Spring Statement

Graham Stuart Excerpts

Wednesday 26th March 2025 Commons Chamber

[Rachel Reeves]

I was pleased to note in my statement that Thanet has already come forward with plans to build affordable housing under the affordable housing plan, for which I set out more money. Opposition parties that abstain or vote against the Planning and Infrastructure Bill are voting against homes for our constituents and jobs for our young people. On the Government side of the House, we back the builders, not the blockers. We back opportunities for young people and housing for our constituents. It is a shame that those parties do not do the same.

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

The Chancellor claimed that growth was her top priority, yet she has taken the fastest-growing economy in the G7 and brought it to a shuddering halt. She promised that there would be no tax rises, but next week’s jobs tax will put tax rises on ordinary working people. Today, she has cut the housing numbers by 200,000 and put up borrowing by £18 billion in the next two years. Is it not time that the Prime Minister invited the Chancellor next door and said, “Rachel, you’re fired”?

[Rachel Reeves]

The plans that we inherited from the previous Government saw the OECD forecast that the UK would have the slowest growth in the G7 this year. It is now forecasting us to have the second-highest growth. That is the difference that this Labour Government are making, moving us up the league tables.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Graham Stuart Excerpts

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

[James Murray]

As I have set out to the hon. Gentleman in a number of debates in recent weeks, the Government have had to take difficult but necessary decisions to restore fiscal responsibility after the completely unsustainable situation that we inherited from the Conservative party. That fiscal responsibility and economic stability are essential for greater investment in the economy, which is the bedrock of the growth that we are so determined to pursue.

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

Will the Minister outline how many billions the Government will spend this year, what percentage £22 billion represents in that amount, and—if I may be so greedy as to ask an additional question, Mr Speaker—how much the flatlining of the economy has cost the Government compared with that £22 billion? I put it to the Minister that the impact of the national insurance contributions rise has been much greater than that of the mythical £22 billion alleged by the Government.

[James Murray]

I am not clear from the right hon. Gentleman’s intervention whether he finally accepts that we inherited a £22 billion black hole when we entered government. I know that several of his colleagues have sought to rewrite history, but the facts are there. We inherited a completely unsustainable fiscal situation, with pressures and a £22 billion black hole, and we had to take difficult but necessary decisions to remedy that. It was important to do so, because without the basic fiscal responsibility and economic stability that a Government should deliver, investment, which is the basis for growth, will not happen.

Oral Answers to Questions

Graham Stuart Excerpts

Tuesday 4th March 2025 Commons Chamber

[Darren Jones]

I thank my hon. Friend, who is a strong champion for his constituency, for raising this rail project. In relation to such projects, the case that he has made will be an important part of our consideration in the months ahead as part of the spending review. I will arrange for him to meet the appropriate Transport Minister as we make those considerations.

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

The great university cities of York and Hull are unusual in that they do not have a direct rail line between them. The whole region—Labour MPs, Liberal Democrat councillors, Conservatives—is united in believing that reopening the Beverley to York line, so that the two great minsters of Hull and York can be reconnected, would bring economic growth and a brighter future for the area. Will the Minister agree to meet me and colleagues to discuss this project and how it could help unlock the growth that we all seek across the House?

[Darren Jones]

I am sorry to hear that the right hon. Gentleman failed to persuade his party, when in government for 14 years, to open that line. I can reassure him that this Government take rail infrastructure seriously, and I will happily consider any detail that he wishes to write to me about.

Finance Bill

Graham Stuart Excerpts

Report stage
Monday 3rd March 2025 Commons Chamber

[James Wild]

Well, the last Government had to deal with a global pandemic and an energy price shock. I am happy to enlighten the hon. Gentleman, who has obviously not read the Red Book: taxes are going up—they are going up to record high levels—under the Budget and the Finance Bill that he is supporting. If he is worried about the tax burden, he should not be voting for this Finance Bill today.

Households are facing financial challenges, and the measures in the Bill will only make things worse. The Office for Budget Responsibility predicts that real household disposable income will fall by 1.25% by the start of 2029, largely due to the measures in the Budget. New clause 3 would require the Chancellor to publish an assessment of the impact of the changes on household finances. The choices that this Chancellor and this Government have made mean that borrowing is increasing, so interest rates will be higher for longer and people’s mortgages will be higher, and hard-working families will be paying billions of pounds to pay off the debt interest. The Government inherited inflation at target, but since then inflation has gone up, meaning less money in people’s pockets.

While it is the Chancellor’s wider mishandling of the economy that is attracting the headlines, the measures in this Bill will have a direct role in squeezing households. Whether it is higher stamp duty, increased alcohol duty, air passenger duty, capital gains increases, vehicle excise duty, changes to the tax treatment of hybrid vehicles or many other measures, the costs of the Bill will be felt directly by households across the UK. When households are stretched, it is essential that we have transparency about what the Government’s actions are doing to incomes.

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

Of course, the big tax-raising measure in the Budget, as my hon. Friend says, was the national insurance contributions rise, with its £25 billion impact on the economy, yet once we have taken off compensation for public services and the negative impact on activity, it nets only about £10 billion. It is a peculiarly ridiculous policy that nets only £10 billion or £11 billion, yet, according to the Office for Budget Responsibility’s numbers, will take £19 billion out of people’s pay packets. Does my hon. Friend agree that there has surely never been a more ridiculous measure that costs so much and delivers so little?

[James Wild]

My right hon. Friend makes the point that this measure may have been introduced by a Chancellor who did not actually understand the impact it was going to have. The Government should have stuck to the promise they made at the election not to increase national insurance at all.

New clause 2 concerns the Government’s plan to undermine our energy security by increasing the energy profits levy to 38%, bringing the headline rate on oil and gas activities to 78%, extending the tax by a year and removing investment allowances. The consequences are fairly predictable. Offshore Energies UK has said that the hike will choke off billions of pounds of investment in the North sea, putting 35,000 jobs at risk.

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[James Wild]

Absolutely. I wonder if, when the Prime Minister was in Washington last week, he had the opportunity to talk to President Trump about home-grown energy and the importance of supporting the domestic sector. That is what we on the Conservative Benches certainly support. This is a sector with 200,000 high-skilled jobs, so it is important that we have an up-to-date assessment of the impact of what the Government are doing on our domestic energy production, energy security, energy prices and the UK economy. Unfortunately, we already see some of that impact: the US firm Apache has said that it will end its operations in the North sea by the end of 2029, blaming the extension of the profits levy for making it uneconomic to stay beyond then.

[Graham Stuart]

This measure is vying with the national insurance contribution change to be the most absurd measure. I think that it wins by a head. The Prime Minister says that we must have energy security, and the Climate Change Committee that says we will still need oil and gas for 25% of our energy needs if we meet net zero in 2050, but the Government will have no more licences. We will lose tens of thousands of jobs, tens of billions of pounds in tax, and the engineering capability that we need for the transition. It is absurd on every single possible front.

