National Insurance Contributions (Secondary Class 1 Contributions) Bill

Iqbal Mohamed Excerpts

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

The right hon. Member for East Antrim (Sammy Wilson) talked about the pressures on the health budget back home in Northern Ireland. I am happy to announce that our Health Minister and the health trade unions have just reached a pay agreement, which may restore parity for our health workers in 2024-25 but which will also cause additional pressures. Although the Treasury’s exemption of our health and social care sector from the increase in national insurance contributions is welcome news for those working in the sector, it will place an additional burden on the parts of the community service that make up the health and social care service across these islands—a burden that the Bill will introduce.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

rose—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. May I ask the hon. Gentleman to keep his contribution to just a few minutes, so that the Minister has time to respond to all the Back Benchers?

[Iqbal Mohamed]

Everyone in my constituency, and indeed in the whole country, knows that the last Tory Government decimated public services after 14 years of austerity, mismanagement, negligence and a sole focus on the rich, at the expense and neglect of the poor working class and the public sector. I sympathise with the new Government, and I will try to provide constructive support.

I wholeheartedly welcome the Government’s announcements in the Budget of increased investment in education, the NHS, infrastructure projects and other public services, but, like many other people in the House and throughout the country, I do not agree with the approach taken to the funding of those investments. Members on both sides of the Committee have indicated today that failing to protect key sectors and services such as general practices, care homes, pharmacies, childcare providers and third sector providers may have been an oversight or a mistake on the Government’s part, but I am not so sure. On the basis of the Government’s other blanket policies on abolishing the winter fuel allowance, imposing VAT on all private schools including low-fee and charitable schools and removing business rates relief from all private schools and charities without any announcement of safeguarding or compensatory measures to protect these services and sectors, it appears to have been a deliberate, or negligent, decision.

It is clear that the Government inherited a dire state of affairs that requires huge investment, which must be paid for in a responsible way. I am sorry to say that the way that has been chosen by this new Labour Government is not the right one. Viable and progressive alternatives are available to the Government to raise finances for the necessary investment rather than inflicting the increase in national insurance contributions on the impacted bodies. Let me suggest a couple of easy measures that would support the Government’s investment. One possible solution is the imposition of a 2% wealth tax on assets over £10 million, which would raise the amount predicted to be raised by national insurance contributions; another is the closing of corporation tax loopholes that allow corporations to save billions and to offshore profits.

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

I am conscious that I have only a few moments to speak. I will not go through the four clauses of the Bill, as I take it that everyone will have read it already. I will instead go directly to the amendments that have been tabled, ahead of potential votes in a few moments.

I will address the amendments tabled by the hon. Members for St Albans (Daisy Cooper), for Angus and Perthshire Glens (Dave Doogan), for Leicester South (Shockat Adam), for Grantham and Bourne (Gareth Davies), and for Lagan Valley (Sorcha Eastwood). These amendments seek to exclude certain sectors, including healthcare providers, educational settings and charities, from the new rate and threshold for employer national insurance. As hon. Members know, the changes in the Bill before us represent one of the difficult but necessary decisions that the Government have had to take to fix the foundations of our economy and our public finances.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Iqbal Mohamed Excerpts

2nd reading
Monday 25th November 2024 Commons Chamber

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

Since becoming a Member of Parliament earlier this year, I have been heartened every time I have heard Ministers confirm that business rates reform is planned. I know what impact business rates can have on town centres through my work as a council leader and my time owning and operating a high street business for nearly 14 years in my constituency of Mid Dorset and North Poole—I do not any more, so I do not need to declare that as an interest. But that was why I was so disappointed to read the Bill, which simply tinkers around the edges and does nothing to fix the foundations of our town centres or about the inequity of business rates between physical and online businesses.

I welcome the higher rate aimed at large warehouses, but it does not go far enough. Those online businesses have sucked the life out of our high streets, and if what the Bill proposes is the extent of the change, it will not support anyone.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

It is not just favourable business rates that benefit online businesses; they can use tax loopholes to avoid paying the taxes that small businesses pay as a proportion of their profits. Does the hon. Member agree that the Government have other mechanisms for raising such funding?

