Carbon Border Adjustment Mechanism: October 2026 Update
James Murray Excerpts(1 day, 19 hours ago)
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The Financial Secretary to the Treasury and Paymaster General (James Murray)
The Government are introducing a carbon border adjustment mechanism from 1 January 2027. It will ensure that highly traded, carbon-intensive goods imported into the UK face a carbon price comparable to the price that would be paid were the goods produced in the UK.
Following Royal Assent of the Finance Act 2026, which provides the legislative framework for the UK CBAM, the Government laid the Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (SI 2026-809) and the Carbon Border Adjustment Mechanism (Emissions and Verification) Regulations 2026 (SI 2026-995). The regulations set out the rules for technical components of the policy.
Today, the Government are publishing information on two key components used to calculate liabilities for CBAM: (i) the CBAM rate and (ii) default emissions values. This will help importers, businesses and international partners understand and prepare for their future CBAM liabilities.
We are today publishing illustrative CBAM rates for the first quarter of 2027, for each sector, as well as a worked example—all based on existing legislation. This is illustrative guidance only and is based on preliminary data. It will give businesses an initial indication of potential CBAM costs. It does not generate a tax liability. The official rates for the first quarter of 2027 will be published before the end of the calendar year. Following this, the official rates will be set and published on gov.uk by the Government at the beginning of each quarter.
We have also published default emissions values. These are the default emissions values that will apply to CBAM from January 2027. Default emissions values—expressed in tonnes of CO2e per good—provide UK importers of CBAM goods with a Government-defined default for the emissions in their imported CBAM goods, and can be used where the actual emissions cannot be determined by the UK importer. They are vital to ensure liable persons can comply with the UK CBAM, even where actual reported emissions data is not available. The Government guiding principle in setting default values is to ensure that there is no advantage to liable persons in using default values rather than determining the actual embodied emissions of imported CBAM goods, as set out in schedule 17, part 4, to the Finance Act 2026.
As confirmed in a statement to Parliament in July, the UK CBAM will use single product-level default values, calculated on a trade-weighted average basis. Data from the EU is excluded. This helps to ensure the values better reflect the emissions embodied in goods for which the default values are most likely to be used, as well as recognising the commitment expressed by the UK and EU to link their emissions trading schemes which will result in EU-origin goods being exempt from UK CBAM.
A markup on default values helps to balance supporting the objectives of the CBAM and facilitating a transition to actual emissions reporting. On that basis, a markup of 10% has been applied in all sectors, except fertiliser where no markup is applied.
The default values published today will be in place for 2027 and 2028. The Government also commit today to introducing country-specific default values from 2029. This is in line with the Government previous commitment to move to an alternative approach when feasible. The appropriate level of markup will also be reviewed at this time.
Further information is available at: https://www.gov.uk/money/carbon-border-adjustment-mechanism.
HMRC will continue to publish guidance and engage with businesses ahead of the UK CBAM’s introduction on 1 January 2027.
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Inheritance Tax
James Murray Excerpts(3 days, 19 hours ago)
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The Financial Secretary to the Treasury and Paymaster General (James Murray)
I thank the shadow Chancellor for delivering a speech for which it was, this time, much clearer when it had ended.
The Opposition motion invites us to speculate on the contents of the Budget. As right hon. and hon. Members will be used to me and my colleagues saying, the Government do not comment on speculation and the Chancellor will deliver his Budget in this House on 28 October. However, I am free to share with the House some of the context in which the Chancellor will take his decisions.
The Budget comes amid unprecedented economic shocks, with conflicts in both the middle east and Europe hitting people here and around the world. However, we are not powerless. That is why we are giving families and businesses breathing space where we can and starting to make the big, long-term changes needed to create good jobs and growth in every postcode. Everything we do at this Budget will be built on fiscal stability. Our fiscal responsibility has been underlined by the IMF this week, and as it made clear, our country is forecast to have the lowest borrowing—that is to say, the smallest deficit—in the G7 from 2029. Our country is demonstrating strong resilience in the face of global challenges, with the joint second-fastest growing economy in the G7 this year.
To deliver good growth in every postcode and to provide breathing space for families and businesses, we must continue to take responsible choices. That is why, as the Prime Minister and the Chancellor have made clear, fiscal discipline will underwrite every promise this Government make to the British people. We will meet our fiscal rules at the Budget later this month with a buffer against uncertainty. We will control borrowing so that we can bring inflation down and reduce long-term pressures on our public finances. That is the right thing to do, because there is nothing progressive about a Government spending £1 in every £10 on debt interest, rather than on the priorities of working people.
This Government inherited public finances that were in a mess and public services that were in crisis. Since the general election, we have put the NHS back on its feet, with the waiting list down by more than 250,000 since the Government came to power. Last year we delivered the highest number of affordable homes in a decade. We are lifting over half a million children out of poverty by scrapping the two-child limit and expanding free school meals. We are investing in Britain’s future, with an additional £120 billion of capital investment across this Parliament, and in Britain’s roads, rail, energy and other infrastructure that is so important to driving growth. Through reforms to how our country works, from planning to pensions and skills, we have helped to create the conditions for private investment to rise by almost 5% since the general election.