[James Wild]

My hon. Friend is 100% correct. I think we all know that the architect of much of this is the Secretary of State for Energy Security and Net Zero, who takes a rather fundamentalist approach. He wants to cover farmland with solar farms, and wants to undermine our oil and gas sector. We on the Opposition Benches disagree. It was the previous Government who introduced the levy, but that was to tackle extraordinary profits at an extraordinary time. The revenue helped to keep energy bills lower for all our constituents, but now the Government are ratcheting up the levy and seem to want to tax North sea exploration out of existence. This is just a further example of the Government’s ill-conceived energy policy. GB Energy is a net zero vanity project that will not generate any energy or be an energy supplier. It certainly will not deliver £300 off bills.

Amendments 67 to 69, tabled in my name, would remove clause 47 and abolish Labour’s education tax. Since 1 January, independent school fees for education and vocational training have been subject to VAT at 20%. It is the first time education has been subject to VAT. Why is that? Because education is a public good, so we do not tax it. Putting VAT on independent schools particularly hurts those on the most modest incomes who have chosen to save and make sacrifices to send their children to a school that they think will serve them best.

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[James Wild]

I agree with the hon. Gentleman. Everyone will have an opportunity, if the amendment is moved and selected for a Division, to vote to strip the measure out of the Bill. None of those parents on modest incomes are getting a tax break. They are also contributing to funding places in the state sector, whether or not their children take them up. Ultimately, this is a tax on aspiration, and we oppose it. In Committee, we raised concerns about the impact on certain groups, including children with special educational needs, small schools, faith schools and military families.

[Graham Stuart]

My hon. Friend is being very generous in giving way. He touches on the issue of children with special educational needs. This is not just about scrimping parents making a choice; this is about people with no choice, whose children have been bullied or who have special needs that have not been met in the state sector, and who have made a sacrifice to put their children in the private sector. People with children in particular need will pay the price of this ill-thought-through measure.

[James Wild]

My right hon. Friend is consistently absolutely right. There are more than 100,000 pupils in independent schools with special educational needs and disabilities who do not have an education, health and care plan. They will have to pay VAT on their school places—that is not covered by the Government.

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[Daisy Cooper]

We disagree on this point. Fundamentally, Liberal Democrats have said that we should rise the tide for all children, not lower the tide for some. We had a very ambitious education agenda in last year’s general election manifesto. Some areas we had in common with the Labour party, and some not. Our very ambitious agenda for education included a ringfenced high needs budget. I have campaigned relentlessly on improving SEND provision for the past five or six years in this Chamber, in Westminster Hall debates and in various meetings. We do not think that this particular measure is needed to improve SEND funding. Other measures could be used. We have a difference of opinion about how to raise that money.

[Graham Stuart]

The hon. Lady’s response to that intervention is perfectly good in its own way, but her new clause simply asks to measure the impact and look at whether the damage is too great to justify it in that broader sense. I hope that the Government consider looking at it, take it seriously and follow the hon. Lady’s arguments.

[Daisy Cooper]

I am grateful to the right hon. Member for highlighting that the new clause is about an impact assessment. Labour colleagues will be aware that the VAT provision will come into effect very quickly, but it will not provide the instant support that many children need. If children’s education is disrupted, they immediately suffer disadvantages in their life. If the Government had really wanted to pursue this measure, I would have hoped at the very least that it would have happened in a few years’ time to allow for adjustment. But we are where we are. We do not support the measure, but at the very least we request an impact assessment, as the right hon. Member suggested.

New clause 8 on alcohol duties would require the Government to produce an impact assessment of the Bill’s measures on distilleries, wine producers and the hospitality industry. Since 2022, I have tabled numerous questions in the House and written letters to the Treasury with evidence of falling tax receipts and sales as a result of the measures that the Labour Government are now introducing. They will introduce huge amounts of red tape, which will be very complicated, very costly and, ultimately, will push up prices for consumers and the industry.

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[Jim Dickson (Dartford) (Lab)]

It is a pleasure to contribute once again to a debate on this important piece of legislation. A number of amendments have been tabled by hon. Members from across the House and, while I do not have time to cover them all, I will address the key ones.

As I said in Committee of the whole House, this is a crucial Bill that underpins the new Government’s aim of fixing a tax system that has become less fair and less sustainable over the last 14 years of Conservative government. I am conscious of the need to confine my remarks to the amendments rather than speaking to the Bill itself, but I remind everyone that the Bill was necessary because of the dire economic inheritance that the Government found on entering office last year.

[Graham Stuart]

The hon. Gentleman said that the tax system had become less fair over those 14 years. Does he oppose the increase in the tax burden paid by the higher paid? That is what happened over those 14 years. Does he not see it as fair that those on lower and average earnings saw their share of the tax take go down? Is he opposed to that? In what way precisely, from his deep understanding of the tax system, has he concluded that it has become less fair over the last 14 years?

[Jim Dickson]

When the last Government left office, taxes were at their highest level for 70 years. Thresholds have been frozen, bringing more workers into higher tax rates than was fair on them. The Labour Government are dedicated to trying to ensure that taxes are paid by those with the broadest shoulders and those best able to pay them.

[Graham Stuart]

rose—

[Jim Dickson]

If I might make a little progress before the right hon. Gentleman intervenes once more, that would be lovely.

Opposition Front-Benchers have tabled new clauses 1 to 8, which would require the Government to undertake a number of reviews of the impact of measures in the Bill, ranging from a requirement for the Chancellor to commission and publish an assessment of the expected impact of changes to energy, oil and gas profits levy on domestic energy production, the UK’s energy security, energy prices and the UK economy to a requirement on the Chancellor to publish an assessment of the impact of the changes in the Bill on the finances of households at a range of income levels. I gently remind Opposition Members that much of the information requested is already available. Details on tax liabilities are published by HMRC, the Department for Work and Pensions and the Office for Budget Responsibility, and the impacts of the changes set out in the autumn Budget are published in documents including the tax information and impact notes and the “Impact on households” report.

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[Nesil Caliskan]

I want to thank the Members who have spoken so far. I have great enthusiasm for the Finance Bill, and I thank the hon. Member for North West Norfolk (James Wild) for his contributions, alongside the Minister at the time, over the several days I sat through the Bill’s Committee stage. I speak in favour of the Finance Bill as a member of the Committee. I recognise that it is part of the Government’s mission to turn the page on what was a period of decline for the country.

There are several aspects of the Bill that I would like to focus on. To begin with, I see the Government’s proposals on non-dom status as a crucial part of our agenda to ensure that we are delivering a fair approach to taxation in this country. Closing the non-dom loophole, alongside extending the levy on oil and gas companies and ending the VAT exemption for private schools through this Bill, will raise the necessary income to deliver what the Government are trying to do: achieve a balanced budget that will stabilise and then grow the economy.

[Graham Stuart]

If it turns out that the energy profits levy, lugged up to even higher levels, leads to a lower tax take than there would have been if it were at a lower level, would the hon. Lady think that that was a mistake and urge her colleagues to change course?