[Vikki Slade]

I agree with the hon. Member and thank him for his intervention. I was just about to say that we need a proper tech tax on online businesses, which should be ringfenced to stay in local communities, where councils could use it to support town centres in a way that works for them.

Many councils are not able to keep the business rates accrued in their areas; they are set externally and sent elsewhere to support other communities. That is not understood or even appreciated by local communities. I cannot remember the number of times that, as a local government leader, I was shouted at by people saying, “You’re making all that money as a council.” People think that the councils own the businesses and the properties and that they set the rates. The fact is, they are set elsewhere, and councils do not have the power to provide discounts without having to plug the gap not just for their own areas, but for what they send to Government. That is what real reform would look like.

--- Later in debate ---

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

I rise in support of the majority of the amendment tabled by the Liberal Democrats. Reducing the high street business rates relief from 75% to 40% will devastate the small businesses on my high streets in Batley and Dewsbury, and many of them will not be able to absorb the costs, resulting in job losses and closures. My primary topic, however, will be the implications of the Bill for private schools that do not draw their students from the richest families in our society.

When I spoke out against the introduction of VAT in previous debates, I was accused of not wanting the best for 94% of students in our country. I absolutely love state schools, and I visited Boothroyd primary academy during UK Parliamentary Week last week. The children were so excited to meet me, but I think I was more excited to meet them and their teachers. I also visited a private faith school that charges, I believe, less than £3,000 per pupil and spoke to the pupils there. There are private schools that serve poor working-class families, and there is a reason why these families have chosen to send their children to such schools. Parents would be penalised if we removed that choice. The other challenge that I have in my constituency is that schools are bursting at the seams, with very few, if any, places available to parents. Many children are going to their second or third-choice schools, away from their catchment area.

Let me come back to the removal of private schools’ charitable status, which is an extra burden on top of charging VAT at 20%. Students at such schools overwhelmingly come from low-income families, and this reality often gets lost in the debate about private schools. We are all very aware of their elitist nature. With average fees of over £15,000, rising to £50,000, they service only the children of the wealthiest. It is not the children of the wealthy, however, who attend independent schools in constituencies such as Dewsbury and Batley, where faith schools are often the only option for families who cannot get their children into local state schools due to demand, or where state schools cannot meet their religious and spiritual needs. Those families are overwhelmingly from low-income backgrounds, and the removal of business rates charitable rate relief from private schools will result in a further increase in their fees, in addition to the proposed VAT. For wealthy families, that might not be a problem. For the families in my constituency, it is a major problem.

In addition, the measures will pose a risk to the future viability of many private schools, which often charge just enough to exist. I ask the Government to consider that class is a reality in the discussion about private schools, but not in the way it is commonly presented. In many communities, faith-based schools are not the preserve of the wealthy; they overwhelmingly educate the children of ordinary working-class families. The Government’s impact assessment of the proposals shows that the average cost, per school, of the removal of charitable status ranges from £27,000 to £179,000 a year for faith schools.

This issue is more complicated than measures to raise tax, and it feels to me that some important subtleties have been lost in the debate. For many of my constituents, faith schools not only provide high-quality education; they also provide children of faith with the relative freedom to express their faith and identity without fear of stigma or recrimination. I feel that none of this reality was properly considered when we discussed VAT on private schools, and now, through abolishing business rates charitable rate relief for private schools, that imbalance continues. The Government have an opportunity now to redress that imbalance, and I request that consideration be given to extending the exclusions for special needs schools to include faith-based schools that draw their students from low-income backgrounds. One easy solution would be to exempt from VAT schools that charge below per-pupil state school allowance, and allow them to retain their charitable status.

--- Later in debate ---

[Jim McMahon]

That really was not worth giving way for. I have literally just said that 1 million properties will be supported against inflationary increases next year. The 40% will continue, with a cap of £110,000. That is exactly what this Bill is intended to do. If the hon. Gentleman supports it, he can join the Government in the Aye Lobby and vote for it.

We know from businesses that the current scheme of discretionary relief does not provide the certainty needed. That is why the Bill will enable a permanent tax cut for retail, hospitality and leisure businesses from 2026-27 through new lower multipliers, ending the year-by-year uncertainty that the previous Government hardwired into the system. That is doing what businesses have been calling for. That rebalancing—from out of town to in town, from online to on street—is exactly what people have called for in communities and in business, and Opposition Members know it. Their frustration is that they did not do it in the 14 years that they had in office. It is down to us to take the steps that are needed in government now, and we are happy to do so.

