Economic Growth

Harriett Baldwin Excerpts

Tuesday 14th November 2023 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

It has been said that we enjoyed a holiday from history between the fall of the Berlin wall and 11 September 2001, but unfortunately history has now etched two more horrendous dates into our memories: 24 February 2022 for Russia’s evil invasion of Ukraine, and 7 October 2023 for Hamas’s evil terrorist attack on innocent Israelis. It is against this tumultuous backdrop that we discuss His Majesty’s historic first Gracious Speech—the first King’s Speech for 70 years, and a speech that represents a profound moment in the stability and continuity of our unwritten constitution. That we were able to change our sovereign and change our Prime Minister twice last year and arrive at the Gracious Speech with entirely peaceful transitions of power is something that we should all find profoundly moving.

Our world seems increasingly dangerous, and around the perimeters of NATO we see terrible conflict and lots of mischief being played to stir up conflict. As a proud member of the NATO Parliamentary Assembly, I know how important it is that NATO countries continue to show unity and that our door is open to new members such as Sweden and Finland, as well as, of course, Ukraine, Moldova and, I hope, Georgia; I draw attention to my interest in that country. It is time that Putin realised that annexing his neighbours gives him more NATO on his borders, not less.

In His Majesty’s Gracious Speech, there was not a lot to distract the Treasury Committee; that will come in next week’s autumn statement—and let me add, in case colleagues are interested, that in addition to our Committee’s scrutiny of that statement, the Bank of England and the financial regulators, we currently have open inquiries into access to finance for small and medium-sized businesses, quantitative tightening, sexism in the City and central bank digital currencies.

I am glad that His Majesty, and also the Chancellor today, have emphasised the focus on increasing economic growth. I am glad that everyone now agrees that we should continue to take action to bring down inflation, ease the cost of living for families, and help businesses to fund new jobs and investment. I am also glad that Ministers will help the Bank of England to return inflation to target. It is the Bank of England that has raised mortgage rates, and the Governor of the Bank of England has acknowledged that the only increases that mortgage payers are now seeing are thanks to its efforts to control inflation and are nothing to do with the decisions of our now responsible Treasury.

These decisions will help household finances, reduce public sector debt and safeguard the financial security of our country, about which my constituents care deeply. Tomorrow we should see a milestone in the quest to reduce inflation: the market expects the consumer prices index to decline to 4.7%, and, combined with wage growth of more than 7%, that means that real wage growth has returned to our economy. We have also seen low pay fall dramatically: fewer than 10% of the many millions more people who are now in work are low paid, thanks to the national living wage.

There was one omission from the Gracious Speech, in respect of what I regard as constitutional sexism in our country. No steps were announced to end the indefensible system of “men only” seats in the other place. The 92 hereditary peerages are almost exclusively for men, and the Hereditary Titles (Female Succession) Bill, which I tried to get enacted in the last parliamentary Session in order to change that, sadly did not make it on to the statute book. I shall try again to get a good slot in the ballot for private Members’ Bills, and if I do so, I will reintroduce that Bill. If I do not get a good slot, I will invite my colleagues to take up the baton.

[Mr Speaker]

We now come to a maiden speech.

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 5th September 2023 Commons Chamber

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

Will the Economic Secretary update the House on the progress he is making to enable our constituents to access personalised financial guidance if they are among the 93% of our constituents who cannot afford regulated financial advice?

[Andrew Griffith]

My hon. Friend, the Chair of the Treasury Committee, makes a really important point about what is called the advice gap. Treasury officials, the FCA and I are consulting on that, and I will publish an update this autumn.

Financial Services Reforms

Harriett Baldwin Excerpts

Tuesday 11th July 2023 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

I should probably note in this context that I am a trustee of the Parliamentary Contributory Pension Fund.

I warmly welcome the work that the Economic Secretary and the pensions Minister have done in this important area, and strongly endorse what the Economic Secretary says about its meaning that future pensioners will be able to retire with higher pension incomes. However, he will know that I have put another piece of urgent work in his inbox, about helping the 93% of our constituents who are unable to afford access to financial advice and have to rely on bog-standard generic guidance. Can he update the House on how his review of the advice-guidance boundary is going and how he will help the majority of people who save in defined-contribution schemes to get access to some sort of personalised coaching or guidance?