[Nesil Caliskan]

Ministers have provided an assurance of their assessment, and they do not believe that will be the case. The Government are taking a rounded approach to energy that, alongside our commitments to GB Energy and to a transfer to more renewable energy, will allow there to be a more mission-led approach. I take the right hon. Member’s point, but the Government have provided assurances that there will be constant monitoring and that if changes are required they will deliver them.

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New clause 7 demands transparency on the impact that the policy will have on pupils across the UK. This change 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. I urge the Government to back the new clause and reconsider this policy.

[Graham Stuart]

It is a pleasure to take part in tonight’s debate on the Finance Bill, and on the amendments and new clauses that have been tabled. The debate follows several remarkable days and this afternoon’s session when pretty much the whole House came together to congratulate the Prime Minister on his composure and leadership on Ukraine. The need to rebuild our military capability and our hard power as this decade goes on, if we are to ensure the security of Ukraine, Europe, including the UK, and the wider world, was made clear. The Finance Bill has been introduced in that context, because the only way to deliver that security is by having a strong economy and the economic growth that colleagues from across the House have discussed, yet this Budget is the most growth-destructive Budget imaginable.

As we look at the amendments and new clauses, it is worth going back over the context of the Bill, following the pandemic and the energy crisis, which continues in some ways. Thanks to the hard decisions made by the Conservatives, which did not always lead to our popularity and in fact contributed to our electoral disaster last July, inflation was back on target at 2% when the election came. We were the fastest growing economy in the G7 and some 4 million additional jobs had been created. That was the legacy. The incoming Labour Government, with their unprecedented majority and the good will to get on and do something, needed to hold their nerve and recognise that the key components for economic growth had been put in place, which was vital to meet the demands of the NHS, an ageing population and an ever more dangerous world. Instead, what we got from this Labour Government was the most disastrous economic suicide note in history, which has been devastating for the popularity of their party. Never has such a huge majority been squandered so quickly.

New clause 1 addresses the tax that will be taken from a state pension. The Labour Government propose that someone whose only income is the state pension could pay tax on that income. Forget the winter fuel payment being taken away as well—is that really what Labour Members came here hoping to do? I do not think they did, so new clause 1, which would ensure that we look at that, understand it and look for opportunities to change it, is sensible.

New clause 3 looks at the overall tax impact on households and sets our an approach that has to be right. My hon. Friend the Member for North West Norfolk (James Wild) gave a powerful speech at the beginning of the debate and I fully support the points he made.

We have heard powerful speeches from across the House on special educational needs. Again, I say to Labour Members, did they really get elected to come here and target children with special educational needs? Some 100,000 children who are in the private sector do not have an education, health and care plan, even though they are eligible for one. They will be forced out of their schools with no notice and no time to change and plan. It is a cruel policy that the Labour party should be ashamed of. I fully support amendments 67 to 69, which focus on VAT on private school, as well as new clause 7 proposed by the Liberal Democrats, which was spoken to powerfully by the hon. Member for St Albans (Daisy Cooper).

On non-doms, it is ironic that, as colleagues have said, the Government have not listened to pensioners, small businesses, farmers and all those with domestic interests. One might have thought that the Government would want to listen to them, reflect and make some changes to lower the negative impacts, but none of them has been listened to in the least. But non-doms in Davos? The Chancellor has gone off there and there is some change on non-doms, but let us not let the Government off entirely on that, because driving out the very rich, who bring us a massively disproportionate amount of revenue, is not sensible.

Socialists often put equality above all other values. As Churchill said:

“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”—[Official Report, 22 October 1945; Vol. 414, c. 1703.]

One of the greatest ways of creating more equality in this country is to drive all the rich people out; drive all the people out who invest, give us jobs and take little from public services, but contribute enormously to them. That always goes down well with the union backers of the Labour party.

[Naushabah Khan (Gillingham and Rainham) (Lab)]

On that point, will the hon. Gentleman give way?

[Graham Stuart]

I promised I would not go on for too long, so I am going to sit down—[Interruption.]

[Hon. Members]

More!

[Graham Stuart]

I said I would speak for six minutes and I have now spoken for six minutes, but interestingly I have not talked about the main topic I was going to touch on: oil and gas. I made my point in an earlier intervention, but I appeal to the Government because putting up taxes on oil and gas in the North sea will mean that there will be tens of thousands of job losses, and a loss of engineering and other capacity in this country, which is vital to the transition to net zero. In response to my interaction with the hon. Member for Barking (Nesil Caliskan) earlier, no one expects the tax take from this sector to go up in the coming years as a result of the measure; the tax take will go down. The rate can be put up to such a level that it means there will be a lower tax take; the hon. Member for Angus and Perthshire Glens (Dave Doogan) spoke powerfully about that as well.

The hon. Member for Barking appeared to accept that point, and she seemed to have a belief in the Minister on the Front Bench that they would listen if it turned out that that was a short-sighted move. If it means that we import more oil and gas from abroad—by the way, that almost always has a higher embedded carbon content than domestically produced oil and gas—that does not benefit the environment, it certainly does not benefit all the jobs that we would have in this country, and it loses us tax revenue. It is truly a crazy policy.

I appeal to Labour Members, especially the new Members, on this point. We heard from the distinguished economist the hon. Member for Loughborough (Dr Sandher) earlier, who was retreading his speech for about the fourth time, little realising it was supposed to be focused on these particular amendments—[Interruption.] Anyway, he did it with great good humour. But I would ask him to take his finely honed mind and address these issues. If the oil and gas policy is as crazy as every expert witness says it is, then he and others should suggest that the Government change course. The hon. Member for Barking said that the Government should consider changing course if the policy did not deliver what it was supposed to deliver, so I ask Government Members to support the amendments that we have put down tonight and oppose this ridiculous Bill. I look forward to hearing from the Minister.

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

At the heart of the Prime Minister’s plan for change is our mission to grow the economy to put more money in people’s pockets. We are determined to make people better off. We know that investment and growth depend on the essential foundations of economic stability, fiscal responsibility and public services being on a firm footing, but this Government inherited a challenging and unsustainable set of future spending plans based on unfunded commitments that had not been shared with the OBR or the British people.

No responsible Government could have let things carry on as they were. That is why at the autumn Budget, my right hon. Friend the Chancellor set out the Government’s plans to fix the foundations of the economy and deliver change—a plan to protect working people, fix public services, including the NHS, and rebuild Britain. That has meant taking difficult decisions on tax, spending and welfare to repair the public finances and support investment in public services, and the Government have done that while protecting people’s payslips. We have also ensured that the UK is one of the best places in the world to grow a business, with corporation tax capped at 25% and reforms that will support small businesses and the British high street. This Finance Bill represents the next step in delivering on the autumn Budget by legislating for several key manifesto commitments, supporting businesses to invest and implementing reforms to the tax system.

I thank all hon. Members for their contributions during the debate; before I turn to the individual amendments, I will briefly address some of the points that they made. I thank my hon. Friend the Member for Loughborough (Dr Sandher) for setting out the importance of growth and making people better off, and for his thorough analysis of all the amendments and new clauses to the Bill, which I seem to recall. Perhaps that was in fact my hon. Friend the Member for Dartford (Jim Dickson), who did go through all the new clauses—I thank him for his contribution. I also thank my hon. Friend the Member for Barking (Nesil Caliskan) for being on the Finance Bill Committee, although I note her description that she “sat through” it, rather than thoroughly enjoying the episode.