The reasoned amendment raises concerns about the impact on schools in the state sector. I can assure the House that protecting and improving state education is at the forefront of the Government’s mind. In fact, we estimate that only 2,900 more pupils will enter the state sector as a result of the removal of the business rates relief for private schools. Let us be clear about what that means in reality: that goes down to about 300 a year. In any given year across England, 60,000 pupils will move between schools; this is 300. We need to keep that in context, because we have heard a lot of scaremongering about the transfer, but that is what the evidence says. That evidence is placed in the House of Commons Library, in case Members want to take time after this debate to go and look. There might even be enough time to find the documents before the vote if they want to bring themselves up to speed.

Importantly, this is about providing much-needed investment in the state school sector. Just how many parents say, “We need specialist support for SEND, because the mainstream provision is not adequate”? How many parents—by their own admission, among Opposition Members—choose to pay for private education because they do not have faith in mainstream provision? Despite what Opposition Members have said about the glory years of the past 14 years, the truth that parents and pupils on the ground feel is very different, and they know it. We have to repair mainstream provision so that parents and pupils can go with confidence to their local school, knowing that they will get the support that they need—support for all pupils, not just some.

Several hon. Members have mentioned the impact on faith schools. I want to offer some comfort. Of course we value and understand parental choice, but based on the evidence submitted through the HMT consultation, as well as the analysis undertaken by the Department for Education on removing the charitable rate relief, it is not apparent that private faith schools will be affected by this measure any more than non-faith schools. There is no evidence of disadvantage.

[Iqbal Mohamed]

Will the Minister give way?

[Jim McMahon]

I want to make progress in the time that I have, and to wind up within the 10 minutes.

The key point is that all children of compulsory school age are entitled to a state-funded school place if they need one, and all schools—and they know this—are required to follow the requirements of the Equality Act 2010 relating to British values and to promote an environment that encourages respect and tolerance towards families of all faiths and none.

A number of Members have rightly mentioned SEND provision—it has been a significant part of the debate, for understandable reasons. We have ensured on the face of the Bill that private schools that are charities and “wholly or mainly” provide education for pupils with education, health and care plans remain eligible for business rates charitable rate relief. Furthermore, private schools that benefit from existing rate exemptions for properties that are wholly used for the training or welfare of disabled people will continue to do so. Taken together, we believe those policies mean that most private special educational needs schools will not be affected by these measures at all.

We recognise that some pupils with special educational needs and disabilities will be in private schools, but without local authority funding in place, as it is judged that their child’s needs can be provided for within the state sector. Of course, parents will still be free to choose whether to be in the state sector or to remain in the private sector—that is a very important point to make. Local authorities aim to process all education, health and care plan applications in time for the start of the next school year, but in special cases, the local authority is able to prepay one term’s fees if the process is not complete. Likewise, some private schools will forgo the first term’s fees for pupils who are expected to receive their education, health and care plan in the future.

Turning to high streets, the Government are wholly committed to rejuvenating our high streets. We want to support the businesses and communities that make our town centres successful. That is why through this Bill, the Government intend to introduce permanently lower rates for retail, hospitality and leisure from 2026-27, in order to protect the high street. That tax cut will be fully funded and sustained through a higher tax on the most expensive properties—the 1% of properties that have a rateable value of £500,000 or more. The new tax rates will be set out in next year’s Budget to factor in the business rate revaluation outcomes and the broader economic and fiscal context at that time.

We were clear in our manifesto that we would look at the business rates system and support our high streets, and we meant it. We know that our high streets and town centres are the beating heart of our communities, but over the past 14 years, they have struggled to keep their heads above water. Think about all those household names that have gone to the wall—that are a thing of the past, not the future. Think about all the banks and pubs that have closed, and about the shutters that have come down on shop premises that were once the lifeblood of where people live. The previous Government had 14 years to get this right, but they oversaw the decline and decimation of our high streets. People feel that in their hearts, because town centres are more than just a place to do business; they are a place for a community to come together. That is something the Tories never understood when they were in government, but it is something that this Government absolutely understand.