[Andrew Griffith]

It is always a pleasure to respond to my hon. Friend and to the work of her tremendous Treasury Committee, which rages across this broad financial sector. She is right to raise the question of access to financial advice; I am afraid the world of financial services regulation is fraught with unintended consequences, and one unintended consequence of financial regulation and a growing compensation culture is to move financial advice beyond the financial ability of so many people who would benefit from receiving it. That is called the advice gap. I and my officials continue to work on that and I look forward to sharing proposals with the House and with my hon. Friend and her Committee in the autumn.

Finance (No. 2) Bill

Harriett Baldwin Excerpts

Report stage
Tuesday 20th June 2023 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

It is important, briefly, to first recognise the context in which we consider amendments and new clauses to the Bill. Yesterday we heard the news that the average rate for a two-year fixed-rate mortgage has now breached 6% for the first time since December. That news will leave the 400,000 people across the country whose existing fixed deals end between July and September feeling anxious and fearful. They face the prospect of having hundreds of pounds less in their pockets each month when their current deal expires and they have to re-mortgage. That is not to mention all those on variable rates, who have already seen their payments rise relentlessly as a result of interest rates going up again and again.

Across the country, mortgage payers are facing interest rate rises above 6% for the second time in 12 months. The first time came in the wake of the Conservatives’ disastrous mini-budget last autumn; now it is because inflation means that banks expect interest rates to stay higher for far longer than anyone feared. The truth is that mortgage payers are feeling pain because the Tories crashed the economy and have no plan to fix it. What is more, we know the current increases in mortgage payments come after 13 years of low growth and stagnant wages. They also come after 25 tax rises by the Government in this Parliament alone, increases that have pushed the tax burden in this country to its highest level in 70 years.

I will begin considering the detail of our amendments on Report by focusing on something very rare indeed: a tax cut from this Government. That tax cut is included in clause 18. Through that section of the Bill, the Government will be spending £1 billion of public money a year to benefit the 1% of people with the biggest pension pots. Ministers may claim that their decision was driven by a desire to get doctors back into work, but since the policy was first announced the Government have flatly rejected any call to consider a fairer and less costly fix targeted at doctors’ pensions.

It is not just Labour who have been questioning the Government’s approach; the Conservative Chair of the Treasury Committee, the hon. Member for West Worcestershire (Harriett Baldwin), said that even she was surprised that Ministers had opted for a blanket cut rather than a bespoke policy for doctors. That is why we will be voting today for our amendment 1, which deletes clause 18, thereby abandoning plans for this blanket change that fails to spend public money wisely. As our new clause 1 makes clear, the Chancellor should finally do what so many have been calling on him to do and produce an alternative approach to pensions that is targeted at NHS doctors and provides taxpayers with value for money.

[Harriett Baldwin (West Worcestershire) (Con)]

I put on the record that while the hon. Gentleman quotes me correctly, I underline that I was pleasantly surprised.

[James Murray]

I thank the hon. Lady, I think, for that intervention. I am trying to work out exactly what point was being made there, but I think the overall point is clear. There is concern from all sides at £1 billion a year of public money being spent on a blanket change, rather than something targeted at NHS doctors.

That failure to spend public money wisely is evident again in the Bill’s proposal to reduce air passenger duty for domestic flights, the impact of which our new clause 10 seeks to uncover. Again, at a time when public finances are under severe pressure, household budgets are being stretched in all directions and the cost of inaction on climate change grows by the day, it is baffling that a tax cut for frequent flyers is the Government’s priority for spending public money.

--- Later in debate ---

[James Murray]

The hon. Gentleman is right to describe the state of the economy as a doom loop. It is on a managed path of decline, which even the former Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng) described as a “vicious cycle of stagnation”. The fact is that without any stability or certainty and without a plan for growth, we cannot get the economy out of that doom loop, which is exactly what we are pressing the Government to do.