I also thank Opposition Members for their contributions to the debate. The hon. Member for Bridgwater (Sir Ashley Fox) recognised that even in his view, he could agree with a few points in our Bill, which I welcome.

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I will move on, Madam Deputy Speaker. I will perhaps not go into some of the amendments in as much depth as I had hoped, as I am getting very well attuned to the subtle signals from my hon. Friends.

[Graham Stuart]

Will the Minister give way before he moves on?

[James Murray]

One more time.

[Graham Stuart]

The Minister is gracious, if not always in the Whips’ best books. Does he expect pensioners who are solely reliant on the state pension to get drawn into tax and the need to produce a tax return? Has he made an assessment of that, and what kinds of numbers would there be?

[James Murray]

As the right hon. Gentleman will be aware, in the coming financial year 2025-26 the personal allowance will be above the level of the new state pension, so what he said should not apply when it is people’s sole income. However, there are already cases of individual pensioners who do owe tax; indeed, around two thirds of pensioners pay tax, because they also have private pensions. They pay via pay-as-you-earn or self-assessment.

I will not go into detail about the Government amendments to visual effects relief, because I assume they have the consent of the whole House. However, I will briefly speak to some of the amendments tabled by Opposition Members, as I feel I should address them. I will take together new clauses 1, 2, 3, 5, 6 and 8, which would require the Government to review the number of individuals receiving the full state pension and their income tax liabilities over the next four years, and to publish various impact assessments regarding the impact of changes to the energy profits levy, as well as the impact of the Bill on households, small and medium-sized enterprises, distilleries, wine producers and the hospitality industry.

The Government remain opposed to all of these new clauses, for the same reasons that I gave in Committee. First, the relevant information on those receiving the state pension and their tax liabilities is already published by HMRC, the Department for Work and Pensions and the OBR, and is publicly available.

Inheritance Tax Relief: Farms

Graham Stuart Excerpts

Monday 10th February 2025 Westminster Hall

[Ben Goldsborough (South Norfolk) (Lab)]

I beg to move,

That this House has considered e-petition 700138 relating to Inheritance Tax relief for working farms.

It is a pleasure to serve under your chairship, Sir Edward. To date, the petition in question has received just shy of 150,000 signatures, which is a mark of the strength of feeling that exists about the proposed policy change. The petitioners argue that

“changing inheritance tax relief for agricultural land will devastate farms nationwide, forcing families to sell land and assets just to stay on their property.”

I put on the record my thanks to the diligent staff of the Petitions Committee who have secured for me, as a representative of the petitioners, meetings with the National Farmers Union, the Country Land and Business Association, the Tax Policy Associates, the Institute for Fiscal Studies and the Rural Accountancy Group. As the Member of Parliament for the rural constituency of South Norfolk, which is formed of a patchwork quilt of farms, I am honoured to lead this debate and, in doing so, to give a voice to the farmers in my constituency who have contacted me to share their thoughts about the planned changes to inheritance tax on agricultural businesses.

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

In 2012, my right hon. Friend the Member for Goole and Pocklington (David Davis) and I opposed the then Chancellor’s proposal to impose VAT on static caravans, as it was clearly wrong when we looked into it. Will the hon. Gentleman do the right thing, represent his rural constituents and recognise that this ruinous policy will not only destroy family farms across the country but put up food prices and worsen our national energy security? He should do the right thing, challenge his Chancellor and take some of his colleagues with him.

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

It is a pleasure to participate in this debate, but I have a sense of déjà vu: a month ago, I stood in my place, the Minister sat in his, and we hoped that the Government would listen. They did not listen. I suppose that we should try to be optimistic. That time, apart from the Minister’s aide, there was not a single Labour MP to be found, but they are all here today. Their approaches have varied. I do not mean to rude to the hon. Member for South Norfolk (Ben Goldsborough), but in nearly 20 years in Parliament, I have never heard a speech that expressed no opinion on the subject in hand. He gets the vanilla award.

The hon. Member for Bishop Auckland (Sam Rushworth) was perhaps tentative and timid, but none the less wanted to hint that it was possible that the perfect selection of policies put forward by Labour might need a little tweak—congratulations on that. However, the award should go to the hon. Member for North Northumberland (David Smith), who was pretty clear that he does not think this policy is right and that it needs to be changed. Praise the Lord that someone on the Government Benches was prepared to come out and say so! That is what they were sent here for—not to do whatever the Prime Minister tells them to.

As I mentioned earlier, when the 2012 Budget proposed the caravan tax, which would have devastated the industry in East Yorkshire—it happens to be based there—and down the coast, because that is where caravans are deployed, we stood against it and opposed it.

[Sam Rushworth]

Will the right hon. Member give way?

[Graham Stuart]

I am delighted to see that the hon. Gentleman is going to stand up and find his inner rebel.

[Sam Rushworth]

There is absolutely nothing timid about what I am telling the right hon. Gentleman: farmers in my community were massively let down by the previous Government.

[Sam Rushworth]

I do not know why the right hon. Lady keeps saying that. We have not voted on the policy yet. There was a vote against a motion that was put forward by the Opposition. It was a cynical motion that was designed to make us want to vote against it, because it was so ridiculous.

[Graham Stuart]

I am afraid that the hon. Gentleman shrunk inside his shell, and the farmers in his constituency will have heard that.

It is possible to challenge one’s Government. I said to my Whips then that the best service we could do the Government was to prevent them from doing something stupid, harmful and alienating to voters. I hope that Government Members can see that, because the Opposition cannot change this. People outside say to me, “Can we get this changed?” It is actually up to Labour MPs. They have the majority. Democracy is not about having a majority and doing what one likes. Democracy is about listening and doing what the now Prime Minister told the NFU when he said:

“You deserve a Government that listens, that heeds early warnings”.

There are one or two warnings about. Listen, change: if the Government change, four years on, no one will remember the U-turn. Whatever civil servants say—they are always very keen to stick with a policy—if it is wrong, stop doing it. And this is wrong. In the minute and 20 seconds I have left, let me say why it is so wrong. We have touched on the various elements, but I am not sure we have pulled it all together.

We have a really peculiar group of businesspeople in this country; they are called farmers. They take a return on capital—the millions they have invested in their farms—that is typically less than 1%. There is nobody that I am aware of—no business I was ever involved in—that would remotely consider continuing in an industry that paid less than 1%. These farmers take a pittance and get up at 4 o’clock in the morning for the privilege. They look after the animals and it does not matter if they are ill; they cannot carry their employment rights and go, “I’m not well, I shouldn’t have to go out,” because the cows do not care: they have to go out and look after them, and then they get less than 1% return. Those farmers, the most beneficent public-minded businesspeople in the whole country, then provide excellent food at among the lowest prices in Europe. If ever there were a business that we would not want to go and mess with, it is these—I should not say it, because I will make enemies of them.