We have always been prepared to take the responsible choices to fix the foundations of our economy, repair our broken public services and deliver the investment needed to support growth. That includes driving down waste and driving up efficiency in the public sector, with a 16% reduction in departmental admin budgets by the end of the spending review period. We are reprioritising spending so that taxpayers’ money is spent on their priorities, cancelling digital ID in order to remove VAT from household electricity bills, reprioritising Ministry of Housing, Communities and Local Government spending to help tackle homelessness and bringing the national bus cap down to £2 for 2027, funded by savings from the Department for Energy Security and Net Zero. We are reforming the welfare system through the Milburn and Timms reviews, while tackling welfare fraud and error to save over £14 billion by the end of 2030-31, and we have taken decisions on tax to ensure that we meet our fiscal rules of living within our means.
Our decisions on tax reflect our commitment to sound public finances. We want to make sure that those with broader shoulders make a fair contribution. Although very few people, if any, want to pay more tax, we recognise that only a small proportion of the largest estates pay inheritance tax, and it makes an important contribution to the public finances.
Inheritance tax is forecast to raise almost £15 billion in 2030-31 to help deliver public services, and it is currently payable on around one in 20 estates. Our reforms to agricultural property relief and business property relief, introduced in April of this year, are expected to raise around £300 million per year, while offering substantial protection for family farms and businesses. Through a 100%—
Alicia Kearns (Rutland and Stamford) (Con)
I thank the right hon. Gentleman for giving way on this point. He focuses on how much he believes this tax will raise, but what does the impact assessment say about how many businesses will close as a result of this tax?
James Murray
The impact assessment, or tax information note, is published alongside the publication of the policy at the Budget.
I want to just make the point that to protect family farms and family businesses, the threshold for the 100% relief goes up to £2.5 million per person, and above that there is a 50% rate, which means an effective inheritance tax rate of up to 20% above that. Furthermore, the repayments can be spread over up to 10 years interest free, so there are substantial protections in place for family farms and family businesses. That 100% relief on the first £2.5 million of qualifying agricultural and business assets means that a couple can pass on up to £5 million of qualifying agricultural and business assets free of inheritance tax between them, in addition to the existing allowances such as the nil rate band. These protections will support family farms as we work with farmers to build a sector that is productive, profitable and resilient for the future.
Kit Malthouse
There seems to be a disconnect in the Labour party’s understanding of the situation. Does the Minister not appreciate that the capital value of an enterprise, whether it be a farm or a business, does not necessarily equate to the revenue that it generates? Many family farms and businesses are what they would call lifestyle businesses, where people are happy to sit on what may appear to be a large capital value that yields only a very small revenue amount that will not support the taxes he is trying to levy, and at the same time only just supports a lifestyle that people are willing to tolerate. It is this imbalance that is causing so much anguish.
James Murray
I thank the right hon. Gentleman for his question, but the fact that we have a threshold of £2.5 million of qualifying assets over which the 100% relief applies, and that the 50% relief applies in an uncapped manner above that level, means that we are protecting our small family businesses and family farms while making sure that there is a contribution towards the public finances.
Kit Malthouse
Let us say that a farm is worth £3 million, ostensibly on land value. That farm might be yielding a net income to a farmer of only £30,000 to £50,000 a year, on which they are surviving. They are willing to live that way because they love living on the farm, it has been in their family for many generations and they feel a sense of stewardship and custodianship, but that revenue is not enough for them to live on and then sustain the tax that the Minister wants to levy.
James Murray
Without commenting on individual tax affairs, even if hypothetical, if a farm were worth £3 million, the £2.5 million allowance for the 100% relief would cover a substantial portion of that. That is in addition to the existing nil rate bands and can be transferred between spouses. If that hypothetical farm were passed on via a couple to their descendants, £5 million would be covered.
I want to emphasise that our work as a Government with farmers—who feed the nation, sustain rural communities and help to manage the land that shapes our countryside—ranges from immediate support, including the £65 million emergency package that we announced to help them cope with this summer’s drought, to opening new markets for British produce through trade deals and export opportunities.
Wendy Morton
The Minister appears to give the impression that he knows about the farming industry, but how often, if ever, does he actually go out on to a family farm and meet the farmers?
James Murray
As the right hon. Lady will know, I have been in a position in the Treasury previously in this Government, and I have had a large number of conversations with people affected by, and worried about, this tax policy. The tax policy introduced in April this year has a £2.5 million threshold for the 100% relief, and we are confident that that balances raising revenue for the public finances with giving the right protection to family farms, which we think is so important.
Dr Andrew Murrison (South West Wiltshire) (Con)
I am grateful to the Minister; he is being very generous. If he was a farmer with a relatively small farm—probably pretty marginal at, say, 300 acres and worth about £3 million—would he consider improving his farm and investing in capital to upgrade it, with the expensive kit now necessary to produce any sort of return on the land these days, or would he think, particularly if he was getting on in years, that that money would simply be top-sliced by the Treasury?
James Murray
Much like his right hon. Friend the Member for North West Hampshire (Kit Malthouse), the right hon. Gentleman refers to a £3 million farm. Again, that makes me confident that the threshold of £2.5 million for the 100% relief would cover a large proportion of those assets. As I said, that £2.5 million of qualifying assets means that a couple can pass on up to £5 million of qualifying assets, and that is in addition to the other existing nil rate bands. It is a similar point that his right hon. Friend made. The fact is that a £3 million farm would be covered by much of the relief and the nil rate bands.
