions and subsidies to the richest in society while the poorest of our kids go hungry in schools, so we come from different places. If he lets me make the point about where I am coming from about genuinely smaller and faith schools, I think it may at least answer part of his question.

When we talk about these schools, let us be clear that the average fees for some of the smaller schools are about £3,000, which is a great deal less than the average. They are maintained through community support and donations, and they are not in the same league as the Etons of this world. They do not reproduce class inequalities, and in fact they enable some of the most deprived communities to flourish. It would be a travesty if these schools were inadvertently punished by a decision designed to tackle the same inequality that some of them work so hard to break down.

If we do not consider the impact on them, the schools charging the lowest fees, which are often located in extremely deprived communities, will suffer and, sadly, the children whose working-class parents have often saved up for many years to get them into these schools will have to leave. Again, while I of course support children moving from that sector into the state sector, the reality is that 14 years of underfunding and under-investment have left us with serious capacity issues in the state sector, which is something Conservative Members may want to address when they speak.

I want to take this opportunity to recognise the massive contributions that faith schools make to society. I have a number of Muslim faith schools that do some excellent work in my constituency, and I want to put on the record my thanks to them for all they do. I must therefore urge Ministers to put in safeguards for smaller independent and faith schools, many of which, sadly, will not survive the policy in its current form. This can be achieved, because I believe the money that would be generated from the smallest of these schools is not at a level that would have an impact on the overall spirit of this legislation.

Madam Deputy Speaker, you are staring at me in a very telling way—although there is no time limit, I know that look. To conclude, I agree wholeheartedly that we cannot keep funding tax breaks for the top end of society while neglecting the rest. This is something I have spoken on and championed my whole life, and I believe this policy is the right one for our state schools. However, I must urge the Government to reconsider, and not let smaller independent and faith schools, which are some of the lowest-charging schools, to pay the price. I must urge Ministers to listen to their concerns, and put in safeguards as this and other relevant Bills progress through to their next stages.

--- Later in debate ---

[Chris Vince (Harlow) (Lab/Co-op)]

Over the weekend, I watched my second favourite film. At the end, the main character, or at least the main character in my opinion, utters the immortal line that

“the needs of the many outweigh the needs of the few.”

When I consider the ending of tax exemption and charitable status for private schools, I often consider that line. We want all children to have the best chance in life to succeed, and 94% of children in the UK attend state school. Like every child, they deserve the highest quality of support and teaching. I also believe that ending the tax break on private schools will help to raise the revenue needed to fund our education priorities for the next year.

But then I realised that the phrase “the needs of the many” does not quite cover it. The Conservative party talks about choice, but there are really only two reasons why parents would choose to pay tens of thousands of pounds each year to send their children to private school rather than state school—maybe three if they go to Eton. Those reasons are longer opening times and boarding facilities, and a lack of faith in local state provision. We want to take away the choice to go to private school, but not in the way that the Conservative party keeps parroting; we want to make state schools so good that no one feels the need to send their children to private school. There should be no necessity for private schools.

I think all Members in the Chamber, even on the Opposition Benches, will acknowledge the issues with SEND funding in schools. It has been underfunded. I was lucky enough to visit Newhall primary school in my constituency on Friday. I saw the work it is doing to support its SEND students, even though it is not a specialist SEND school. However, it could only do that with a small number of students. Imagine what it could do with additional funding opportunities: it could help so many more.

What many people fail to recognise is that these private schools have the choice to absorb some of the tax. We are not here to punish students or parents. Schools can choose to absorb some of the tax, in the same way that the state sector has been asked to do for the past 14 years.

[Graham Stuart]

I wonder whether the hon. Gentleman listened to the speech of the hon. Member for Bradford East (Imran Hussain). Many private schools actually charge less than the funding that goes to state schools. Every school is not Eton. What does the hon. Gentleman have to say about the most vulnerable schools and the children therein? Should the proper design of any policy not be grounded in looking at the most vulnerable rather than the strongest?