[David Smith]

I thank the hon. Member for his scoring system, but can he confirm whether he was part of the last Government, which failed to get £300 million of subsidies to farmers out the door?

[Graham Stuart]

For the hon. Gentleman’s political career, as he has been so brave today, I entirely forgive him that piece of whataboutery.

We must understand how remarkable it is that there is a whole group of businesspeople who take practically nothing from their business, work all the hours God gives, and provide us with some of the finest food in the world at among the lowest prices in Europe. Why would we want to mess with that? Not only do they do that, but they brainwash their children from the earliest age so that they carry on doing it. These people are in indentured service to the nation, providing food while making very little profit. They do it willingly and, in fact, love it: it is their life. To go and mess with them out of some stupid, socialist spite is ridiculous and absurd, and Government Members know that—the hon. Member for North Northumberland certainly does, and he should lead his colleagues to tell the Chancellor to change course, just as we did in 2012 when George Osborne got it wrong.

--- Later in debate ---

[Gideon Amos (Taunton and Wellington) (LD)]

It is a pleasure to serve with you in the Chair, Dr Murrison.

I rise to speak up for the 337 signatories to this petition from my Taunton and Wellington constituency. One thing that we should have learned—surely, I hope, the Treasury must have done—is that farms are asset-rich but cash-poor, and that especially applies to smaller family farms. The Treasury’s figure that only 27% of farms will be affected is therefore an underestimate. As the NFU has pointed out, it is more like 75%, because Government figures often leave out the fact that changes are being made to both business property relief and agricultural property relief. That means that more farms will experience an impact, since the maximum allowance applies to both combined.

More importantly, this measure fundamentally misunderstands that the value of a farm is wrapped up in the land and is about not just pounds and pence, but the integrity of that farm. If one starts selling off chunks of that farm piecemeal, time after time, one eliminates the value of that farm as a whole. The Government need to accept the damage that this family farm tax could do.

The Minister might say, “The money can be borrowed—why do they not just borrow the money and pay it off over time?” Ed Hawkins from Cutsey farm in Trull came to see me and explained that if he annualised that payment over a number of years, it would wipe out the very small margin that he depends on to live. We have heard the same thing from other Members. It is not realistic. Robbie Vile from Higher Lillesdon farm in North Curry came to see me with his son, Charlie, who is hoping to go into farming. However, looking at how farming has been treated recently—the delays in the SFI payments, the underspend of a full £358 million of the agricultural budget over the last three years, massive advantage given to Australia and New Zealand, cheap imports after Brexit and now inheritance tax—they ask: why would any young person be encouraged to go into farming in those circumstances?

[Graham Stuart]

Does the hon. Gentleman agree that it would be useful for the Minister to say from the Treasury Front Bench what the average profitability is in British farming? It would be useful to have that on the record, because it is in that context that we have to look at this. If we do not see it in context, we just compare farming with other businesses and can easily mislead ourselves as to the reality for farmers across the country.

[Gideon Amos]

I agree; that would be a very useful statistic. If the Minister is not willing to look it up, I hope he might ask the House of Commons Library to do so, because it would certainly reveal the vast number of farms that would be affected by the scale of the tax that is proposed for them.

In short, I have no objection to the taxing of super-large landowners who use farms as a loophole to avoid inheritance tax—in fact, I would support it. But the irony of this policy is that it will drive more land into the hands of those super-large landowners, because every time farmers have to sell off some of their land, it will go to one of those bigger companies. Seeing that land being sold piecemeal time after time will only damage British farming as a whole. Drawing this tax down to some of the smallest family farms in Taunton and Wellington, and across the country, is unjust. It will not raise the money that the Government say it will. It will mean piecemeal disposal of farms up and down the country. The Government really must raise the threshold for this policy or extend the transitional relief. If they do not do that, the policy needs to go and it needs to go now. That is what the Liberal Democrats would do.

--- Later in debate ---

[Robbie Moore (Keighley and Ilkley) (Con)]

It is a pleasure to serve under your chairmanship, Dr Murrison. Here we are again! As we speak, thousands of farmers are once again rallying outside the gates of this building. Over the past six months, our farmers have repeatedly been told by this Labour Government that their way of life is expendable and that their hard work, their sacrifice and their future can simply be priced up and taken away. Is it any wonder that our farmers have shown up in such vast numbers again today?

Make no mistake: it is not just our farmers who are outside our gates. Across the country, more than 148,000 people have signed the petition because they know, just as Opposition Members do, that the family farm tax is wrong, is vindictive and must be scrapped now. I thank the hon. Member for South Norfolk (Ben Goldsborough) for leading this petitions debate, but I have to say that he did a disservice to the petitioners, who put their faith in him to lead this debate, by not actually forming an opinion. He communicated strong arguments, but he did not form an opinion. He was a mere spokesman and did not use his opportunity in this debate to voice properly their concerns.

What an image for our farming community to take away from this debate! Where on earth is the Secretary of State for Environment, Food and Rural Affairs? The shadow Secretary of State, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), is sitting beside me. Where on earth is the farming Minister? He is absent. What message does it send that the Labour party has filled up its Benches but that only five Labour Members spoke, despite having the opportunity to voice their concerns in this three-hour petitions debate, and that all five of them voted against scrapping the family farm tax when we brought the motion to the House? This is probably one of the most important debates we could have on this issue, and yet once again those with responsibility for rural areas and our farmers are missing in action. There are Labour Members who have turned up but have not even contributed to the debate, despite representing large rural constituencies.

Where is this Government, who claim to be on the side of rural Britain? If they had actually visited some of their farming communities, they would know just how damaging to our farming community their choice to implement the family farm tax is. They might have had some of the devastating conversations that I and many Conservative Members, including the shadow Secretary of State, have had. I would like to share some of them.

Just last week, in Northamptonshire, I met George, who has worked on his farm all his life and is nearly in his 80s. Unfortunately, he is extremely ill. He knows from his diagnosis that he does not have long to live, but he is not sure whether he will live beyond 26 April. He knows that if he should pass away before 26 April, his IHT bill will be zero, but if he passes away after 26 April, the tax bill for his family will be well over £1 million—a debt that his family simply cannot sustain. Taking his own life was an option that was put forward to me. These are horrific choices and unthinkable amounts of pressure for any individual or family to be put under, never mind some of the most vulnerable people in our society.

[Graham Stuart]

My hon. Friend is giving a very powerful speech. It is true that George was given no notice and no ability to plan for this important impact on his life and on everything he has worked for—but is it not worse than that, because he explicitly relied on a promise not to do this? That makes it particularly unforgivable.

[Robbie Moore]

I could not agree more.

--- Later in debate ---

[James Murray]

I will respond fully to the point made by the hon. Member for Angus and Perthshire Glens (Dave Doogan) first. As I was saying before he intervened, the data from HMRC, to which other Members have referred, shows that 40% of agricultural property relief benefits the top 7% of estates. It is a similar picture for business property relief, more than 50% of which is claimed by just 4% of estates—that equates to 158 estates claiming £558 million in tax relief. Given the wider pressures on the public finances, we do not believe that that is fair or sustainable, and we felt it was appropriate to reform how the reliefs operate.