I know that Conservative Members may be feeling rebellious today, so perhaps they will consider supporting our new clause 6, which requires the Chancellor to follow Labour’s lead and set out a plan for business taxes that increases certainty and investment. The truth is, however, that even if the Conservatives did set out a plan, no one would believe that they would or could stick to it. Everyone knows that this Prime Minister is weak, hostage to his party, and unable to lead. Only a new Labour Government can bring the stability and certainty that businesses need.

That is what we need in order to boost investment, create jobs and grow Britain’s economy. That is what we need to get us off this path of managed decline, to provide security for family finances once again, and to make people across Britain better off.

[Harriett Baldwin]

I rise to speak to new clause 2 and amendment 7, which were tabled in my name and those of all the other members of the cross-party Treasury Committee.

“Taxes are far too complex.”

Those are not my words but the words of the Chancellor of the Exchequer when he gave evidence to our Committee. The amendments to which I am speaking would give legislative effect to the recommendations of the report we published last week on the work of the Office of Tax Simplification. The report is on the Table, and I encourage all hon. and right hon. Members to read it.

Across the House, I think we can all agree that, regardless of the level of tax, the tax system itself has become far too complex. To give an example, as a result of the Committee’s current inquiry on tax reliefs, we have finally found out how many tax reliefs there are in the tax code—1,180. The unnecessary complexity in our tax code makes the tax system expensive and difficult for HMRC to administer, makes the tax system confusing and makes it difficult for taxpayers to understand the choices on offer and the consequences of those choices for their after-tax income.

A complex tax system can be hugely costly for taxpayers and for those responsible for compliance with the tax code. The Financial Secretary to the Treasury was kind enough to give evidence to our Committee on the VAT system last week, and she described it as the “most complex” part of the tax system. VAT creates a crippling compliance burden for small businesses and, as a result, there is a massive pile-up of companies just underneath that £85,000 turnover threshold. This shows that small, potentially dynamic, growing businesses—the engines of our economy—would rather stay under the threshold than deal with the VAT system.

Unfortunately, the VAT threshold is far from the only cliff edge in our tax and benefits systems. At worst, these cliff edges result in people being worse off for earning more money. In recent evidence to a joint session of the Treasury Committee and the Work and Pensions Committee, we heard how people can suddenly find themselves much worse off, after losing entitlements such as free school meals and council tax support, when they earn only a little more money. Indeed, next winter a person who earns an extra £1 will take home £900 less because they lose the cost of living support entitlement, which we reflected in a recent report. People would actually be better off by working less, or perhaps not working at all, and surely that is something we do not want to see in our tax and benefits systems.

[Kit Malthouse]

My hon. Friend is making a powerful point, but does she accept that complexity can lead to gaming of the system? It often feels as if the accountancy profession and tax planners are streets ahead of the Revenue, to the extent that we now have to have a general anti-avoidance measure so that, if they find something we do not like, they are not allowed to do it, even though it may be within the rules. That is a direct product of this complexity, which is creating a whole other industry around finding loopholes.

[Harriett Baldwin]

I agree with my right hon. Friend’s excellent point. Not only do the wealthiest get the best tax advice, but general financial advice has now become so expensive in this country that only 8% of our constituents can afford to pay for it.

--- Later in debate ---

[Bob Stewart (Beckenham) (Con)]

I am ignorant about tax affairs, but trying to sort it out might make it even more complicated.

[Harriett Baldwin]

My right hon. Friend highlights that this is not an easy task. The point I am trying to make with my amendments, which I hope he will support, is that, by abolishing the Office of Tax Simplification, we lose not only a source of valuable advice on how to simplify the tax system but the message that we want to do so, which I know the Chancellor wants to convey.

Higher up the income scale, the £100,000 income bracket triggers the withdrawal of the very welcome steps we have taken on tax-free childcare and the personal allowance. This means that a family with two children in full-time childcare, if they happen to live in London, would be better off earning £99,999 than earning more than £150,000 because they would have a more than 100% withdrawal of extra earnings in that income bracket, which is very distorting. It provides disincentives to work, and we see that obstacle to economic growth reflected in the workforce numbers produced by the Office for National Statistics.

The Chancellor agrees that

“the tax system is overcomplicated and the trend of ever more complication must be reversed.”