Our responsible approach to the public finances stands in stark contrast to the approach taken by the Conservatives. In government, they crashed the economy while the shadow Chancellor was in the Treasury, and they left us with billions of pounds of unfunded spending commitments. In opposition, they are showing that they have learned nothing from their general election defeat. They claim their changes to inheritance tax would cost £6 billion and that they know how they would pay for them, but when they say they would make savings to welfare and asylum, no one can believe a word they say when everyone knows the cost of both soared when they were in power. What is more, independent analysis by tax expert Dan Neidle suggests that the true cost of their changes would reach £10.8 billion a year once behavioural effects are taken into account. That is almost double the number the shadow Chancellor has been bandying around.
Let’s face it: with the Conservatives’ policies costing double what they say and their so-called savings failing to materialise, they would either push up borrowing or do what Tories do best: make cuts to schools, prison places and our NHS. Let’s be clear: this policy would fail to help ordinary families across the country. That independent analysis has shown that 90% of the benefit would go to the wealthiest 20% of pensioner households; 40% would go to the wealthiest 5%; and 70% of the benefits would go to households in London and the south-east.
The Conservatives’ policy stands in contrast to the fair decisions that this Government will always take. My right hon. Friend the Chancellor will of course set out any future tax measures in the Budget in two weeks’ time. But let me remind the House of the decisions this Government have already taken to provide breathing space to families and businesses. For families rightly concerned about the cost of energy, we have removed VAT from electricity bills, taking around £45 off the price cap, and that is on top of the £150 removed from bills at the last Budget. For those paying business rates, the Government have introduced a support package worth £4.3 billion, with a further announcement in July taking an extra 20% off bills for pubs, social clubs and live music venues.
These are some of our choices to help families and businesses across the country. Rather than helping ordinary families struggling with the cost of living, the Tories instead are prioritising some of those with the greatest wealth. In a world of difficult choices, they are choosing to direct billions of pounds towards some of those with the largest assets, while everyone else is asked to pick up the bill.
Chris Vince
I thank the Minister for giving way; he is always generous with his time. Does the motion not just show that the Conservatives have the wrong priorities? Removing inheritance tax for families when the threshold is £1 million will make no difference to families in my constituency of Harlow. Less than one in 20 families pay inheritance tax. Is it not the right thing to do to tackle the cost of living crisis in the way that he is talking about?
James Murray
My hon. Friend makes an important point about politics being about choices and priorities. Indeed, in a world of difficult choices, the Conservatives choose to direct billions of pounds towards some of those with the largest estates, while everyone else is being asked to pick up the bill.
Robbie Moore (Keighley and Ilkley) (Con)
I worry that this Labour Government are living in some sort of parallel universe. I met one of my manufacturing businesses in Keighley recently, which employs nearly 250 people. It has already worked out that its business property relief liability over and above the £2.5 million threshold is about £1 million. The advice it received is either to sell plant or machinery to mitigate that liability imposed on it by this Government, or to sell shares in its business. Either way, people are losing control of their business, or losing productivity from having to sell plant or machinery, and that is the result of a choice that has been made by this Labour Government. How can the Minister sit there and describe those as fair choices to the bosses of that business, when up to 250 people are now likely to be exposed to the risk of losing their jobs in my constituency?
James Murray
Without commenting on the circumstances of an individual taxpayer, the fact that we have a threshold of £2.5 million before any inheritance tax is due on relevant agricultural or business property assets provides substantial protection for people from those charges. As I said earlier, there is a 50% relief which is uncapped above that level, and payment is allowed over 10 years interest-free. The balance we are striking in the policy that was introduced in April provides protection for family farms and small businesses while ensuring a contribution to the public finances, underscoring our fiscal responsibility, which is so important for better public services and a stable economy.
Joe Robertson (Isle of Wight East) (Con)
The Minister is doing so much to protect and help farmers, so is he mystified that they are not queuing up to thank him?
James Murray
I was going to say that I thank the hon. Gentleman for his question, but I am not sure it was meant in that tone. Being in government is about taking the right decisions for the future of the country, and I know that when taking decisions in the Treasury, the most important thing to start with is to ensure that fiscal stability and responsibility are the bedrock of all our decisions. If we look at the decisions that we as a Government have taken, and at the commitment of the Chancellor and Prime Minister, no one can be in any doubt that we will never return to the recklessness of the hon. Gentleman’s party in government.
Labour Members know that to provide breathing space for families and businesses, and to fix our economy and country for the long term, fiscal discipline must underwrite every promise we make. That is why we will continue to meet our fiscal rules, with a buffer against uncertainty. We will support good growth in every postcode by getting power out of Westminster, and we will drive investment to boost innovation and create jobs. That is how we will bring back hope across Britain, not through the fantasy economics and unfunded spending commitments of the Conservative party but with a plan to unlock potential in every part of our country, so that wherever someone lives, they and their local community can thrive. I oppose the Opposition motion.