[Chris Vince]

It is very exciting to take my first intervention from an Opposition Member, but I think the right hon. Gentleman fails to recognise the point that I am trying to make. I am saying that we need to support the state sector to be as good as it possibly can so that parents do not feel the need to send their children to private school.

The Conservatives groan when we mention the £22 billion black hole, but I do not even need to mention the £22 billion black hole—in fact, I will not mention the £22 billion black hole. What I will say, however, is that we have high streets that are already boarded up and school buildings left crumbling. I visit state schools in my constituency all the time and I see children of all ages and abilities full of compassion, intelligence and potential. I had the fantastic opportunity to visit St Mark’s Catholic school in my constituency again last Friday. The students asked fantastic questions. If they are listening now, I emphasise that they can aspire to achieve everything they want in life. However, classrooms are overfilled and underfunded. Paint is peeling off the walls, and some schools—not that particular school—have faulty heating. Despite all those things, the pupils could not be filled with more excitement or more desire to learn and understand.

I can see that you are looking at me, Madam Deputy Speaker, so I had better get on. Labour is making the fair choice to support small business, to give every child the chance to succeed and to protect the public finances. I will finish with a line from my favourite film of all time, “A Matter of Life and Death”. At the beginning, David Niven says:

“Politics: Conservative by nature, Labour by experience.”

I am delighted that on 4 July, plenty of people went to the polls with that view.

Oral Answers to Questions

Graham Stuart Excerpts

Tuesday 29th October 2024 Commons Chamber

[Rachel Reeves]

I can understand the hon. Member’s concern, but of course, that £1.5 billion was already baked into the forecast—it is not new money to spend on initiatives. As she knows, we inherited a £22 billion black hole in the public finances; we will set out the detail of that at the Budget tomorrow, but because of that, we have had to make very difficult choices. Even in those difficult circumstances, though, we have protected the winter fuel payment for the most vulnerable pensioners who are on pension credit. We have also boosted the uptake of pension credit, so that people get the support they are entitled to.

[Graham Stuart (Beverley and Holderness) (Con)]

Residents of Joseph Rowntree’s St Ellens Court all gathered recently to tell me about the devastating impact that the cut in the winter fuel payment will have on their living standards, and people in Withernsea gathered Saturday last to demonstrate against it. Tomorrow, the Chancellor can do the right thing; will she?

[Rachel Reeves]

I am sure the right hon. Gentleman told them about the £22 billion gap in the public finances that his Government left, which has required the difficult decisions this Government have had to make to clean up the mess left by the Conservative party.

VAT: Independent Schools

Graham Stuart Excerpts

Tuesday 8th October 2024 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

rose—

[Graham Stuart (Beverley and Holderness) (Con)]

rose—

[Damian Hinds]

I am spoilt for choice. I give way to my right hon. Friend.

[Graham Stuart]

During the election, in the Monks Walk pub, I met a constituent who has stayed in his small home and has one car for the family, because they decided their bullied daughter needed to go to another school. They have sacrificed, with the support of wider family, so that that child with special educational needs can go to a private school. It is children and families like that who will be the victims of this spiteful policy. Does my right hon. Friend agree?

[Damian Hinds]

My right hon. Friend is right to identify that many parents make great personal financial sacrifices to do what they believe is best for their children. Some parents whose children go to independent school are rich, and some are definitely not. I include in that latter bracket most of the parents sending their children, for example, to small religious schools in Hackney, Salford or Birmingham. Very many more are in the middle, including many professionals working in our public services.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (James Murray)]

This Government were elected to break down barriers to opportunity. We are determined to fulfil the aspiration of every parent in our country to get the best education for their children. We are committed to doing so by improving state schools and making sure that every child has access to a high-quality education. We will start to make this happen by expanding early years childcare for all by opening 3,000 new nurseries across England. We will recruit 6,500 new teachers, alongside improving teacher and headteacher training, and we will roll out further mental health support to schools and colleges in England. Those improvements to the state education system will begin our work to make sure every parent’s aspiration for their children can be fulfilled.