It is surprising that, on coming to office, he chose not to reverse the abolition of the Office of Tax Simplification. It was established in 2010, and it was given a ringing endorsement by the Treasury in its 2021 statutory review. Disbanding the independent champion for simpler tax sits very uncomfortably with the Government’s insistence that tax simplification is a priority.

However, the most important factor in securing tax simplification in practice would be for the Chancellor to take on the personal responsibility for simplification that he pledged to take, which brings me to the Treasury Committee’s new clause 2. We have heard that, while the Treasury and HMRC focus on new taxes, the Office of Tax Simplification did important practical work seeking to simplify the existing tax system. We also heard in our evidence session that the Office of Tax Simplification did good work listening to taxpayers to understand how the complexity of the tax system works against them. The reports of the Office of Tax Simplification were published very transparently, unlike the private advice given to Ministers, and they facilitated parliamentary scrutiny of tax simplification efforts.

The Chancellor told us that he intends to be a Chancellor who makes “progress on tax simplification.” I welcome the simplification of the lifetime allowance, which the Opposition opposed earlier, but the Committee wants the ability to hold him accountable for that. Under new clause 2, the Treasury would report to the Committee annually on the Chancellor’s promise to simplify taxes.

[Victoria Atkins]

I have genuinely enjoyed my hon. Friend’s contributions not just today but at earlier stages, and I enjoyed being grilled with the Committee’s very thoughtful questions last week. In the spirit of agreement and co-operation, would it meet with her and the Committee’s approval if I committed to write to the Committee once a tax year, including this tax year, on the subject of simplification? The Committee could look at that report, decide for itself how the Government of the day are doing and, of course, call Ministers to account before the Committee.

[Harriett Baldwin]

I thank the Financial Secretary for that intervention, which is very much in the spirit of what we are calling for in our new clause. Our report set out the sorts of things we would like to see. The report from the Treasury should be annual and it should include international comparisons, where available. It should also set out what the Treasury has done within that year to simplify taxes for our constituents and those who run businesses.

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

Let me add that we want to see real examples of simplification, as the tax code is so incredibly long and confusing. Just today, I was talking to people from some businesses that have found it impossible and extremely expensive to work their way through that tax code. As the Chairman of the Treasury Committee has set out, some concrete examples would be crucial in any report that came to the Committee.

[Harriett Baldwin]

I thank my right hon. Friend for that intervention, which made me think immediately of the measures in this Bill on the increased rate of corporation tax. That in itself is controversial, but we now have these ladders between 19% and 25%. Our Committee would be interested to see the letter that the Financial Secretary has undertaken to write to us annually include an assessment of not only new measures such as that on the behaviour of businesses—I highlighted the impact of the VAT measures just now—but of the existing body of tax law. As with the simplification of the lifetime allowance, we must ensure that this Treasury and these Treasury Ministers focus relentlessly on how they can simplify the complexity and the behavioural signals that our tax system is sending, which are deterring people from entrepreneurialism, taking on extra work and earning higher incomes. With that, I am happy to have spoken to those two amendments.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I wish to speak to my new clause 3, which would compel the Chancellor to assess the impacts of the Bill on poverty and inequalities, and, subsequently, our health. It states:

“The Chancellor... must review the public health and poverty effects of the provisions of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) The review must consider—

(a) the effects of the provisions of this Act on the levels of relative and absolute poverty across the UK…

(b) the effects of the provisions of this Act on socioeconomic inequalities and on population groups with protected characteristics as defined by the 2010 Equality Act…

(c) the effects of the provisions of this Act on life expectancy and healthy life expectancy across the UK…

(d) the implications for the public finances of the public health effects of the provisions of this Act.”

Most notably, it must consider those implications on the NHS. So the ask is simple: that the Government should disclose their evaluation of the impact of their economic policies on the health of our constituents—that is it. It is fairly straightforward, and I think we are all aligned on that; these are ambitions the Government have professed to have in their levelling-up agenda. My new clause would contribute to that and to the achievement of the reduction in health inequalities to which the Government say they aspire. They should have nothing to fear from the transparency that this new clause would bring.