Madam Deputy Speaker (Caroline Nokes)
I call the Liberal Democrat spokesperson.
The Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026
James Murray Excerpts(5 days, 19 hours ago)
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The Financial Secretary to the Treasury and Paymaster General (James Murray)
I beg to move,
That the Committee has considered the Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (S.I., 2026, No. 809).
Should I speak now, Mr Stringer? I have not done a statutory instrument in a few months, so I am just recalibrating.
James Murray
Thank you for the quick explainer, Mr Stringer. It is a pleasure to serve on this Committee and to see you in the Chair.
The regulations form an important part of the legislative framework for the UK’s carbon border adjustment mechanism. The core framework for CBAM has already been set out in the Finance Act 2026, but the regulations provide further detail on two important aspects of its operation. Mainly, they establish how and under what circumstances liable persons can claim relief for charges paid under overseas carbon pricing schemes; they also provide additional clarity on how the CBAM rate should be calculated in practice.
CBAM is a new environmental tax that will apply from 1 January 2027. It will apply to specified goods in five highly traded carbon-intensive sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel. The reason for introducing CBAM is clear: to support the UK to decarbonise, domestic producers face carbon costs that encourage investment in cleaner and more efficient production. Without CBAM, there is a risk that production and associated emissions will simply move overseas to jurisdictions with lower carbon costs, leading to what is known as carbon leakage rather than to a true reduction in global carbon emissions.
CBAM is designed to address the risk of carbon leakage by ensuring that imported goods face a carbon price comparable to what manufacturers would pay were they producing the same goods in the UK. In doing so, it supports our decarbonisation objectives and gives UK producers the legislative support that they have called for to bolster their confidence in investing in the transition to net zero.
The regulations put this idea into practice by creating a mechanism that ties the CBAM rate to domestic carbon prices. They set out that the CBAM rate is to be calculated by taking the quarterly mean average of the UK emissions trading scheme auction price, and how the free allocation adjustment is to be applied to reflect the upcoming phase-out of free allowances to domestic industry.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
Can the Minister explain why the Government are proceeding with the removal of free allowances when there is no contingency plan if the UK’s CBAM fails to prevent carbon leakage?
James Murray
The mechanism of removing free allowances is part of the transition to the new system. Under the new system, the CBAM price will ensure that those industries within the UK that are investing in decarbonisation are not disadvantaged by industries moving overseas. If the industries move overseas to areas that have a higher carbon intensity, they could be at an advantage relative to the industries here in the UK. It is about levelling the playing field for businesses operating in the UK.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
The Minister mentioned that fertiliser will be affected by the CBAM. Farmers are rightly concerned about how this will impact them. Some farming organisations have indicated that this might increase the price of fertiliser by up to £70 a tonne, which will obviously have a big impact on the price of food. When will the rate for fertiliser be set, and when will it be announced?
James Murray
Although fertiliser production is emissions-intensive, the effective carbon price paid by UK-based fertiliser manufacturers has been extremely low because of the allocation of free allowances to that sector. As a result, we expect initial liabilities to be very modest for imported fertilisers. To support transparency and to help businesses to prepare, the Government will publish illustrative CBAM rates very shortly, which will provide a clear indication of the likely scale of the charge that may apply to fertiliser imports when the CBAM comes into force.
I should emphasise that CBAM is not a protectionist measure, nor is it designed to raise revenue. Its purpose is to ensure that imported goods face carbon costs comparable to those that our domestic industry faces, as I set out in response to my hon. Friend the Member for Middlesbrough South and East Cleveland. It is therefore only right that, where the emissions embodied in an imported good have already been subject to qualifying a carbon price overseas, those costs are recognised and relief is made available. Importers of goods produced under schemes that align with the criteria, such as the EU emissions trading scheme or the Canadian federal output-based pricing system, should not pay twice for the same emissions. Those are just two examples; a list of all the national schemes that the Treasury recognises as qualifying carbon pricing schemes has been published on gov.uk.
The regulations establish the framework for claiming this relief. They define the characteristics of a qualifying carbon pricing scheme, set out how an effective carbon price should be determined and specify the evidence and independent verification required to support a claim for carbon price relief.
The Government remain committed to a full consultation throughout the development of CBAM, and that has included a technical consultation of the regulations before the Committee today. A small number of technical and clarificatory changes were made following that consultation, as is set out in paragraph 7.3 of the explanatory memorandum. Those changes improved the operation and clarity of the regulations without altering the policy intent. Engagement has not been limited to formal consultation. The Treasury and HM Revenue and Customs continue to work with domestic businesses, trade bodies, verifiers, international partners and other interested stakeholders and remain committed to ongoing engagement as CBAM comes into force on 1 January 2027 and beyond.
In summary, the regulations implement important aspects of the CBAM framework already approved by Parliament in the Finance Act 2026. They provide clarity on carbon price relief, including when it is available and how importers can calculate it, and they give transparency on how the CBAM rate will be calculated. In doing so, the regulations support the effective introduction of CBAM from 1 January. They help to protect against carbon leakage and they give businesses greater certainty about how the new tax will operate. I commend them to the Committee.
