Finance Bill (Fourth sitting)

James Murray Excerpts

Committee stage
Thursday 30th January 2025 Public Bill Committees

Question proposed, That the clause stand part of the Bill.

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

The clause increases the lower and standard rates of landfill tax from 1 April this year. The rates will increase in line with RPI, adjusted to account for the high inflation in the period 2022 to 2024, and were first announced in the spring Budget 2024.

Landfill tax is charged on material disposed of at a landfill site or unauthorised waste site in England and Northern Ireland. The objective of landfill tax is to divert waste away from landfill and support investment in more circular waste management options, such as recycling, composting and recovery. Since 2000, landfill tax has contributed to a 90% decrease in local authority waste to landfill in England. Increasing the lower and standard rates of landfill tax by RPI in recent years has helped to maintain a strong price incentive to divert waste away from landfill.

The changes made by clause 70 would increase the lower rate of landfill tax from £3.30 a tonne to £4.05 a tonne from April 1 this year. They would also increase the standard rate of landfill tax from £103.70 a tonne to £126.15 from April 1. Landfill tax rates are rounded to the nearest 5p. The clause increases the rates of landfill tax in line with RPI adjusted for recent high inflation from April 1 2025, to maintain a strong price incentive to divert waste away from landfill.

[Gareth Davies]

Clause 75 amends the landfill tax rates to increase them in line with RPI, adjusted to account for high inflation between 2022 and 2024. As the Minister knows, when in government, we uprated landfill tax in line with RPI in the 2023 and 2024 Finance Acts. We also reduced the landfill tax gap from £275 million in 2017-18 to £100 million in 2022-23. How will the Government continue those strong efforts to further reduce the gap? I know it particularly exercised the Minister when he was in opposition—he certainly asked me a lot of questions on it. We will not oppose the clause, and I cannot wait to find out the Lib Dem position on it.

[James Murray]

I thank the hon. Gentleman for supporting the clause. I fondly remember the questions I asked him about landfill tax when I was on the other side of this Committee Room, or a similar one on this corridor. I can reassure him that the current Government are considering the options for landfill tax reform, following the call for evidence that was undertaken in 2021. We will announce further steps in due course. The Government are considering options for landfill tax reform including opportunities to design out opportunities to commit waste crime, including landfill tax fraud. We will announce next steps in due course.

Question put and agreed to.

Clause 75 accordingly ordered to stand part of the Bill.

Clause 76

Rate of aggregates levy

Question proposed, That the clause stand part of the Bill.

[James Murray]

The clause increases the rate of aggregates levy from April 1 in line with the RPI as forecast by the Office for Budget Responsibility when the rate was announced at autumn statement 2023. Aggregates levy is charged on the commercial exploitation of virgin aggregate, which includes rock, sand and gravel. The object of aggregates levy is to encourage the use of recycled rather than virgin aggregate in construction. The changes made by clause 76 will increase the aggregates levy from £2.03 per tonne to £2.08 per tonne. The clause increases the rate of aggregates levy in line with RPI from April 1 to ensure that the real-terms value of the price incentive to manage aggregate more sustainably does not fall in future.

[Gareth Davies]

As the Minister said, the clause uprates the aggregates levy in line with inflation. These provisions in this Finance Bill are pretty much identical to those that we put forward in the Finance Act 2024. It is therefore right that we do not oppose them.

Question put and agreed to.

Clause 76 accordingly ordered to stand part of the Bill.

Clause 77

Rate of plastic packaging tax

Question proposed, That the clause stand part of the Bill.

[James Murray]

The clause makes changes to increase the rate of the plastic packaging tax from April 1 in line with the consumer price index. The plastic packaging tax was introduced on 1 April 2022 as part of the previous Government’s resources and waste strategy. The tax provides a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging, thereby stimulating the collection and recycling of plastic waste and diverting it away from landfill or incineration. Increasing the rate of the tax in line with CPI maintains the real-terms value of the price incentive to use recycled plastic.

The changes made by clause 77 will increase the rate of plastic packaging tax, as set out in section 45 of the Finance Act 2021, from £217.85 to £223.69 per tonne, with effect from 1 April 2025. The new rate will affect UK manufacturers and importers of plastic packaging containing less than 30% recycled plastic.

In conclusion, this clause increases the rate of plastic packaging tax in line with CPI from 1 April to maintain the real-terms price incentive to include recycled plastic in plastic packaging. I commend the clause to the Committee.