As we know, there is overwhelming evidence that socioeconomic inequalities are the key determinants of our health and, consequently, our health service use; inequalities in income, wealth and power will determine how long we are going to live and to live in good health. It is, therefore, only reasonable that the Government report on how the Finance Act will have an impact on those inequalities. For example, life expectancy for men is four years lower in Oldham than it is in the Prime Minister’s constituency. In the past 13 years, Oldham Council has had £230 million in funding cut from its central Government funding—that is 29% of its total budget in 2010. It has received funds through the competitive bidding processes for the towns fund and levelling-up fund totalling £44 million. A GCSE in maths is not required to see the shortfall there. However, in Surrey, where the Chancellor is an MP, people have seen their council budget cut by just 8.3%. The issues are clear when we compare that 8.3% with that 29%.

How can it be right that in the sixth richest country in the world people are dying younger because of their socioeconomic position? Poverty and inequality are not inevitable; they are political choices that can have deadly consequences. The pandemic revealed that stark reality, exposing how our structural socioeconomic inequalities impacted on who was infected by covid and their experience of the disease. People on low incomes were more likely to be infected and to die of covid; within that, and at every other level of the income hierarchy, people of colour and people with disabilities were disproportionately represented in case numbers and deaths. If we are to prevent the same mistakes from happening, the Government must listen. If they do not listen to me, they should listen to Professors Sir Michael Marmot, Clare Bambra and Kate Pickett, and to countless others. There is overwhelming evidence to show that structural inequalities in our country drove the unequal death toll from covid.

Michael Marmot revealed that instead of narrowing, health inequalities, including how long we are going to live and to live in good health, were getting worse; prior to covid, our life expectancy and healthy life expectancy was getting worse. Most significantly, his analysis showed that unlike the situation in the majority of other high-income countries, our life expectancy was flatlining. For the poorest 10% of the country, including in my part of the world, it was actually declining, with women being particularly affected. He showed that “place matters”; living in a deprived area in the north-east was worse health-wise than living in an equally deprived area in London.

Sir Michael also emphasised that it is predominantly the socioeconomic conditions that people are exposed to, not the NHS, that will drive their health status and how long they will live. Analysing the abundant evidence available, he attributed the shorter lives that people in poorer areas such as my north-west constituency are predominantly living to the disproportional Government cuts to local public services, support and income that they have experienced since 2010—and then the pandemic hit. As the National Audit Office and others have outlined, it was always a question of when, not if, there would be a pandemic. Like many of us, Sir Michael has pointed out that the Government’s hubris can be seen not only in their pandemic management but in the high and unequal covid death toll. Improving our health and wellbeing must be a priority of this Government and an outcome of our economic—and other—policies.

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 20th June 2023 Commons Chamber

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

The growth plan in September obviously had an impact on the mortgage market, but is the Economic Secretary to the Treasury aware that by November, the Governor of the Bank of England said, when he gave evidence to our Committee, that the increases in mortgages henceforth were down to the Bank of England’s own increases, because that temporary effect from the growth plan had dissipated? Increases since then have been largely due to the fact that inflation has been worse than the Bank was forecasting. Did the Economic Secretary note that this week I received a letter from the Chair of the Court of the Bank of England, saying that they are going to undertake the request that I sent for them to look at their inflation modelling and at why it has been incorrect?

[Andrew Griffith]

Not for the first time, the Chair of the Treasury Committee is on the money in her understanding of what is driving the markets, and in her advocacy and championing of the fact that our lending banks need to do a good job not just for mortgage holders, but also for savers. I am happy to meet her to talk about how we can ensure that they do the best job they can.

Mortgage Market

Harriett Baldwin Excerpts

Tuesday 13th June 2023 Commons Chamber

[Mr Speaker]

In fairness, the right hon. Member for Wolverhampton South East (Mr McFadden) is right honourable. But there we are. I call the Chair of the Select Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

The Government have given the Bank of England the task of targeting inflation at 2%, and our Committee has regularly held the Bank of England Governor’s feet to the fire over its performance on that inflation target. Mortgage rates have been increasing because inflation has been higher for longer than expected. In fact, the Governor said in his evidence to our Committee last November that from now on, our grumpy constituents who are having to pay higher mortgage rates should complain to him rather than to the Government. Will the Economic Secretary endorse the Treasury Committee’s campaign to ask the banks why, instead of just raising mortgage rates on the day the Bank of England raises rates, they do not also increase the savings rates that are paid to our constituents?