James Murray
I thank all Members for their contributions. As I set out in my opening remarks, the regulations before the Committee give effect to important elements of the CBAM framework, which has already been established by Parliament under the Finance Act 2026. Ultimately, CBAM is about ensuring that the UK’s decarbonisation efforts lead to a real reduction in global emissions. The regulations help to achieve that objective by ensuring that imported goods face a carbon price comparable to that of goods produced in the UK. The regulations support a fair, proportionate and effective CBAM to protect against carbon leakage, and to give industry the confidence to invest in the transition to net zero.
I am grateful to hon. Members for their contributions and will try to address some of their points. As I say, without CBAM the risk is that production and associated emissions will simply move overseas to jurisdictions with lower carbon costs. That carbon leakage, as it is referred to, would be the impact of not having a CBAM, rather than a true reduction in global carbon emissions.
A number of points have been made about the impact on businesses, about the timing of the introduction of the measures and about when the various values will be put in the public domain. I assure the Committee that we have considered carefully how best to support businesses’ preparations for CBAM. We have had to balance the benefits of publishing information at the earliest possible opportunity against the importance of ensuring that the figures published are sufficiently representative to be genuinely useful. For that reason, we have chosen to wait for the latest available data through the UK ETS baseline data reporting exercise, which will provide a robust illustration of future CBAM liabilities. As I say, we will publish that information very shortly.
John Lamont
The Minister will be aware of the comments of Paul Tompkins, the NFU deputy president, who has highlighted that adding a CBAM to fertiliser will add significantly to the costs and growing pressures that farm businesses already face. What discussions has the Minister had with the National Farmers’ Union about the issue and specifically about a date when farmers will find out the rate that is to be applied?
James Murray
As I said earlier, that happens not only through the formal consultation, but through regular engagement with all sorts of industries affected by the introduction of the CBAM. We want to ensure that we develop the detail of the policy in the best possible way, particularly in relation to fertiliser. I understand that the hon. Gentleman raised that issue, as did a number of others.
A few hon. Members mentioned a figure of £70 per tonne of emissions in fertiliser. I do not recognise that figure at all. I confirm to the Committee that, as I have said, although fertiliser production is emissions-intensive, the effect of the carbon price paid by UK-based fertiliser manufacturers has been extremely low because of the allocation of free allowances to the sector. As a result, we expect initial liabilities to be very modest for imported fertilisers. I will publish illustrative rates very shortly.
Other hon. Members questioned the impact on businesses of the administrative burden of implementing the CBAM. I reassure the Committee that only those that import £50,000-worth or more of CBAM goods in a 12-month period will need to register for the UK CBAM. HMRC estimates that more than 80% of otherwise affected importers will be excluded from the CBAM altogether and that more than 99% of imported emissions will be covered. We believe that that gets the balance right between covering the relevant imports and minimising the administrative burden to those who could be affected.
Edward Argar (Melton and Syston) (Con)
I draw the attention of the Financial Secretary to paragraph 9.3 of the explanatory memorandum:
“There will be one-off costs to businesses to familiarise themselves with the requirements, train staff and set up new systems. There will also be a one-off cost associated with the time taken to register for CBAM where required. In addition, there will be ongoing costs to businesses to collate and report to HMRC information about the CBAM goods they have imported”.
What sort of quantum will those costs come out at? What assessment has the Financial Secretary made of what those costs will be for a business?
James Murray
I am happy to write to the right hon. Gentleman with any further information that might be available, in addition to what he referred to. However, the wider point, as I said in my opening remarks, is that this is about ensuring we address the risk of production with associated emissions simply moving overseas to jurisdictions with lower costs. The CBAM ensures that we prevent such carbon leakage, so the impact of the policy is to have a genuine reduction in carbon emissions rather than simply moving production overseas. That is the driving principle behind the regulations, the framework in its totality, and the details that we are debating. I thank all right hon. and hon. Members for their contributions and commend the regulations to the Committee.
Question put.
Oral Answers to Questions
James Murray Excerpts(1 month, 1 week ago)
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Will Stone (Swindon North) (Lab)
The Financial Secretary to the Treasury and Paymaster General (James Murray)
We love our pubs, so to support them the Prime Minister announced in his first week after taking office a 20% cut in business rates for them, as well as for social clubs and live music venues, from April 2027. That is building on the 15% reduction earlier this year. I and other Ministers have regular discussions with representatives from the pubs and hospitality sector to understand the impact of business rates support.
Claire Hazelgrove
My first job was as a pot washer and waitress in a pub at the age of 14. Today, pubs help me to bring fellow residents together for my pub politics events across the constituency. I know how much our pubs mean to us locally, and I warmly welcome further support for them. Will the Minister set out how that support will help to give pubs and the wider sector the certainty they need so that they and the great jobs they provide are here for generations to come?
James Murray
I know my hon. Friend is a great champion of pubs in her constituency. In fact, she has brought together people for her pub politics events, including at the Willy Wicket, the Beaufort Arms, the Baileys Court Inn—which I have been to—and the White Lion, where people come to talk about issues that matter to them. The support we are providing for pubs will be worth nearly £250 million next year. That will benefit around 32,000 venues, which helps to ensure that they and the jobs they provide will be there for the future.
