James Murray
Main Page: James Murray (Labour (Co-op) - Ealing North)Department Debates - View all James Murray's debates with the Cabinet Office
(4 days, 18 hours ago)
Commons ChamberI thank my right hon. Friend the Member for Wolverhampton South East (Pat McFadden) for opening today’s debate, and for so clearly reminding us of the state in which the Conservatives left our country.
As many Members have rightly made clear today, yesterday’s Budget made choices about the future of our country. They were not just choices to get through the next few months until the next fiscal event, as we got used to under the last Government, but choices—sometimes difficult ones—about the long-term future of the UK economy and the public finances. The Chancellor’s Budget honoured our manifesto commitments by restoring economic stability, fixing the public finances and boosting long-term, sustainable investment in our country. The first Budget of this new Government turned the page on the last 14 years of chaos and decline. This Budget is a generational event to fix the foundations, so that we can deliver the change that the people of this country voted for. It begins to address the urgent pressures that our NHS, our schools, our police and our borders are under.
However, this Budget is not just about the coming year, nor even the whole of this Parliament; it is about making the right long-term decisions to create opportunities for people throughout the country, put more money in people’s pockets and begin a decade of national renewal.
I thank the Minister for giving way; he is very generous. He has mentioned choices. Could he comment on the fact that the cost of borrowing is soaring after this tax-raising Labour Budget of broken promises? Labour Members have talked about a crashed economy, but now the Government are presiding over their own low-growth, slow-growth car crash, and they are living in denial themselves.
Although we will not comment on market movements, the Chancellor outlined yesterday two new robust fiscal rules, which are the bedrock of stability on which this Budget is built. Those rules will put the public finances on a sustainable path and prioritise investment to support long-term growth. The current budget is in surplus by £9.9 billion in 2029-30, with net financial debt falling in 2029-30 and with headroom of £15.7 billion.
When we went into the election in July, the first steps that we promised to the British people opened with these three words: “Deliver economic stability”. As the Chancellor confirmed yesterday, our first fiscal rule is the stability rule. That means we will bring the current budget into balance so that day-to-day spending is met with tax receipts. No more borrowing for day-to-day spending, no more living beyond our means, and no more papering over the cracks. Our tough new stability rule means that the British people, businesses and the markets can all see the fiscal responsibility that will underpin every decision we take in government.
The Chancellor is clear that taking the tough decisions needed to deliver stability is not always easy. The previous Government ducked the difficult decisions. They made promise after promise to the British people that they knew they could never afford. Our stability rule offers a different approach. Meeting it means we needed to raise taxes, but we have been clear that we will protect working people. That is why the Budget does not increase income tax or national insurance contributions that working people see on their payslips. Instead, we are balancing the books in a fair way.
That does not always mean decisions are easy—far from it—but it is also right that, before considering any changes to taxes, we make sure everyone pays the tax they owe by closing the tax gap. That is why, as the Chancellor set out yesterday, we will deliver the most ambitious package to close the tax gap that this country has ever seen. Alongside a series of policy changes set out in the Budget documents, by 2029-30 HMRC will have recruited 5,000 additional compliance officers and funded 1,800 additional debt management staff. Together, that will mean £6.5 billion in additional tax revenue to pay for the country’s priorities before we make a single change to a tax rate or threshold.
Beyond the crucial work to close the tax gap, the Budget confirms that we will implement our manifesto promises, including to abolish the non-dom tax loophole, which the OBR says will raise £12.7 billion over the forecast period. We will end the VAT exemption and business rates relief for private schools, which the OBR confirms will raise £1.8 billion a year by 2029-30. As of today, we have increased the stamp duty land tax surcharge on second homes to 5%, helping more than 130,000 people to buy their first home or move home over the next five years, while raising £310 million a year by 2029-30 to support public services.
I know hon. Members have raised questions about some of the other tax changes announced in the Budget, and I am glad to have the opportunity to respond. In particular, I would like to address the changes we have made to inheritance tax, specifically the reforms to agricultural property relief. I realise that people may be concerned about the impact on family farms, so I would like to make clear some of the facts about how the reforms to this relief will work. The main rate of agricultural property relief on all assets was set at 50% until 1992, at which point it was raised to 100% just before the election that year.
Let me be clear: these reforms still provide a very significant level of relief to protect family farms. The Chancellor confirmed yesterday that the first £1 million of combined business and agricultural assets will continue to receive 100% relief in most circumstances. Assets above £1 million will attract a 50% relief, equal to the pre-1992 rate, which means that inheritance tax will be paid at a rate of 20% instead of 40%. Our reforms, in a tough fiscal context, still leave the relief as being far more generous than it has been in the past.
It is important to note that agricultural and business property reliefs are in addition to the nil rate bands and other exemptions, such as the transfers between spouses and civil partners, and the rules on gifts. Indeed, the National Farmers Union director of strategy has highlighted that these other features of the tax system are important. He said just today that APR
“is not the be all and end all for passing on farms on death.”
Indeed, these exemptions mean that if someone has no other assets and is passing it on to a direct descendant, a farm or farming business worth up to £2 million can be passed on without paying any inheritance tax at all. Furthermore, those liable for a charge can in most circumstances pay any liability over 10 annual instalments.