[Andrew Griffith]

The independent Governor of the Bank of England is, of course, right. Today we have seen strong print on wage growth, in part due to the 9.7% increase in the national living wage, on which I hope Members will join me in congratulating the Government. My hon. Friend is, as ever, right to highlight the impact on savers. It is important to me and to this Government that savers get a fair deal, which is one of the reasons why National Savings and Investments continues to offer savers an attractive range of products in the market.

Non-Domestic Rating Bill

Harriett Baldwin Excerpts

2nd reading
Monday 24th April 2023 Commons Chamber

[The Financial Secretary to the Treasury (Victoria Atkins)]

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

The House may have spotted that I am not in as full voice as I normally like to be. I promise that is not because I have been participating in the activities that I understand are going on outside in Parliament Square. I hope the House will understand if I do not take quite the number of interventions that I generally like to when opening a debate.

I believe that all of us across the House recognise how important business rates are to council budgets and the funding of core services. This year alone, business rates are set to raise more than £20 billion to fund vital services, from adult and children’s social care to refuse collection. However, business owners have raised concerns about the impact of this tax on their ability to stay competitive. That is why the Government have delivered and will continue to deliver on our commitment to reform business rates.

In the autumn statement, we announced substantial immediate support to help businesses adapt to the 2023 business rates revaluation. Today, we take another major step forward, turning our attention towards longer-term reform with the Non-Domestic Rating Bill. It will ensure a business rates system that is more flexible, transparent and fair.

Before I set out what the Bill delivers, I remind the House of the steps we have already taken to improve the business rates system. From April 2023, we have updated all rateable values for non-domestic properties, reflecting changes in the property market. The revaluation ensured a fairer distribution of bills between online and physical retail. On average, bricks-and-mortar retailers saw decreases of around 20%, but we did not stop there.

In the autumn statement, we announced a support package worth almost £14 billion over the next five years to support businesses. We have frozen the business rates multiplier this year—a £9.3 billion tax cut over the next five years—we have increased the retail, hospitality and leisure relief scheme from 50% to 75%, supporting around 230,000 properties, and we have removed unpopular downwards caps from the transitional relief scheme, ensuring that businesses immediately see the benefit of falling bills.

Turning to the Bill, business owners have been clear that a more frequent revaluation cycle would be extremely helpful. In place of the current five-yearly cycle, the Bill will implement a three-yearly cycle. The most recent revaluation took effect from this April, so the next will take place in 2026 and it will happen every three years thereafter. I understand that colleagues will ask, “Hang on a minute. Why every three years, rather than annually or every two years?”. The reason is that this single measure is a significant shake-up of the business rates system. An initial three-yearly cycle ensures that the Valuation Office Agency has the capacity to deliver these important reforms. I reassure the House that we will of course keep the system under review, with the aim of going even further if we can.

We are implementing a new duty for ratepayers to provide the VOA with information that supports valuation. That will be submitted through a new, simple online service. It brings business rates in line with wider tax practice, and it is a crucial first step towards going further on the frequency of revaluations in the future. We will make the valuation process clearer by increasing the transparency of the VOA’s work. The VOA has already delivered some improvements, but the Bill will allow it to go even further and provide more accessible information to ratepayers on how individual valuations have been reached.

[Harriett Baldwin (West Worcestershire) (Con)]

The Minister is speaking about the Valuation Office Agency, which gave evidence to the Treasury Committee last week. It reassured us that it was ready for these changes and on track for its computer system changes. Is that consistent with what she has been told?

[Victoria Atkins]

Yes, it is. Indeed, the VOA is very keen to get moving with this because, while it does a good job under the current system, it understands the difficulties that less frequent revaluations have posed for businesses, particularly given recent history with the pandemic. This is very much part of trying to sew the system together even more tightly, so that the VOA is able to fulfil its obligations to ratepayers.

