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.

Digital Pound

Harriett Baldwin Excerpts

Tuesday 7th February 2023 Commons Chamber

[Andrew Griffith]

It is always a pleasure to hear from the hon. Lady, in what I think was a welcome from His Majesty’s Opposition for the joint consultation between the Treasury and the Bank of England. She rightly raised issues that I assure her are addressed in the consultation, about which we would like to hear. They include how to ensure privacy, which will be embedded in the design. It is important that we come forward with, potentially, a digital pound precisely to avoid this space being colonised solely by, for example, private large tech companies.

I can assure the hon. Lady that this issue will not in any way distract from our important work on financial inclusion. Cash will indeed continue, and no part of the consultation talks about in any way replacing it. Rather, this is about ensuring access to that currency, so that potentially it will no longer be gated behind existing financial institutions; it could be something that new participants make available to citizens without some of the constraints that are sometimes put on the financial services system. The consultation also addresses the risk, which the hon. Lady rightly raised, should everybody withdraw their money all at once to invest in this digital currency.

However, the hon. Lady’s comments were a speech of two halves, and the second half was as wrong as it was unnecessary. This Government have never promoted a crypto wild west. The current Financial Services and Markets Bill contains more measures to protect consumers. The risks that consumers face have always been extremely clear, but when it came to financial promotions, one of the biggest challenges we faced was the Mayor of London and Transport for London, which gained a reputation for accepting particular adverts from the crypto industry.

[Harriett Baldwin (West Worcestershire) (Con)]

The Treasury Committee has opened an inquiry into crypto, and this morning we had a session at which the chief executives of the major high street banks appeared before us. The real question we wanted to ask them was why they have been paying our constituents so little on their savings since the Bank of England started to increase rates. Is not the logical conclusion of the consultation process that my hon. Friend has opened today that each of us should be able to hold a digital currency account at the Bank of England, and to earn the Bank rate on our holdings and disintermediate the entire banking sector?

[Andrew Griffith]

I thank my hon. Friend for her, as ever, wise points, as well as her wise chairmanship of the Treasury Committee. It is absolutely imperative that savers get the interest rates that they are entitled to. I commend my colleagues in National Savings and Investments, who have significantly increased the rates offered to savers. Of course, she also raises one potential opportunity, in that, although a digital pound would sit alongside our existing financial services infrastructure, it potentially offers consumers and citizens a different choice, which could involve the ability to hold currency through intermediaries other than the current banks.

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 7th February 2023 Commons Chamber

[Mr Speaker]

I call the Chair of the Select Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

The Treasury Committee recently published a report titled “Fuel Duty: Fiscal forecast fiction”, because we do not think the Chancellor will really be able to raise fuel duty by 12p, as is currently baked into the Office for Budget Responsibility numbers. Will the Chancellor be able to respond to our report before the Budget?

Charter for Budget Responsibility

Harriett Baldwin Excerpts

Monday 6th February 2023 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

Thank you very much, Mr Deputy Speaker, and may I associate myself with those passionately expressed words from the Chair?

I did think there might be a few more people here this evening to talk about the charter for Budget responsibility, after we have had so much debate across the country about the Office for Budget Responsibility and its forecasts over the last year or so. This was the year when the Office for Budget Responsibility made it into the headlines on numerous occasions, so I thought there might have been a bit more of a heated debate. I listened to the words of the right hon. Member for Wolverhampton South East (Mr McFadden), and I am not sure I understand at the end of his speech whether the Opposition are in favour of tonight’s motion and of the charter. I am not sure whether they are in favour of Budget responsibility. In fact, I did not hear any suggestions at all for solutions to the criticisms that he raised.

This evening, I reiterate, for those who were not here in early 2010, the rationale for the setting up of the Office for Budget Responsibility. It was because, in the Treasury of 2008, 2009 and early 2010, it was far too easy for the Government simply to make their own forecasts and to mark their own homework. I think there is merit in having someone external to the Treasury and oblivious to ministerial pressure come up with a set of forecasts. We all acknowledge that none will be perfect, or have perfect foresight about the future, but that externality means there is a way of marking the Treasury work and the Treasury projections. A Chancellor can certainly make an argument about why they may take issue with some of the elements going into the forecast, and there is often a more dynamic quality to tax revenues than is perhaps put into some of the external forecasts referenced this evening. A Chancellor can certainly have a debate about the numbers, but we do need to remind ourselves of the importance of this process and its external nature.