Peter Swallow
I recently stopped by the wonderful Koh-I-Noor Indian restaurant in Priestwood to meet its owner, Kamran, and to speak about the realities of running a family-owned restaurant. He told me how rising costs were making it challenging for him to invest and grow his business. I genuinely welcome the Chancellor’s action on cutting business rates for pubs and music venues ahead of the Budget, but will the Minister look at what more he can do to support the hospitality and retail businesses at the heart of our local communities?
James Murray
I thank my hon. Friend for highlighting the contribution that businesses such as Koh-I-Noor provide to local communities and economies. As he set out, the Government are helping pubs right now, because of the important community assets that they are and the real pressures that they face. I assure him that we will continue to look at what more we can do to support high street businesses more widely to help them to invest and grow.
Gill German
Like our new Prime Minister, many of us on the north Wales coast love the pubs and music venues of the north-west. The boost to them from business rates relief is really welcome, but we love our pubs and venues too. Pubs such as the Bay Hop and the Mayquay face the same challenges as our north-west neighbours, and we want to attract more live music to north Wales too. Decisions on business rates in Wales are of course the responsibility of the Welsh Government, but does the Minister agree that the need for support does not stop at the border, and that a 20% cut to business rates in Wales would be a welcome boost for us too?
James Murray
I very much agree with my hon. Friend about the vital role that pubs and clubs play in local communities on either side of the border. As she rightly points out, business rates decisions in Wales are a decision for the Welsh Government. In England, we have taken action to support community venues and high streets, including the targeted business rates support for pubs. I urge the Welsh Government to consider doing the same.
Will Stone
Pubs across Swindon, such as Arkell’s, contacted me regularly about the reduction in business rates, so I thank the Minister for that. However, can he outline whether there will be any further business rates reductions for the wider hospitality sector?
James Murray
My hon. Friend is a great champion for pubs and other hospitality venues in his constituency, including Arkell’s brewery, which I know supplies pubs across Swindon and Wiltshire. As he rightly points out, we have provided support for pubs and community venues, which the Prime Minister announced soon after taking office. We will consider all options for what we can do to further support them in the Budget.
Nigel Huddleston (Droitwich and Evesham) (Con)
That is some brass neck, Mr Speaker. I am astounded that the Minister can stand at the Dispatch Box and expect credit and gratitude for giving a little bit of support to a sector that his own policies have undermined and destroyed—two pubs a day closing down, and 100,000 jobs lost in hospitality and tourism. Will he instead adopt the Conservative policy of 100% business rates relief and actually support these sectors, rather than giving hypocritical warm words?
James Murray
The hon. Gentleman has some cheek, given the number of pubs that closed when his party was in government. The Labour party is making sure that the business rates system is set right for the future. Not only have we announced a 20% cut in business rates for pubs as a result of the new Prime Minister taking office, but I was pleased to announce a review of the way in which pubs and hotels are valued for the future, following concerns raised by the sector. That review will report in time for decisions taken on the basis of it to be in place for the next revaluation.
Mr Joshua Reynolds (Maidenhead) (LD)
Pubs, cafés and restaurants are among the largest employers of young people across the country, but the sector has seen 100,000 job losses as a result of the Government’s jobs tax. Business rates relief might have some impact, but the hospitality sector is telling us that what it needs is a cut in VAT to really help people get back into hospitality venues. Have the Government looked at what a cut in VAT would be able to do for both growth and new jobs?
James Murray
The hon. Gentleman is right to point out the important role that pubs and hospitality play in providing jobs, including jobs for young people. However, I gently say to him that one of the issues with the Lib Dems is that they welcome extra investment in our NHS and public services, but they never want to pay for it. When it comes to hard decisions on the economy, all they offer is soft politics.
Wera Hobhouse (Bath) (LD)
The 20% rate cut for music venues and pubs is of course very welcome, but what my high street in Bath really needs is an overhaul of the business rates system, which the Labour Government promised. Rather than accuse us of not having ideas, will the Minister do the bold thing, which is to get rid of business rates and replace them with a commercial landowner levy?
James Murray
As the Prime Minister made clear when he took office, we are giving pubs and community venues real breathing space through the 20% cut to their business rates, but our reform of business rates and our support for the high street does not end there. We are considering every possible opportunity to support retail, hospitality and leisure businesses on the high street, so that high streets in all our communities across the country can thrive.
Mr Tom Morrison (Cheadle) (LD)
I recently visited the Station House in Cheadle Hulme, one of the Almond family’s five pubs in Stockport, and spoke to the owner, Doug, about how hard it was for him to run his business. Like many pub owners across the country, the Almonds welcome the 20% cut in business rates, but they are contending with a system that penalises hospitality. The Minister dodged the question from my hon. Friend the Member for Bath (Wera Hobhouse), so may I ask him to commit himself now? Will the Government overhaul the business rates system so that community pubs such as the Station House can help our high streets to thrive?
James Murray
I thank the hon. Gentleman for talking about the Station House in his constituency; I am sure we all have pubs in our own neighbourhoods that we feel are at the heart of the local communities that we represent.
The 20% business rates cut that we announced was a down payment on further reform. We will continue to look into what we can do to support pubs, hospitality and other high street uses, because we know how much they matter to everyone in this Chamber and all the people whom we represent.