[Graham Stuart]

To follow up on the earlier question that I channelled in the Minister’s direction, will he say something about the average profitability of family farms? That puts this in context.

[James Murray]

Earlier in the debate, we heard that the average return on capital is 0.5%, but I am sure that the right hon. Gentleman will be aware that 10% of farms in England have made a return on capital of 10%, so it is perhaps a more complicated picture than the one presented earlier. Similarly, farm business income, which is net profit, shows a wide variation. In designing the reforms, we obviously considered the fact that those who have assets on which they currently claim agricultural or business property relief still need to have generous relief. That is inherent in the design of the reforms that we are proposing: there is full 100% relief for the first £1 million of assets—above other nil-rate bands, spousal transfers and so on—and then effectively an unlimited 50% relief thereafter.

[Graham Stuart]

I thank the Minister for his answer and for telling us about the variation, which I am sure is there, but will he provide the average or median, to give us a sense of the situation for the vast bulk, rather than the top 10%? What does the average or median look like? What is the reality for most farms up and down this country?

[James Murray]

I thank the right hon. Gentleman for his further intervention. In understanding how the reliefs are reformed, the important point is to focus our conclusions on the data on claims. In understanding how many estates are likely to be affected by the changes, the data that matters is the data on claims. That is why the information that I was setting out around where the bulk of the relief currently goes is based on claims data. In a moment I will come to some other statistics that were referred to in the debate.

Agricultural and Business Property Relief

Graham Stuart Excerpts

Tuesday 14th January 2025 Westminster Hall

[Dr Rosena Allin-Khan (in the Chair)]

I will call Graham Stuart to move the motion and then the Minister to respond. There will not be an opportunity for the Member in charge to wind up, as is the convention for 30-minute debates.

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

I beg to move,

That this House has considered the impact of planned changes to agricultural property relief and business property relief on small businesses.

It is pleasure to serve under your chairmanship, Dr Allin-Khan, and to see so many colleagues from across the House here today. Perhaps it is not surprising that we have a redoubtable Minister, who picks up the poisoned chalice on so many occasions. He will do so today, no doubt both well informed and with good humour, as he has done previously.

I refer to my declaration in the Register of Members’ Financial Interests as a recipient of campaign donations from businesses and farmers across Beverley and Holderness. Given the rural nature of my seat, I will start by focusing on the twin impacts of the changes to agricultural property relief and business property relief on family farms, followed by the impact of changes to BPR on family businesses. We have just a half-hour debate, and a colleague asked the good question of why it was so short for something so big. That means I will probably be the sole speaker, but I am happy to take as many interventions as I can, because I know that concern is widespread.

In her autumn Budget, the Chancellor announced a significant change to APR and BPR, set to take effect from April 2026. She is imposing a 20% tax on the value of land and machinery exceeding £1 million. That is known by many of us as a family farm tax. By the Government’s own estimate, it could result in one farm closing in every rural constituency every year.

[Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)]

I thank my right hon. Friend for securing this debate. I also draw attention to my entry in the Register of Members’ Financial Interests. When a small farm has been in a family for generations, that family knows the local watercourses better than anybody else. Does my right hon. Friend share my concern that as those small farms disappear and move towards development, flooding issues may result because the local knowledge that would prevent flooding will be lost?

[Graham Stuart]

I thank my right hon. Friend for that intervention. On Friday, I visited Ian and Rebecca at Bygott farm just outside Beverley, which is about 220 acres. Their profits would be wiped out by the expected inheritance tax for 10 full years, with 10 years to pay it. The expected annual payment for 10 years would be greater than their profit last year. They also play that vital role, which my right hon. Friend mentioned, of looking after the watercourses. The villagers nearby do not know what a critical part they play in maintaining those watercourses.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Gentleman for bringing this forward. All my neighbours in Northern Ireland are small farmers. Everyone will be impacted, because the threshold of £1 million is too low. The threshold should be between £4 million and £5 million, which would give a chance to retain the family farm. Has the right hon. Gentleman had the opportunity to talk to the National Farmers Union or the Ulster Farmers Union to ascertain their legal opinion, which is against what the Government are introducing?

[Graham Stuart]

The hon. Gentleman is absolutely right. If the measure was about hitting huge investors, they are the ones least likely to be affected. The richest and most sophisticated will find it easiest to avoid the impact. Small farmers, such as the ones I visited on Friday, will be most seriously affected. It is a bit like the winter fuel payment cut. If the Government took that away from people who had an income of more than £25,000, it would be infinitely less controversial. The point is, it hits people on very low incomes and hurts them the most.

[Jim Allister (North Antrim) (TUV)]

Does the right hon. Gentleman also accept that the measure has an inequitable application across the United Kingdom? In some parts, land values are higher than others. In Northern Ireland they are the highest, therefore one will reach the £1 million threshold sooner with less acreage there than elsewhere. Where we have a concentration of family farms, that will have a crippling effect on future generations.

[Graham Stuart]

Once that farmland is lost, it is gone forever. It is certainly gone forever from the families who, generation after generation, have been prepared to invest their all—their time and their money—into an asset which they never seek to realise, but merely use for a very low return on capital employed, in order to feed the nation.

As somebody said to me, of all the groups that one might possibly target, of all the profit-maximising people it could be assumed might have the broad shoulders to pay more, why pick people who sit on a multimillion-pound asset, take a derisory income from it, and get up at four in the morning to feed us? Of all the groups to target, this is the most absurd. I hope the Minister, who has until 2026, can start to realise this.

[Martin Vickers (Brigg and Immingham) (Con)]

I met a farmer a couple of weeks ago in my constituency who is 80 years old and has made arrangements for passing his farm on to the next generation. However, the seven-year rule is unlikely to affect someone of that age. Does my right hon. Friend agree that a modest compromise could be made by the Government to allow for those sorts of situations?

[Graham Stuart]

My hon. Friend is absolutely right. I spoke to another farmer in my constituency and his farm is owned by three people, one of whom is his father—who has a third of it—and who has been in ill health lately, is in his early 80s and is highly unlikely to live for the next seven years. All the planning that they responsibly put into ensuring that that farm continues to contribute to waterways, the environment, and the nation’s food security has been cast aside and turned over by this Government’s ill thought-out plans.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

In my constituency, many family farms exceed the threshold due to the high value of the land and machinery. Does the right hon. Gentleman agree that these changes threaten to push family-run farms into the hands of large corporations and therefore both erode rural communities and jeopardise our domestic food security?

[Graham Stuart]

The hon. Lady is absolutely right: that is exactly what they will do. I am sure that it is not the Government’s intent to bolster the big international corporations and hurt the small player who is an embedded part of the community.

So many people I speak to genuinely try and run their farms to be supportive of nature and of local business. Once major corporations are involved, these will not care where they get their supplies from. They will not be focused on that.

[Esther McVey (Tatton) (Con)]

Does my right hon. Friend agree that this brutal change to inheritance tax—let us call it what it is, a family farm tax—will destroy family farms and farming in the UK as we know it? Does it not make nonsense of Labour’s claim to believe in food security for the UK? We need a U-turn straightaway.