We are going to clarify what sort of changes or events should lead to changes in rateable values between revaluations, with reforms to material changes of circumstances. Another key reform involves rethinking the way that the two multipliers or tax rates are calculated. We are making the recent practice of uprating the multipliers by the consumer prices index a permanent feature. Defaulting to this lower measure of inflation will help businesses struggling with rising costs. The Bill will also allow the Government to adjust either multiplier to a rate lower than inflation, and to prescribe which properties pay the lower or smaller multiplier, keeping business support adaptable to the fast-moving fiscal environment.

The key driver for all of these changes is to help businesses grow, and in so doing we want to remove barriers to investment and to incentivise growth. We are therefore creating an entirely new 100% relief for ratepayers making eligible improvements to their property. They will not face higher bills as a result of those investments for 12 months. I know that that is something for which businesses, and indeed colleagues, have been asking for some time. We will also enshrine in law the 100% relief for low-carbon heat networks that have their own rates bill. That is something we recently brought in with the support of local authorities, and it has been warmly welcomed by the business community.

The Bill shows that the Government are honouring our promise to British businesses that we will be there for them no matter what, so that they can continue to innovate, expand and thrive in a globally competitive economy. In the last six months, my right hon. Friend the Chancellor has announced almost £14 billion of support to the business rates system, and now through the Bill we are going even further. The Bill creates a modern system that can adapt to the ebb and flow of market tides. It delivers a fairer system that provides greater transparency for ratepayers and a business-friendly system that helps, not hinders, growth and rewards companies that invest. I commend it to the House.

Finance (No. 2) Bill

Harriett Baldwin Excerpts

2nd reading
Wednesday 29th March 2023 Commons Chamber

[Victoria Atkins]

I encourage the right hon. Gentleman to look carefully at the small profits rate clauses in the Bill. We clearly do not want smaller businesses, such as those on our high streets that we care for so deeply as constituency MPs, to be subject to the regimes for the largest multinational companies. If he looks at those clauses, he will see that we keep the rate at 19% for companies with profits of £50,000 or less. For companies with profits between £50,000 and £250,000, there is a tapered rate of increase. That means that 70% of companies will not see an increase in their corporation tax rate. Only the top 10% of companies will be eligible for the full main rate, but we hope that many will take advantage of the full expensing policy that we have announced.

[Harriett Baldwin (West Worcestershire) (Con)]

Many measures in the Bill will be warmly welcomed by businesses and households in West Worcestershire. However, clause 346 abolishes the Office for Tax Simplification. I do not think that anyone would say that the tax system is simpler than it was when the OTS was established. Could the Minister outline how we on the Treasury Committee can hold her accountable for continuing to simplify our tax system?

[Victoria Atkins]

I thank my hon. Friend the work that she and her Committee have done on the issue of simplification. The Committee had a very productive session with the soon to be former members of the office. What we want to do, which I will expand on a little later, is to put simplification at the heart of policymaking. So I have set my officials three objectives: making tax fairer, simpler and supportive of growth; and, for every single decision that we make, having explanations of how we will meet those three objectives. But we must acknowledge that, sometimes, there is a tension between the wish to make tax fairer and the wish to make tax simpler. The taper rate that I just described is an example of that. I appreciate that, for businesses with profits between £50,000 and £250,000 profits, their accountants will have to work out which tapering rate is available to them. But we do that precisely because we want to be fair to those businesses. I will expand on the important point that she raised later in my speech.

The Government have committed not only to supporting the growth of established businesses but to providing a boost to start-ups and young companies. That is why the Bill increases the amount of seed enterprise investment scheme funding that companies can raise over their lifetime from £150,000 to £250,000. It simplifies the process to grant options under the enterprise management incentive scheme, and it doubles the amount of share options that qualifying companies can issue to employees under the company share option plan to £60,000. Those changes intend to provide a boost to young companies by widening access to the schemes and increasing the funding limits, encouraging additional investment and further supporting growth of those companies.