Daisy Cooper (St Albans) (LD)
As the Member of Parliament for the constituency with more pubs per square mile than anywhere else in Britain, I have been campaigning to reform the broken business rates system for longer than I have been an MP. My understanding is that the Government’s review will look at the fair maintainable trade criterion, which sees pubs singled out to be valued on the basis of what they could earn rather than what they actually earn; but, as pointed out by my hon. Friends the Members for Bath (Wera Hobhouse) and for Cheadle (Mr Morrison), the review falls far short of the Labour party manifesto, which pledged to overhaul the entire business rates system. May I ask Ministers whether that pledge still stands? If so, will they overhaul the business rates system before the next general election?
James Murray
I wonder whether any other Members might say that they have the most pubs in their constituency, or whether the hon. Lady has done her research. [Interruption.] I hear her saying that hers are the best pubs, a claim that even more Members may challenge in the Chamber.
Although the hon. Lady and I have some differences, I think that we share a desire to see a fairer business rates system. I know that the 20% cut for pubs and community venues was widely welcomed, and the Prime Minister and the Chancellor have made it clear that we want to go on looking at what we can do to support our hospitality venues, pubs and other high street uses. This is not a question of taking one policy announcement from July and thinking that that is the end of the story, because we know how important high streets are to communities across the country, and we want to see them thrive.
Mr Connor Rand (Altrincham and Sale West) (Lab)
Greg Smith (Mid Buckinghamshire) (Con)
The Financial Secretary to the Treasury and Paymaster General (James Murray)
As part of the £600 million package the Government announced in May, there will be no rise in fuel duty this year. This means that the temporary 5p cut will be extended till the end of the year, providing certainty to motorists. In total, the decisions taken since the 2024 general election to freeze fuel duty save motorists 11p per litre, or £120 per year for the average car, compared with the plans inherited from the previous Government.
Christine Jardine
I appreciate what the Minister has said about the fuel duty freeze, but the Liberal Democrats have called for an emergency cut of 10p per litre, which would make a difference of 12 per litre at the pump for ordinary families. For my hard-pressed constituents in Edinburgh West this winter, that could make a big difference not only to their travel costs, but to the cost of food and other services. Will the Government consider that emergency cut in the forthcoming Budget?
James Murray
I agree with the hon. Lady about the importance of providing breathing space for families, which is a priority for us as a Government, and she mentioned her plans. I have set out what we have done since the general election to reduce fuel prices by 11p per litre compared with what they would have been otherwise. As I set out in my earlier remarks, the 5p cut has been extended to the end of the year, and as she would expect, any future decisions will be taken at the Budget by the Chancellor.
Greg Smith
I cannot believe the Minister just said he wanted to give families breathing space when the RAC Foundation has found that, since fuel prices increased due to international issues earlier this year, the Treasury has raked in £1 billion extra from the VAT on fuel. How can it possibly be fair on motorists or give them any breathing space whatsoever to carry on with another fuel duty hike in January?
James Murray
The hon. Gentleman is right to point to the fact that international events have an impact on prices here at home. We did not want to get involved in that conflict, unlike the Conservative party. None the less, we are impacted by it, and the right thing for us to do as a Government is to make sure we are providing breathing space for families as we weather international events.
Danny Beales (Uxbridge and South Ruislip) (Lab)
I welcome the Government’s commitment to the cut on fuel duty, although motorists are being not only squeezed at the pumps but ripped off by unfair monthly insurance charges. Does the Minister agree that insurance companies should not be charging unfair and unjustified additional costs for monthly insurance, when that is what most people can afford? Will he meet me to discuss the Which? research, which has found that people paying monthly for insurance are paying hundreds of pounds in additional costs?
James Murray
Although my hon. Friend is right that fuel duty is one cost that families face, they also face a number of other costs, including through insurance. He is a formidable campaigner on a range of issues, so I would be happy to meet him to discuss this issue, or to ask my colleague, my right hon. and learned Friend the Member for Northampton North (Lucy Rigby), to do so, if she is better placed to respond.
Euan Stainbank (Falkirk) (Lab)
I welcome the Government’s fuel duty freeze for working families, alongside the road tax holiday for hauliers and the diesel fuel duty cut. Fuel costs for businesses in my constituency, such as Northfield quarry near Dunipace, have nearly tripled due to the Iran war and the previous Government’s tightening of eligibility for red diesel. In the Budget, will the Chancellor consider extending fuel duty reductions for industries such as quarrying, which is essential for house construction and provides good local jobs for working families?
James Murray
I thank my hon. Friend for his request of the Chancellor at the Budget. As the Chancellor set out earlier, he will take those decisions at the Budget in the normal way, but my hon. Friend has made a powerful case for his constituents and used this opportunity to ensure that all of us on the Treasury Front-Bench team have heard what he has to say.
James Murray
I think the hon. Gentleman’s point is that the price of fuel is linked to international events, which, as I said earlier, I very much agree with. That is why it is important that we de-escalate the situation in the strait of Hormuz, which is the best way to bring down the cost of fuel. Meanwhile, the Government are determined to give families across the country breathing space—extending the 5p cut until the end of the year, a £2 cap on bus fares, and removing VAT from electricity bills—as we weather the impact of international events.