[Gareth Davies]

As the Minister said, clause 77 uprates the plastic packaging tax in line with inflation. The provisions in this Finance Bill are pretty much identical to those that we put forward in the Finance Act 2024, and we will not be opposing them; but on this particular tax measure, I seem to remember the now Exchequer Secretary to the Treasury questioning me about the possibility of an impact report or assessment, and I just wonder how much progress he is making with that.

[James Murray]

I reassure the hon. Gentleman that the Government are making progress across a whole range of issues every day, and we will update the appropriate authorities in the appropriate way at the relevant time.

Question put and agreed to.

Clause 77 accordingly ordered to stand part of the Bill.

Clause 78

Rates of soft drinks industry levy

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 9—Statements on soft drinks industry levy—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to Parliament about the increase to the soft drinks industry levy introduced in section 78 of this Act.

(2) The statement under subsection (1) must include details of the impact on—

(a) encouraging reformulation of packaged soft drinks, and

(b) the UK soft drinks industry.”

This new clause requires the Chancellor to make a statement about the impact of increasing the soft drinks industry levy.

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[Gareth Davies]

Let me just gather my speech. [Laughter.] Clause 84 makes some of the more technical and minor amendments to various pieces of legislation, so in the interests of good housekeeping if nothing else, His Majesty’s Official Opposition has no point to raise on the matter.

Question put and agreed to.

Clause 84 accordingly ordered to stand part of the Bill.

Clause 85

Interpretation

Question proposed, That the clause stand part of the Bill.

[James Murray]

This highly controversial clause sets out the legal interpretation, in the usual manner, of abbreviations in the legislation.

[Gareth Davies]

Thanks to clause 85, I do not think anything remains to be interpreted, so I will sit down.

Question put and agreed to.

Clause 85 accordingly ordered to stand part of the Bill.

Clause 86

Short title

Question proposed, That the clause stand part of the Bill.

[James Murray]

Clause 86—[Hon. Members: “Hear, hear!”] I thank hon. Members for their wholehearted support for this important clause, which, in the usual manner, sets out the short title of the legislation.

[Gareth Davies]

It will be no surprise that we have nothing to add, but as this is the last time I will speak, let me take this opportunity, before you get too emotional, Ms Vaz, to thank you and Mr Mundell, the Clerks, all the officials who have supported the Ministers and, in particular, on my behalf and that of my office, the Chartered Institute of Taxation and the Association of Taxation Technicians. I put on the record my thanks to Luke Pike in my office, who provided great support throughout the preparation stage, and to all Committee members—including the Lib and the Dem over there and my frenemies across the way.

In particular, I thank the hon. Member for Halesowen, who grabbed me on the way out of the first sitting and told me that this is the best Bill Committee he has ever served on. It is completely irrelevant that this is the first one he has ever served on—tell him it is all downhill from here. I will let my hon. Friend the Member for North West Norfolk take it from here.

Question put and agreed to.

Clause 86 accordingly ordered to stand part of the Bill.

New Clause 1

Rate of vehicle excise duty for haulage vehicles other than showman’s vehicles

“(1) In paragraph 7(3A) of Schedule 1 to VERA 1994 (which specifies the rate of vehicle excise duty applicable to haulage vehicles other than showman’s vehicles), for £350’ substitute ‘£365’.

(2) The amendment made by this section has effect in relation to licences taken out on or after 1 April 2025.”—(James Murray.)

This new clause provides for an increase in the rate of vehicle excise duty applicable to haulage vehicles other than showman’s vehicles.

Brought up, read the First and Second time, and added to the Bill.

New Clause 2

Review of sections 63 and 64

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act and every six months thereafter, review the impact of the measures contained in sections 63 and 64 of this Act.

(2) Each review must consider the impact of the measures on—

(a) Scotch whisky distilleries,

(b) small spirit distilleries,

(c) wine producers and wholesalers,

(d) the hospitality industry, and

(e) those operating in the night-time economy.

(3) Each review must also examine the expected effect of the measures on exports and the domestic wine trade.

(4) A report setting out the findings of each review must be published and laid before both Houses of Parliament.”—(Mr MacDonald.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

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[James Murray]

New clause 10 would make changes to require the Government to conduct a review of business taxes, and make recommendations on how to increase business certainty and investment, before the next Finance Bill is published.

The Government do not support the new clause. The Government keep all taxes, including taxes paid by businesses, under ongoing review. At the autumn Budget, the Government published their corporate tax road map to provide certainty to businesses about the areas of the business tax system they intend to keep stable, and the areas they intend to review over the course of this Parliament.