The question I am now being asked by my farmers is: did this policy come about because the Government did not know what they were doing and through a lack of knowledge by the Labour party of the farming community? Or will we look back at this and see it for what it is: theft by the state of land from private owners?

[Graham Stuart]

I will come to that point later in my speech.

When that farmland is gone, it will take with it the livelihoods of families who have devoted generations to feeding our nation and will have a permanent negative impact on the nation’s food security.

[Damian Hinds (East Hampshire) (Con)]

Before my right hon. Friend goes on too much further, I wonder whether he agrees that another effect of this is that, at a time when we need to unlock growth and productivity, it will discourage and disincentivise the investment in our family farms that is so badly needed?

[Graham Stuart]

My right hon. Friend is right. That is why I appeal to the Minister: if the Government do not care at all—in fact, if the Government see farmers as some sort of class enemy—it still does not make sense to do this, because it will weaken our food security. Go and talk to farmers—as I do in my area all the time—and it is obvious that their personal commitment to things like flood protection, understanding of the land, and thinking in the long term, is not just words.

People think in the long term when there is no thought in their minds of selling. Why would anyone not put their money back in? Farmers put all their money back in because they are happy to do so, and they have a lifestyle as part of that. All that is put under threat if the investment in a piece of machinery or infrastructure that could help them to green their land will be subject to a 20% tax. Suddenly the economics do not add up and the bank will not want to lend.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

The right hon. Gentleman will know, as all of us in this room do, that in GB we enjoy some of the most competitively priced fresh produce available anywhere in Europe and that is precisely because of the investments in production technology that family farms have made over generations. Is he concerned that at a stroke this Government, myopic about the workings of agriculture, have made them immediately—overnight—stop that investment, and consumers will feel that in food prices?

[Graham Stuart]

The hon. Gentleman makes an important point that has not been made so far: we have among the lowest food costs in the world. In fact, all my local farmers are forever moaning at me about how outrageous it is that food is so low in price. As I say to them, the system has allowed them to continue farming, providing first-class food at a very low cost to consumers. It is that carefully balanced ecosystem that will be impacted by this juggernaut creation of the Government, which will raise, if it raises anything at all, very little. That is why it is great to have someone as thoughtful, insightful and empathetic as the Minister on the Government Bench, because we have time to change path away from this ridiculous policy.

[John Glen (Salisbury) (Con)]

My right hon. Friend is making a very clear case. Of course, there is massive agreement in the room. Does he recognise that with the uncertainty about the land use framework and the Government’s interventions and intentions on development of the work that we did on ELMS—the environmental land management scheme—farmers face massive uncertainty? Does he agree that it would be far better if the Government paused, as the NFU is asking, to look at this matter in the round, alongside the other policy decisions that they need to make—there is plenty of time before next spring—and, in particular, to address the issue about the age distribution of farmers? For younger farmers there will be ways of mitigating this matter and for older ones there simply are not. Overall, they lack clarity on what the future looks like, and that is a real concern.

[Graham Stuart]

At the very least, as my right hon. Friend says and as a colleague touched on earlier, tweaks could be made to this policy to stop the most egregious negative impact of it on people who have planned in good faith all their lives for a position and are now in no position whatever to change things. It is not just the elderly—everyone looks for the elderly person in their 80s or 90s to pass on, but I met another constituent whose mother died aged 41. These things happen, sadly, and what does that do to a farm? Is it holding hundreds of thousands of pounds in the bank when there are 200 and something acres?

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

The right hon. Member will possibly be familiar with my constituency—one of the richest farming areas in the UK. The Treasury continues to insist that only about 520 estates a year will claim APR in the way that it is describing, and it has set the threshold at £1 million. Does the right hon. Member agree that the Minister needs to provide clear evidence for this threshold, and is he aware that at the evidence session in December, the NFU claimed that the actual figure, rather than 520, is 2,000 estates involved?

[Graham Stuart]

The hon. Gentleman is right. The expert valuers who do this for a living have come out with different numbers, but they are all violently different from the Government’s assumptions. Even on the basis of the Government’s own figures, if I take Beverley and Holderness—as a rural constituency—it would be a farm a year. And of course, everyone is affected. They are all having to spend and bring advisers into the room. They are sitting there, as a small business that might be making less than £25,000 a year, and having to pay £1,000 an hour to get the expertise in the room to advise them on something that, sure, depending on the longevity of family members, may not have an impact for 15, 20 or—hopefully—30 years, but none the less they are spending that money now because of the uncertainty of this policy, which is very ill advised.

[Harriet Cross (Gordon and Buchan) (Con)]

I thank my right hon. Friend for bringing forward this debate, which is so important. Just this morning, I was at the meeting on food security, speaking to poultry farmers there, and they said that they are already taking decisions not to invest in new buildings, directly because they are now thinking of how they need to save for an APR bill. Of course, that has a knock-on effect on other businesses that will be the suppliers, and therefore we come into the BPR argument as well. Does he share my concerns that, if farmers cannot invest in their holdings, they will not be as profitable in future? It is a huge cycle—a self-fulfilling prophecy that will mean that more farms will be impacted down the line.

[Graham Stuart]

My hon. Friend is right. I say to the Minister that rather than looking at the issue through a fairness lens or an “attack wealth” lens, it must be in terms of incentives. Incentives are what drives behaviour, and behaviour is what drives wealth creation and security. If we come at it with some sort of A-level politics student’s approach, rather than one grounded in human behaviour and incentive, and get it wrong, we will see reduced investment from farm to farm and business to business.

If someone is not buying that new piece of planting machinery, they will not be investing in the training of their staff or they will not take on that extra employee who would have been brought on, because to justify expenditure they needed to invest in them, pay them more, and bring on more staff. All of that goes into reverse. I hope that as they come face to face with the realities of being responsible for the economy, Ministers will take that onboard and start to have a different philosophical approach in the way they do policy.

[Freddie van Mierlo (Henley and Thame) (LD)]

Does the right hon. Member share the concerns that my farmers have about their mental health, who are already in an industry where mental health issues are very high? They are concerned about the deadline of April 2026 and what impact that could have on their wellbeing.

[Graham Stuart]

I do. Someone only has to meet farmers to know that farming is already quite a lonely profession, with a high level of suicide anyway and high rates of depression. Combining that with this figure, it sounds hyperbolic to suggest that people will kill themselves ahead of this deadline, but knowing the farmers as I do in my area, I do not find it that hyperbolic. I hope it proves not to be the case, but it is a serious issue to be considered.

The impact of changes to BPR extends beyond farming communities. When asked about the changes, 85% of family businesses surveyed by the Confederation of British Industry said they would reduce investment by an average of 17%, an issue which colleagues are rightly raising. That will stifle long-term growth and harm the broader network of businesses that depend on them. They say that trust takes years to build, seconds to break and forever to repair. As I walked down Whitehall, shoulder to shoulder with farmers, their anger was palpable because they had believed the Prime Minister’s promises yet were betrayed. To Labour’s credit, it won the trust of rural Britain, through every door knocked, leaflet printed and promise made. It went from representing two rural seats in 2019 to 40 today.