We want to get on with these important changes right away, and to do so, they must be paid for. That is why to help fund improvements to our state schools, we have made the tough but necessary decision to end tax breaks for private schools. In the July statement, the Government announced that as of 1 January 2025, all education services and vocational training provided for a charge by a private school in the UK will be subject to VAT at the standard rate of 20%.

[Graham Stuart]

I know the Minister to be an honourable man, so will he take this opportunity to apologise to the House in the absence of the Secretary of State for Education for the malicious and spiteful tweet that she put out this weekend? That tweet was ill-advised, even if one believes that this policy is the right thing to do.

[James Murray]

Neither I nor any of my colleagues will make any apology for wanting to improve state education across this country to make sure that the aspiration of every parent in our country to get the best possible education for their children can be fulfilled. That is why we have announced that any fees paid from the date of the July statement, 29 July, relating to the term starting in January 2025 onward will be subject to VAT.

--- Later in debate ---

[James Murray]

I thank the right hon. Member for her contribution. First, in terms of an impact assessment, while developing these policies, the Government have carefully considered the impact they will have on pupils and their families across the state and private sectors, as well as the impact they will have on state and private schools. In addition to having reviewed analysis published by third parties such as the Institute for Fiscal Studies, the Government have conducted their own analysis of the likely impacts of these policies, which draws on a range of sources.

[Graham Stuart]

On a point of order, Mr Speaker.

[James Murray]

I am not going to give way, because I am responding to the right hon. Member for Witham (Priti Patel).

[Mr Speaker]

Order. It is a point of order, so you do give way, unfortunately.

[Graham Stuart]

I am grateful to you, Mr Speaker. Could you give any advice to me on how we can ensure that the impact assessment that must have been conducted on this policy is shared with the House? It is a fundamental—

[Mr Speaker]

Order. As you know, that is not a point of order—do not waste my time. Carry on, Minister.

Winter Fuel Payment

Graham Stuart Excerpts

Tuesday 10th September 2024 Commons Chamber

[Mel Stride (Central Devon) (Con)]

I beg to move,

That this House regrets that the Government approved the use of the urgency exemption in section 173 of the Social Security Administration Act 1992 to make and lay the Social Fund Winter Fuel Payment Regulations 2024 before the Secretary of State had referred the Regulations to the Social Security Advisory Committee; further regrets that the Government decided it was not necessary to publish an impact assessment for the Regulations, despite, for example, the evidence which shows that living in a cold home increases the risk of serious illness for vulnerable people and those with disabilities and so restricting eligibility for the Winter Fuel Payment is likely to lead to increased burdens on the National Health Service; regrets that the Government made time to debate the prayer motion from the Official Opposition without the Social Security Advisory Committee’s Report, and Government response; and calls on the Government to lay those papers before Parliament without delay, and to publish a full regulatory and equality impact assessment for these Regulations.

The decision to remove winter fuel payments has come as a complete shock to millions of pensioners—pensioners on as little as £11,500 a year. We have had no adequate explanation as to why this measure is so urgent. We have had no explanation as to why the Government had to invoke the special emergency provisions that allow them to bypass the scrutiny of the Social Security Advisory Committee. We have had no explanation as to why no impact assessments were provided. This is a major policy change that will remove the entitlement for up to 10 million pensioners, including many who are already in poverty. It is a cut worth £7.5 billion over the course of this Parliament. Rushing such a policy through—without taking time to consider the impacts, ensure effective and fair implementation, and allow possible scrutiny—is impossible to justify. This is not the way to make good policy, and this is not good government.

It is worth considering the conclusions of one of the few bodies that have been afforded the opportunity to scrutinise these regulations. The Secondary Legislation Scrutiny Committee in the Lords has been damning in its criticism of the Government’s approach, and I refer the House to my remarks in the previous debate, when I quoted the Committee at some length. As the Committee points out, such measures would normally be subject to the SSAC’s consideration. That is an important part of the process for any legislation of this nature, as I know well from my time as Work and Pensions Secretary. Conveniently, Ministers have claimed that the measure is too urgent to wait for the SSAC’s scrutiny.