The other point I want to raise is about the fiction, which the Treasury Committee highlighted in one of our recent reports, that clouds the Office for Budget Responsibility forecasts for fuel duty. Again, this practice goes back many Chancellors and many Governments, and it is about putting into the projections for future tax revenue a ratchet up every year of fuel duty, yet for the last 12 or 13 years, every Chancellor coming to the Dispatch Box has decided not to implement it. It would be astonishing—I note that the Chief Secretary gave me a little cheeky smile—to see what is currently projected for fuel duty in the Office for Budget Responsibility forecast, which is for an extra 12p to go on to fuel after the Budget if the Chancellor does nothing. I think we can all agree that that is fiction. I cannot see the Chancellor coming to the Dispatch Box on 15 March and increasing fuel duty by 12p—I would be astonished—because the temporary one-year reduction of 5p will expire and there is the cumulative impact of the ratchet over the years.

I just wanted to highlight that there is some element of a work of fiction in the Office for Budget Responsibility forecast. It would be healthier for all concerned if a more realistic approach could be taken to the forecast for fuel duty not just in the short term, but in the medium term, because I think we all recognise that there will have to be a change, as more and more people are buying electric cars, in how we tax transport and drivers. I also wanted to publicise how our Committee has come together on a cross-party basis to make that point.

[Mr Deputy Speaker]

I call the SNP spokesperson.

Non-domicile Tax Status

Harriett Baldwin Excerpts

Tuesday 31st January 2023 Commons Chamber

[James Murray]

I thank my hon. Friend for drawing attention to the impact that tax avoidance has on the public purse and on people across this country and to the fact that the Prime Minister probably understands some of these issues very well indeed.

As my hon. Friend set out, people are feeling the impact on this country’s economic growth as we lag so far behind other countries around the world. People are feeling the impact of so many parts of our public services breaking at the seams, and people are feeling the impact as the big challenges of the future get kicked ever further into the long grass.

We need a Government with a plan to grow the economy, with the drive to get ahead of the challenges of the future and with the determination to reform and strengthen our public services. Nowhere is that clearer than with the NHS, as more than 7 million people wait months and even years for treatment, unable to work or to live their lives to the full. We know that, to make the NHS fit for the future and able to support a healthy society and economy, it desperately needs reform and sustainable funding from a growing economy.

[Harriett Baldwin (West Worcestershire) (Con)]

The hon. Gentleman is making a typical, anti-aspirational socialist rant straight out of the book called “Politics of Envy”, but he is not actually speaking to the motion on the Order Paper. Why has he put “28 February” in that motion when he could just wait for the Budget on 15 March?

[James Murray]

It would only be a Conservative MP who could criticise an Opposition shadow Minister for suggesting that people should pay their fair share of tax.

I was speaking about the NHS, so let us look at the Government record on the NHS and see what can be done. We know that, after 1997, Labour’s reforms and funding from a growing economy meant that our country had an NHS of which we were proud. If we win the next general election, as my hon. Friend the Member for Ilford North (Wes Streeting) the shadow Health Secretary has set out, one of the first steps we will take to get the NHS back on track is to use some of the money raised by scrapping non-dom status to implement a workforce plan that addresses the root cause of the crisis the NHS is in. Under our plan, we would double the number of medical school places to 15,000 a year. We would double the number of district nurses qualifying each year. We would train 5,000 new health visitors a year. We would create 10,000 more nursing and midwifery clinical placements each year.

[Harriett Baldwin]

On a point of order, Mr Deputy Speaker. Is it in order for the Opposition spokesman to be talking in such general terms about a wide range of things, without actually addressing the motion on the Order Paper?

[Mr Deputy Speaker (Mr Nigel Evans)]

If I had heard anything out of order, I would have called the shadow Minister to order. I am quite content with what he is saying at this moment in time.

IMF Economic Outlook

Harriett Baldwin Excerpts

Tuesday 31st January 2023 Commons Chamber

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

Will the Minister take this opportunity to reflect on last year when, despite the headwinds of the coronavirus, the invasion of Ukraine, huge hikes in energy costs, rising interest rates and high inflation in this country, UK businesses managed to generate more than 4.1% of economic growth—twice that of the United States, 25% higher than China, and higher than the eurozone?

[James Cartlidge]

The Chair of the Select Committee is spot on. Instead of talking down our economy, she makes the key point that, despite all those challenges, we had strong growth last year because of British enterprise. That is why, on Friday, the Chancellor, himself a former entrepreneur—there are not many of those on the Opposition Benches—said that we will back advanced manufacturing in the high-growth sectors to ensure that we continue to live with that level of growth in the future.