The Government have also committed to a review of the business rates system. At the autumn Budget, the Government published a discussion paper that set out the Government’s priority areas for reform of the business rates tax system. The Government have therefore already set out areas of the business rates system where they will provide stability. Given our existing processes and recent commitments, I ask the hon. Member to withdraw the new clause.

[James Wild]

That was a disappointing response from the Minister, if not predictable.

[James Murray]

Unpredictable, you mean.

[James Wild]

Sorry—it has been a long afternoon.

We need to provide certainty, and the new clause was intended to be constructive. It would frame the next fiscal event so as to address all the issues that businesses have been talking to us about. There are issues with business confidence, and yesterday we saw more companies laying people off. This is a serious time, and we need the Government to listen to what is happening, so I intend to press the new clause to a Division.

Question put, That the clause be read a Second time.

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[James Wild]

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

As we know, households currently face a number of challenges, and the measures in the Bill and the Budget will serve only to exacerbate them. At the time of the Budget, the OBR confirmed that real household disposal income will be

“1¼ per cent lower by the start of 2029. The bulk of this difference (around 85 per cent) is explained by policies announced in this Budget.”

It is because of the measures in the Bill and the Budget that growth is forecast to be lower over the forecast period than predicted in March last year. Higher borrowing means that interest rates are forecast to be higher for longer, which means that mortgage rates will be higher for longer. Borrowing costs have hit a 27-year high under this Chancellor—hardly the stability that is her watchword. The Government inherited inflation at target; since then inflation has increased, which means less money in people’s pockets. All those effects will be felt by the working families the Government said were their priority at the general election.

As we discussed in Committee of the whole House, the Bill’s education tax will hit people who have chosen to prioritise providing for their children’s education in the place that they consider best suits their child’s needs. The Conservatives are for 100% of children, and we back parents’ freedom to choose; the Labour party is adopting a self-defeating ideological approach to our education system, including academies, that seeks to divide. The education tax will hit 100,000 children with special needs who are in independent schools but without education, health and care plans. We have already seen children withdrawn from schools and schools closing as a result.

Measures such as increased alcohol duty, air passenger duty and vehicle duty will impact household finances directly, and borrowing costs have risen, meaning hard-working families will have to pay the costs—[Interruption.] Excuse me, my voice is going. Any impact that changes in the Bill will have on households should be closely monitored, which is what the new clause seeks to achieve.

[James Murray]

As the shadow Minister set out, the new clause would require the Government to report on the likely impact of the tax measures on households across the income distribution. The Government already published that information alongside the autumn Budget in the “Impact on households” report, which illustrated the distributional impact of Government measures that have a direct impact on household incomes. Those measures come from welfare benefits, tax paid or benefits in kind received through public services by UK residents.

The analysis shows that the Government decisions at the autumn Budget 2024 and spending review 2025 phase 1 are progressive. Increases to public service spending means that households are, on average, better off in 2025-26 as a result of those decisions. The impacts of Government decisions benefit households in the lowest-income deciles the most, on average, as a percentage of income in 2025-26. The increases in tax are concentrated on the highest-income households. Overall, on average, all but the richest 10% of households will benefit from policy decisions in 2025-26.

Since the assessment of the impact of the Budget on households across the income distribution has already been published, I ask the shadow Minister to withdraw the new clause.

[James Wild]

In the light of my failing voice I will not move the next new clause, so this will be the last time I will speak in the Committee. I thank you, Ms Vaz, and Mr Mundell, the Clerks and other officials, as well as Committee members. I also echo the thanks for the Chartered Institute of Taxation and others, and I thank Billy Falcon in my office, who has done sterling work in supporting me. I am grateful to the Minister for his comments. I am sure the rest of the Committee will be delighted that I beg to ask leave to withdraw the clause.

Clause, by leave withdrawn.

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[James Murray]

On a point of order, Ms Vaz. I thank you and Mr Mundell for chairing for the Committee. I thank all the Clerks and officials who have looked after us so well this week, and officials in the Treasury who have helped me to prepare for the Bill. I also thank all hon. Members present—both my hon. Friends and Opposition Members.

On a personal level, I have particularly enjoyed interacting with the lead Opposition spokesperson, the hon. Member for Grantham and Bourne, with our roles having been switched following events last July. Despite our political differences, he is someone with whom I enjoy debating important matters relating to Finance Bills. I thank all Members for their time, and I look forward to seeing them on Report.

[The Chair]

I add my thanks to all the Clerks who have supported me in this role. I also say to Mr MacDonald that you have done exceptionally well as a new Member on a new Committee. Take this as a good learning exercise—we learn every day.

Bill, as amended, accordingly to be reported.