We understand that the SSAC is due to consider the measure tomorrow. Can the Minister commit to the House today that the SSAC’s report, and the Government statement responding to any recommendations, will be laid before Parliament before the regulations come into force next week? As the Lords Committee has pointed out, it would seem wholly inappropriate for the SSAC’s views to be taken into account only once the regulations are already in force. In the words of the Committee,

“It remains unclear what the practical impact of any statement might be on regulations which will have already come into effect.”

If the Government do not intend to provide us with the SSAC’s observations before the House rises on Thursday, why were Members asked to consider and vote on the prayer motion against the regulations today, before the SSAC has met?

The lack of any impact assessment means that we are severely hampered in our ability to scrutinise this measure. We were told in the explanatory memorandum that:

“A full Impact Assessment has not been prepared for this instrument because there is no significant new impact on business, charities or voluntary bodies.”

This seems a bold claim to make about a measure that removes hundreds of pounds of support from some of the most vulnerable elderly households in our country.

The guidance from the National Institute for Health and Care Excellence is clear:

“For a vulnerable person, living in a cold home increases their chance of serious illness or death.”

It also notes that

“being housebound increases both the exposure to an underheated home and the cost of heating it.”

So can I ask the Minister on what basis it was concluded that there would be no significant impact from this policy on those charities and organisations that support elderly people or on the wider health and social care system? Will he now commit to the publication of a proper impact assessment?

The only basis for the urgency seems to be a claim that this measure is vital for public finances. We have even been subjected to the Leader of the House claiming that it was needed to avoid a run on the pound. I might ask the Minister to comment on that when he appears at the Dispatch Box. The only real relevance of a measure of this kind to the public finances is its impact on the Government’s fiscal rules. Those fiscal rules are based on levels of debt and borrowing at the end of the Office for Budget Responsibility’s fiscal forecast period in five years’ time. The rules that the Chancellor has claimed she will sign up to were already being met when the Government came into office, according to the OBR’s own forecasts.

The Government could have opted to bring this measure in next year, with greater time for scrutiny, better notice for pensioners, more time to drive up pension credit uptakes and perhaps time to consider whether there were much better ways of going about it. It would still have been a broken promise, and we on this side of the House would still have opposed it, but it would have been a much better way to make policy and it would still have delivered exactly the same savings at the end of the forecast period.

Ministers will claim that they needed to make immediate in-year savings, but that is based entirely on a black hole that they have confected themselves. The real reason this is being rushed is pure politics. The Government want to rush this measure through while they can try to blame it on their predecessors in order to avoid proper scrutiny. There is no need whatsoever for the haste with which this is being done.

[Graham Stuart (Beverley and Holderness) (Con)]

Does my right hon. Friend, like me, find it inexplicable that the Government should fail to go through the proper process when their own research suggested that thousands of people could die as a result of precisely this measure? That is something that the whole House should find deeply uncomfortable.

[Mel Stride]

My right hon. Friend makes a powerful point. This is a very serious step that the Government are taking. Of all the steps that should be properly scrutinised, surely this is one of them. I remember when I was sitting on the other side of the Chamber, I could barely breathe without the cry going out that an impact assessment should be held. It is extraordinary that on such an important measure as this, affecting millions of the most vulnerable, the Labour party should be utterly silent on this issue.

--- Later in debate ---

[James Murray]

I would be interested to understand why the hon. Gentleman is backing a candidate to lead his party who supports the means-testing of the winter fuel payment. He might want to have a conversation with that candidate before he starts criticising our approach of targeting support at those in greatest need. The critical point is that the combination of the state pension rising under the triple lock with those in greatest need getting winter fuel payments alongside pension credit, not to mention the extension of the household support fund, means that the right measures are in place to give all pensioners the support they need.