Let me also be clear about the data on agricultural property relief. The total value of a farm should not be confused with the value being passed on at death. Multiple family members can own part of a farm. For example, if an individual jointly owns a farm worth £3 million with their partner, only £1.5 million is in their estate at death. In 2021-22, the most recent year for which data is available, the median value of assets qualifying for APR was £486,000. Three quarters of estates claimed for assets below £1 million, and such estates will continue to pay no inheritance tax at all. Just 463 claims were for agricultural assets of over £1 million, or 27% of all claims. The largest assets, those worth over £2.5 million, related to just 7% of claims for APR. That data is published openly on gov.uk for everyone to see, and I encourage people to investigate it.
It does seem rather odd to introduce a new tax and then to defend it on the basis that very few people will pay it. Why is the Minister so confident that it will yield anything recognisable in terms of a contribution to the public finances? The few landowners who will be caught by this measure will be making other arrangements to ensure that they avoid it, particularly the very large landowners.
I thank the hon. Gentleman for acknowledging that the impact of these changes is limited and targeted. That is an important point. He leads me on to my concluding point, which is to point out that the decision we have taken to retain APR, but to limit its generosity for the top quarter or so of assets, is the right approach to fixing the public finances while also protecting family farms.
I have set out some of the detail of how we are restoring stability and responsibility to the public finances and meeting our first fiscal rule, the stability rule. As the Chancellor set out yesterday, that rule is accompanied by the investment rule, which makes sure that debt is falling as a share of the economy. Debt is measured as net financial debt—a statistic measured by the Office for National Statistics since 2016, and forecast since then by the OBR. It recognises that Government investment can deliver returns for the taxpayer by counting not just liabilities on our balance sheet, but our financial assets too. That new approach provides space to deliver the step change in investment that our country needs, within a strong fiscal framework that puts public finances on a sustainable path.
To drive investment further still, the corporate tax road map, which we published yesterday, commits us to providing the best environment for businesses through a predictable, stable, tax system. It caps the headline rate of corporation tax at 25%—the lowest in the G7. It maintains our world-leading capital allowances system, including permanent full expensing and a £1 million annual investment allowance. It maintains our generous R&D reliefs so that the most innovative companies can invest in the long-term future of our country.
Before I conclude my remarks, let me thank all hon. Members for their contributions today. It is a pleasure still to be hearing maiden speeches so far into this Parliament. I found the speech from my hon. Friend the Member for Worcester (Tom Collins) truly uplifting as he spoke about what he drew from the past of his constituency, the promise of the future and, most importantly, the people who he represents and the inspiration they give him. I thank him for bringing some of that uplifting inspiration to the Chamber.
I thoroughly enjoyed the maiden speech by my hon. Friend the Member for Dagenham and Rainham (Margaret Mullane), and everyone in this Chamber will immediately have felt the connection that she has to her constituency and the people she represents. Having formerly been the Deputy Mayor for Housing in London, I found her emphasis on the history and future of affordable housing particularly close to my heart.
My hon. Friend the Member for Livingston (Gregor Poynton) spoke passionately about his constituency, and perfectly articulated the strength of our Union in the UK, balanced with the strength of our national identities in Scotland, England, Wales and Northern Ireland. I thought he encapsulated that perfectly in his speech, and I will be looking at Hansard to remember his phrasing.
The maiden speech from my hon. Friend the Member for Ribble Valley (Maya Ellis) touched us all as she spoke about her late father, who I am sure would be incredibly proud of what she has achieved. I thank her for sharing that close personal story with us today.
We also heard from the hon. Member for Carshalton and Wallington (Bobby Dean) whose maiden speech I believe I heard last time I was at the Dispatch Box. Was he trying to claim that the change in fiscal rules was his campaign win during his speech? I am pretty sure it was the Chancellor of the Exchequer who came up with the idea, but I thank him for his contribution none the less, and I look forward to seeing him on the Treasury Select Committee.
I also thank my hon. Friend the Member for Leeds Central and Headingley (Alex Sobel) for acknowledging the importance of working with mayors across the country, including the excellent Mayor of West Yorkshire.
Let me briefly address two points made by Opposition Members, including the hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown) who spoke about a pensions review. It is an excellent idea to have a pension review, so I am glad that the Chancellor announced in August a landmark pension review, which is looking at how to boost investment and to increase pension pots. It will set out how billions of pounds of investment could be unlocked from defined contribution pension schemes and how pension pots in such schemes could be boosted by up to £11,000. I hope that the hon. Gentleman will look at that review, and I would welcome discussing it with him in due course.
The hon. Member for North East Fife (Wendy Chamberlain) spoke about the Scotch whisky industry. I understand that it may not have welcomed everything in the Budget, to put it mildly, but I want to be clear that we feel that the overall package on alcohol balances the commercial pressures on the alcohol industry with the need to raise revenue. Of course, 90% of whisky is exported so no duty is due on that. We have also looked to support the Scotch whisky industry by reducing fees for geographical verification—specific support that I hope will help the industry in the years ahead.
Today’s debate has brought to the surface the stark difference between this side of the Chamber and the other. The Conservatives have made it clear, yet again, that they are unable to take responsibility for the state of the country as they left it. In contrast, Labour’s first Budget makes it clear that, above all else, we are taking the difficult and responsible decisions to fix the mess they made. We know there are no shortcuts. We are realistic about that, but our Budget is the one our country needs. It is a Budget to restore economic stability while protecting working people, to fix the foundations and fix the NHS, to invest in the future and to rebuild Britain. I commend it to the House.
Ordered, That the debate be now adjourned.—(Taiwo Owatemi.)
Debate to be resumed on Monday 4 November.