We recognise how important research and development is to drive innovation and economic growth, including in our thriving life sciences sector, which employs more than a quarter of a million people and had a combined turnover of more than £90 billion in 2021. To encourage research and development, the Bill legislates for reforms to the R&D tax reliefs system previously announced by the Prime Minister when he was Chancellor. They include changes to support modern research methods by expanding the scope of qualifying expenditure for R&D reliefs to include data and cloud computing costs, and a range of measures to reduce error and fraud to ensure that our tax reliefs are well targeted and offer value for money.

By encouraging more businesses to invest in R&D, this Government are helping them to create the technologies, products and services that will advance living standards. I am pleased that, when they were announced, the chief executive of the Bioindustry Association Steve Bates OBE said of the measures:

“Modernising R&D tax reliefs to include data and cloud computing is essential for life science firms discovering and developing life-changing therapies for patients”.

We recognise the enormous contribution to our culture and economy made by theatres, orchestras and museums, as well as our vibrant film, gaming and media businesses. The Bill will extend for another two years the current 45% and 50% rates of tax relief for theatres, orchestras and museums, which will continue to offset ongoing pressures and boost investment in our cultural sectors.

The Bill will support the Chancellor’s ambitious plans relating to employment. To achieve the dynamic economy we all want, we cannot afford to waste anyone’s potential. We need to remove the barriers that stop people from working. No one should be pushed out of the workforce for tax reasons.

The British Medical Association, the Royal College of Surgeons and others have told us about the disincentive to continue working in healthcare because of tax charges on their pensions, and the NHS is our biggest employer, so to make sure that they and other professions are not deterred from working, the Bill will increase the pensions annual allowance to £60,000. The Bill will also remove the lifetime allowance charge to incentivise our most experienced and productive workers across our economy to stay in work for longer. As Dr Vishal Sharma, chair of the British Medical Association pensions committee, said:

“The scrapping of the lifetime allowance will be potentially transformative for the NHS as senior doctors will no longer be forced to retire early and can continue to work within the NHS, providing vital patient care.”

These changes will help to incentivise highly skilled and experienced individuals to remain in the labour market, which will help to grow the economy while increasing the knowledge and experience of the UK’s labour force.

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 21st March 2023 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

There was a significant tax cut in the Budget that has been greatly welcomed by drivers in my constituency and elsewhere, namely the extension of the 5p cut in fuel duty and the freezing of the escalator, but does the Chancellor accept that by postponing that decision until an election year—next year—he is simply continuing the fuel duty fiction that our Committee has highlighted?

[Jeremy Hunt]

I am delighted that my hon. Friend welcomed the freezing of fuel duty, which means that over the period for which it has been frozen, the average motorist will have saved £200. There is a specific reason why I wanted to continue to freeze it this year: combined with the extension of the energy price guarantee, it will reduce CPI inflation by 0.7% in a year in which headline inflation is still over 10%.

Silicon Valley Bank

Harriett Baldwin Excerpts

Monday 13th March 2023 Commons Chamber

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

May I put on the record my gratitude to the Minister, his colleagues and officials, and to people at the Bank and in the City in general, who have obviously worked flat out all weekend to deliver what turns out to be the best possible outcome in these difficult circumstances?

On the importance of the sector to the UK economy, did the Minister and the Bank treat this situation any differently because of the sector in which SVB was operating, or would they have tried for the same sort of solution for a bank in any sector? Was the Minister as concerned as I was about reports that investors required the firms that they were funding to put money into the bank as a condition for investment? Finally, given that other banks have collapsed in the US—other small banks, including one that specialised in crypto—does he think that crypto is in any way contributing to financial instability?

[Andrew Griffith]

I thank my hon. Friend, one of my predecessors and the Chair of the Select Committee, for her support and comments. The degree of concentration in a particular sector is unusual—it was an unusual feature. The business model of Silicon Valley Bank in the UK was different from that in the US, partly because of the tight regulations that we have here. For that reason, I have not seen any evidence that the banking of crypto-asset companies was something that contributed. Rather, once the Fed had taken its action, we saw the impact on the bank here. That is why it was right for the Bank to act to give us the space to protect that bank and to achieve the outcome that we announced this morning.