The Prime Minister pledged to form a new relationship with farmers based on respect. My right hon. Friend the Member for Salisbury (John Glen) questioned where those proud rural Labour MPs are today; they are certainly not here facing the music. As usual, they are leaving the Minister to do it on his own. He asked us to judge his Government on their actions and not their words, so that is what we will do. In November 2023, the current Environment Secretary, in a room full of farmers, looked them straight in the eye and told them

“We have no intention of changing APR.”

By November 2024, that promise meant nothing. Labour waited 14 years to deliver its Budget, and it made a choice not just to change APR, but halve it. One constituent shared their shock as they calculated the impact, realising it would cost their family £300,000. Another constituent, William Hodgson, who runs a 600-acre farm near Withernsea with his mother, faces an inheritance tax bill of £1.5 million, with a post-tax profit of £150,000 a year. That means he would have to dedicate an entire decade of profits just to cover the cost of that tax. It was at that moment that the most valuable currency in politics—trust—was lost.

In February 2024, the Prime Minister told the NFU that it deserves a Government that listens and heeds early warnings. The planned changes to APR are not due until 2026, leaving the Prime Minister with one year, two fiscal events and ample parliamentary sitting days, with many colleagues all too happy to constructively work with him, to come to this House and tell us that he has listened and will change course. The question is whether he has the courage to do so.

It will have been hard to hear all of us and our chants while he was in Rio and we were in Whitehall; farmers at his north London surgeries will be few and far between. However, I hope he will listen to the hon. Member for Penrith and Solway (Markus Campbell-Savours), on his own side, who spoke bravely against the policy during the debate in the Chamber last month.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

Will the hon. Gentleman give way?

[Graham Stuart]

I had better make some progress. The hon. Member for Penrith and Solway may have been scolded behind closed doors for doing that, but he will have regained the trust of voters who put their trust in him. As devastating as the proposed changes to APR and BPR could be on our farmers, the impact of the changes on family-owned businesses more widely could be even greater, and perhaps that deserves more attention.

A recent report by Adriana Curca at the CBI laid bare the potential fallout. Far from raising £1.4 billion, as forecast by the Treasury, the Chancellor can expect a £1.2 billion decrease in tax revenue from family-owned businesses. Instead of helping the Government to fulfil their pledge to be pro-business and pro-worker, it could lead to the loss of more than 125,000 jobs over the next four years.

Rachel from accounts obviously never got a new abacus for Christmas. Maple Garage, Beverley Travel, Beverley Camera Centre, Oh My Dog—great place—Flowerstyle, Vivienne Rose Wallpaper and Interiors, the Beverley Card Company, Islay Bloom, the Monkey Tree Café, Trent Galleries, Hull Aero Club—those are all businesses that I have spoken to since the Budget. The overwhelming sentiment was exactly the same, regardless of the type of business: disappointment in a Government who do not understand business. None of the Cabinet has ever run one, and it shows.

When the Prime Minister promised that wealth creation would be his party’s No. 1 priority—do hon. Members remember that?—more than 120 business leaders believed him, from the founder of Wikipedia, Jimmy Wales, to Andrew Higginson, the chair of JD Sports. The Prime Minister convinced them that he had a plan to kick-start our economy. Now, six months into the reality of a Labour Government, they are lacing up their trainers and running for the hills.

It does not have to be that way. Instead of tinkering with who is and who is not eligible for inheritance tax relief, we could consider following Sweden’s example, where, having tried heavy inheritance tax charges—

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

Will the hon. Gentleman give way?

[Graham Stuart]

I will have to press on. Sweden ended up with even, I think, the communists voting to abolish it entirely. Since Sweden scrapped inheritance tax in 2004, entrepreneurship has flourished. Some 8,000 wealthy individuals moved their assets back to the country. Its tax revenues increased by £19.5 billion in a decade.

The planned changes to APR and BPR hurt everyone and help no one. Scrapping inheritance tax may not be a silver bullet, but the evidence suggests it is a policy worth examining.

I return to the saying that trust takes forever to repair. The Prime Minister will not take my word for it, but he should listen to his voters, and recent polls show that 66% of voters believe that Labour does not respect rural communities, and 77% do not trust Labour to manage the economy effectively, or remain unconvinced.

Newer MPs may grandstand and say that it will all blow over—although their appetite to do so seems to be diminishing by the day—and that by 2029, it will be a bad memory for farmers and entrepreneurs. Perhaps they could ask some of their colleagues in the Liberal Democrats how that story ends. After all, in 2010, it took them less than six months to break their promise to students not to raise tuition fees, and it still came up in last summer’s TV debates. Farmers and businessmen, like students, have long memories.

I am a firm believer that we reap what we sow. In the past six months, the Government have sown a dangerous thing—seeds of doubt, and an idea that they cannot be trusted. I had better let the Minister have a short period to respond. However, on behalf of colleagues right across this side of the House—and I think, by their absence, quite a number of colleagues on that side of the House—we ask the Minister, who is a thoughtful and decent man, to go back to the Chancellor and the Prime Minister, and persuade them to change course.

Public Finances: Borrowing Costs

Graham Stuart Excerpts

Thursday 9th January 2025 Commons Chamber

[Darren Jones]

It is absolutely right that the Labour Government are bringing fiscal and economic stability back to this country, because we know that when you play fast and loose with the nation’s finances, you play fast and loose with family finances. That is what voters in every constituency experienced when the Conservatives were last in government. They will not experience that under this Labour Government.

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

We are looking at higher interest rates, lower growth and a higher cost of borrowing to the Government; as my hon. and right hon. Friends have said, we are grateful to the Chief Secretary to the Treasury for being so honest with the House. It is clear that if he sticks to his word, there will not be any more borrowing, or any more tax rises. Given the numbers, that leaves only one option: cuts in public services. I wonder whether his colleagues behind him on the Government Benches realise that reality. What word other than “austerity” will he use to describe it?

[Darren Jones]

As I have said, it seems that the Conservative party is proud of its record on austerity. We do not support austerity, which was blind ideological cuts to public services—3% cuts—irrespective of the outcome for the people who rely on public services. The Chancellor increased investment in public services at the Budget in the autumn, and we will continue to increase investment in them, because we need to get them back on their feet, and they are an important foundation for economic growth. I am pleased that the right hon. Gentleman recognises my statements, and says that they are honest, because of course they are. I look forward to coming back to the House in future months and years to show him the progress that the Government are making.

--- Later in debate ---

[John Slinger (Rugby) (Lab)]

On the economy, as with so much else, does my right hon. Friend agree that Conservative Members should sip from the elixir of personal responsibility and that the two words we most need to hear from them are, “We apologise”?

[Graham Stuart]

That’s not a question.

[Mr Speaker]

Order. Mr Stuart, I need no advice from you. I think you are on the Panel of Chairs, and I need to see some better behaviour if you are going to stay on it.

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%.

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[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.

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[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.