With the leave of the House, I thank all hon. Members who have contributed to this important debate. This Bill is the first step on the road to transforming the business rates system. The measures within it will provide certainty and support to our vibrant high streets, enabling the delivery of a permanent tax cut that is sustainable and that finally levels the playing field between the high street and online. The Bill will also help break down barriers to opportunity, supporting all parents to achieve their aspirations for their children. We need to bear in mind, of course, that the vast majority of children in this country—over 90%—are in state schools. This investment will see them given the support that they need and deserve, and that, frankly, they have waited a long time for. I commend the Bill to the House.

Question put, That the amendment be made.

The House proceeded to a Division.

VAT: Independent Schools

Iqbal Mohamed Excerpts

Tuesday 8th October 2024 Commons Chamber

[Damian Hinds]

I ask my hon. Friend to forgive me, as I must make progress.

As for children whose parents are priced out of a school, or face its closure, disruption to learning can be difficult at any time, but it is even more problematic when pupils have started a public examination course. Their next school might not even offer the subjects that they were taking, or the exams might not be marked by the same exam board. We need to think about those children. The tax levy should be postponed until pupils who are now in years 10 or 11, or in the lower and upper sixth form, have finished their exams—until 2025 or 2026.

The widest impact of all will be felt by state schools. Ministers have said repeatedly that there is no problem because there are plenty of spaces in state schools. We have repeatedly pointed out that that is of no help at all if those places are in the wrong places or the wrong year groups. They need to be where and for whom they are required.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

State schools in my constituency are bursting at the seams. There are no spare spaces to move into for the more than 1,000 children being educated in independent schools there. The fees charged by those independent schools are a quarter to half of the cost of state school provision per pupil.

[Damian Hinds]

I am grateful to the hon. Gentleman.

Independent Schools: VAT and Business Rates Exemptions

Iqbal Mohamed Excerpts

Tuesday 8th October 2024 Westminster Hall

[Dr Al Pinkerton (Surrey Heath) (LD)]

It is a pleasure to serve under your chairmanship, Dame Caroline. I thank the hon. Member for Bromsgrove (Bradley Thomas) for securing this important debate. In my constituency, there are six small independent schools, two of which are dedicated to special educational needs, serving a total of 820 students. I have heard from each of those schools, from families of current students and from teachers in the state sector about the potential impacts of imposing VAT on private education provision.

I want to highlight two issues that relate particularly to the educational ecosystem of Surrey Heath, but which will, I think, also resonate widely across the country. The first is special educational needs. Of the 820 students in private schools across Surrey Heath, 230 have special educational needs of varying degrees of severity, and, of those, 138 are not in possession of an EHCP. That figure indicates the disproportionate service and choice that small, local private schools provide children and families with special educational needs.

For those children and families, private provision is more than just an alternative to the state sector; it is a crucial lifeline for children who struggle in mainstream education or who cannot secure one of the limited places in a special educational needs school provided by Surrey county council. Parents and headteachers have made it clear to me that families with children with special educational needs already face significant financial strains, and an additional 20% will be the tipping point that forces already stretched families to withdraw their children and turn again to an overstretched county-run system.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

The state schools in my constituency are already bursting at the seams, and we have hundreds of children who are outside of education, many of whom are unable to receive homeschooling. There are six private schools in my constituency, educating more than 1,000 children. The lowest fees start at £1,800, with the highest at around £3,300. We are talking about working-class, low-income families with children who have special educational needs. If enacted, the policy would be hugely damaging to those families’ financial situation and their children’s education. I strongly urge the Government to assess the impact of that and put in place protection mechanisms for such schools.

[Dr Pinkerton]

I agree with the hon. Gentleman entirely.

My second point relates to military families. As we have close ties to Sandhurst, Pirbright and nearby Aldershot, around 10% of pupils in my constituency come from military families. Those families already report that they are struggling with fees because of the increasing gap between the continuity of education allowance paid by the Ministry of Defence and the rising cost of private education, and adding 20% would widen that gap further still. Many families would reach their tipping point and be forced to withdraw their children from their current schools, with all the attendant risks.