Opposition Members want to know why the legislation is being progressed urgently. I will be really clear: it is urgent because we need to deal urgently with the £22 billion black hole—the huge in-year spending pressure—that we inherited from the Government that they ran. It is crucial that we act quickly to restore responsibility to our public finances and stability to our economy. On top of that, it was important that we made sure that regulations were in place at the start of the qualifying week for winter fuel payments, while wasting no time in doing all we can to raise pension credit take-up.

[Graham Stuart (Beverley and Holderness) (Con)]

We have heard that the Transport Minister yesterday could give no assurance to pensioners about their transport concessions. Last week, I asked the Deputy Prime Minister about the single person council tax discount. There is a very real prospect that pensioners could lose even more than £300—another £300 or £400. Will the Exchequer Secretary take this opportunity to reassure pensioners that there is no way that the Government will remove the single person discount from the council tax? It would be politically good for him and the Labour party, and it would be enormously important for people who need to hear some reassurance at this time.

--- Later in debate ---

[Peter Swallow (Bracknell) (Lab)]

I was proud to be elected on a manifesto that committed to delivering economic stability, security and growth. After 14 years of Tory recklessness with our economy and after the disastrous Liz Truss mini-Budget drove up inflation, food bills and mortgage repayments and pushed my constituents to the brink, the public voted for change. That change must start with getting our economy back on its feet.

When the previous Labour Government left office, Trussell Trust food banks were giving out 40,000 food parcels a year. Last year they gave out 3 million. When we on the Labour side of the House talk about the recklessness of the previous Government, it is not academic. We are talking about taxpayers’ money being poured into ideological gimmicks while children are going to school hungry, working adults are one rent rise away from homelessness and a broken NHS is stalling productivity and failing those who most rely on public services, including our pensioners. We face a £22 billion black hole in the public finances that they covered up and walked away from.

Stability means bringing the economy and the country back from the brink to which the Conservative party knowingly pushed it. No one doubts that this policy is tough, and it is not a measure we want to take, but we have been left a huge bill to pay. Means-testing the winter fuel allowance will allow us to support those pensioners most in need as we take the difficult steps we have to take to right the ship.

Members across this House know that in our communities there are too many pensioners struggling. That is why I welcome this Government’s commitment to the triple lock, under which the state pension has risen by £900 this year and will rise by more than £450 in April. I also support the extension of the warm home discount, worth £150 for more than 1 million low-wage pensioners.

[Graham Stuart]

The hon. Gentleman will be aware that the Tory triple lock was introduced by the Tories, precisely in order to deal with the legacy left by the previous Labour Government when, unless I have got this number wrong, there was a lower take-up of pension credit than there is today—we raised that. The triple lock raised pensioner incomes, and the first act of the Labour Government, of whom he is clearly aiming to be a loyal member, is to take £300 away from people who really need it.

[Peter Swallow]

Three million food parcels were distributed last year. That is the legacy of the Conservative Government. And the triple lock that the Conservatives purport to defend? They broke it in 2022.

I also support the extension of the household support fund to help the families most in need this winter, as well as the Government’s commitment to introducing tougher regulation to the energy market, which has let customers down for too long. I am working hard with Bracknell Forest council to ensure that pensioners in the Bracknell constituency who are in need but not claiming the support to which they are entitled are identified and encouraged to get help. I urge any pensioner who is concerned about their finances to go to Age UK’s benefits calculator to see what support they may be entitled to.

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[Graham Stuart (Beverley and Holderness) (Con)]

It is interesting to follow the hon. Member for Bishop Auckland (Sam Rushworth), and to follow the angst-ridden journey with his conscience to ensure that he could abandon those in most need of their winter fuel allowance in this coming winter. It was good of him to highlight the Tory triple lock, which did take the absolutely woeful state of the pension left by the last Labour Government and transform it into a sounder one today. However, even in these conditions—where, thanks to the Tories, pensioners are much better off than they used to be—there are people, and this came from Labour research a few years ago, who will die, according to that research, if this policy, which he in good conscience thinks he should vote for today, is implemented. That is the truth.

