National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Graham Stuart and James Murray

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.

Finance Bill

Debate between Graham Stuart and James Murray

Report stage
Monday 3rd March 2025 Commons Chamber

[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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[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

Debate between Graham Stuart and James Murray

Monday 10th February 2025 Westminster Hall

[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.

Finance Bill

Debate between Graham Stuart and James Murray

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 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.

Finance Bill

Debate between Graham Stuart and James Murray

2nd reading
Wednesday 27th November 2024 Commons Chamber

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

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

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

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

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

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

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

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

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

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

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

[James Murray]

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

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

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

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

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

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[James Murray]

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

[Graham Stuart]

Will the Minister give way?

[James Murray]

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

[Graham Stuart]

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

[James Murray]

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

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

VAT: Independent Schools

Debate between Graham Stuart and James Murray

Tuesday 8th October 2024 Commons Chamber

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

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

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

[Graham Stuart]

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

[James Murray]

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

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[James Murray]

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

[Graham Stuart]

On a point of order, Mr Speaker.

[James Murray]

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

[Mr Speaker]

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

Winter Fuel Payment

Debate between Graham Stuart and James Murray

Tuesday 10th September 2024 Commons Chamber

[James Murray]

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

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

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

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