That takes us to one key issue that we have been discussing today, which is process. The hon. Member for Bishop Auckland seems like an honourable and decent man—at least he used the word “conscience” in this debate, rather than purely political theatre. The point is that when something could lead to thousands of people dying, the Government have not done what they are legally obliged to do—they used some rare exemption requirement—and produce an impact assessment. So we do not know. People who in good conscience want to do the right thing, like the hon. Gentleman, do not know what the impact is. If it was in front of us, and if it validated the Labour party’s previous analysis, and showed that 4,000 people could be going to die, could he really support the measure in good conscience for £1.1 billion when we spend more than £1,200 billion?

The £22 billion black hole is a sort of political theatre from a Government who said they were not going to do politics as theatre and performance, and that they were going to do it properly. In fact, this is a miniscule amount. It is significant, but it is miniscule in the overall scheme of things. A choice has been made and rammed through on a timetable that is not in order and does not follow the normal and proper way of things or allow new Members of Parliament, like the hon. Gentleman, to look at the issue, weigh it up and come to the right conclusion. It is truly shameful. Peter, one of my constituents, is one of 882 people who signed a petition in my constituency against this measure. He and his wife are £12 over the pension credit limit.

[Dr Zubir Ahmed (Glasgow South West) (Lab)]

The right hon. Gentleman is citing concerns about the safety of vulnerable groups, and I wonder if he might reflect on the past 14 years, and that he enabled a Government that led to the decay and decline of every single public service. When public services decay and decline, that disproportionately affects vulnerable groups.

[Graham Stuart]

The hon. Gentleman knows full well that that is not true. I used to chair the Education Committee, so I know a little about that, and standards were lifted—[Interruption.] Look at the OECD or the PISA tables. It seems that the new Ministers do not want to take into account the most reputable international measure of educational performance, which showed that we lifted ourselves up massively. The NHS is under enormous tension and in crisis, but compared with five years ago we have 20% more doctors and nurses, if it was purely a budgetary matter. I wish the new Government well in reforming the NHS, but if we want to see what a Labour Government means for the health service, we can find it right now. We just need to travel to Wales, and the hon. Gentleman knows that that is not delivering.

Let me return to Peter and his wife. They are not the only people who are worried about this policy. I spent a little time yesterday reading Labour’s manifesto, as I hope Labour Members may have done, and I was touched by the quote from Gary on page 48:

“I’ve never struggled this much to keep warm. I can only afford to heat one room with a small portable heater. Sometimes I sleep in my armchair to save money…it’s no way to live.”

Surely Labour Members, in good conscience, recognise that he is right: it is no way to live. When 9.7 million people voted Labour, they voted for it on the promise of change. I do not think this is the change that Gary and others were led to believe they would receive.

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[Emma Reynolds]

I honestly think that Conservative Members have some brass neck. During their time in power, we lost an average of 3 million working days a year to strikes because of their failure to deal with industrial action, and we lost 1.4 million NHS appointments which were cancelled, which meant that pensioners and others were in pain for longer than they needed to be. We will not take lectures from the Conservatives. We have had to take this difficult decision to means-test the winter fuel payment because of the £22 billion black hole in year, this year. [Interruption.] They may not want to hear it, but they should apologise for leaving that black hole. It was created by repeated and reckless unfunded spending—

[Graham Stuart]

On a point of order, Madam Deputy Speaker.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Is the point of order directly relevant to the current proceedings?

[Graham Stuart]

Yes, Madam Deputy Speaker. I just want some guidance from you on whether it can be appropriate for Ministers and others on the Government Benches who have been directly funded by the trade unions not to declare that personal benefit before doing something like this, which is hurting millions of pensioners.

[Madam Deputy Speaker]

Members are guided to talk about any such conflict before they speak on the Floor of the House. I am not sure that this has a direct impact on proceedings, but the right hon. Gentleman’s point has been noted.