Sir Jeremy Hunt (Godalming and Ash) (Con)
Catherine Fookes (Monmouthshire) (Lab)
The Financial Secretary to the Treasury and Paymaster General (James Murray)
Fiscal decisions are taken at the Budget, but I join my hon. Friend in urging the Welsh Government to consider extending the support that we have given to English pubs to pubs in Wales.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
James Murray
As I said a moment ago, decisions on fiscal matters are taken at the Budget, but I urge the hon. Gentleman to urge the Scottish Government to follow the UK Government’s example by providing support to pubs in Scotland, too.
Adam Thompson (Erewash) (Lab)
Amanda Hack (North West Leicestershire) (Lab)
When CoalWorks in my constituency fundraised for a defib, the charity London Hearts reached out to it. Because it is a charitable organisation, there was no VAT on the purchase, meaning that CoalWorks could afford to buy two. However, when the Kings Arms in Coleorton recently fundraised, it had to pay VAT because it did not go via a charity partner. Will the Minister make an assessment of the potential impact of removing VAT on defibs for community-based purchases?
James Murray
I congratulate the organisation in my hon. Friend’s constituency for successfully fundraising for two defibrillators. As she knows, decisions on fiscal matters are taken at the Budget. She makes a powerful case, but we have to evaluate whether VAT reliefs are passed on in full to consumers. That is one of the key considerations when taking decisions of this sort.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
James Murray
We are providing a 20% cut in business rates for pubs in England. I urge the Scottish Government to do the same for Scottish pubs.
Imogen Walker (Hamilton and Clyde Valley) (Lab)
When the Bank of Scotland closed its Larkhall branch, it left the town with no high street bank. It is a problem not only for Larkhall but for nearby villages including Ashgill and Netherburn. I am grateful to Treasury Ministers for engaging with me on this issue over the last few months. What can the Government do to support towns like Larkhall and protect face-to-face banking services in rural communities?
Rosie Wrighting (Kettering) (Lab)
In recent weeks, the fast fashion online retailer Shein has been valued at a fraction of its price when it listed in Hong Kong, in part due to the treatment of low-value imports in the US and Europe. With that in mind, I welcome the Government’s decision to end the £135 de minimis relief by October 2028, but what more can be done before then to level the playing field for British retailers?
James Murray
My hon. Friend is right to highlight the importance of removing the low-value imports relief and levelling the playing field with high streets. As she will know, my predecessor announced in June that we are bringing forward the implementation of the measure to October 2028 to benefit high streets across the country as quickly as possible.
VAT on Medication: Compassionate Access Schemes
James Murray Excerpts(1 month, 1 week ago)
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The Financial Secretary to the Treasury and Paymaster General (James Murray)
It is a pleasure to respond to this debate. I thank my hon. Friend the Member for Uxbridge and South Ruislip (Danny Beales) for securing it, and for all his engagement and campaigning on this important issue. I know from my conversations with my hon. Friend that he cares deeply, as do I, about ensuring that patients can access innovative medicines, particularly when there is unmet clinical need.
Free-of-charge arrangements play an important role in giving patients early access to medicines, as my hon. Friend so powerfully illustrated when he spoke about the patients and families who have shared their stories with him. I was moved to hear the experiences of those patients, and am grateful to my hon. Friend for sharing them this evening. My thoughts, as I am sure every Member’s thoughts will be, are with those patients and families, including the family of the young woman who my hon. Friend told us had tragically passed away. I am sure that everyone in this House agrees that we must find a solution that means that those patients, and others like them, can continue to access lifesaving medicines.
Before responding to the points made, I will first set out some of the context for the existing VAT treatment of donated medicines. This evening’s debate concerns the application of long-standing VAT rules to some medicines supplied free of charge. Under UK VAT law, some transactions where no money changes hands are treated as though a supply has been made, and these are known as deemed supplies. These rules help to keep the VAT system fair where a business has reclaimed VAT on its costs. These are not new rules introduced by this Government; they are long-standing features of the VAT system dating back to the early days of VAT, before the VAT Act 1994.
His Majesty’s Revenue and Customs wrote to the sector in 2023 as part of the process of ensuring that businesses pay the correct tax. However, the Government recognise concerns raised by pharmaceutical companies and patient groups about the potential impact of this treatment on free-of-charge access and, ultimately, on patients. That is why, as my hon. Friend mentioned, on 23 June, my predecessor announced that the Government would bring forward a new approach as soon as possible. As set out in the written ministerial statement on 2 July, the Government are considering either changes to the VAT rules or a reimbursement scheme. The new approach will be effective for donations made on or after 23 June 2026.
Officials in the Treasury, HMRC and the Department of Health and Social Care have been working closely together and engaging constructively with the pharmaceutical sector to develop the detail of both options. That work must ensure that any approach supports patients while being legally robust, operationally workable and sustainable. We recognise that free-of-charge medicines are supplied through a variety of arrangements. Those include early and expanded access, post-trial access and arrangements that operate after Medicines and Healthcare products Regulatory Agency authorisation.
My hon. Friend raised the question of which medicines would be in scope of the new approach, and the Government are considering this question carefully in collaboration with the sector. The solution must capture genuine patient access arrangements without creating unintended consequences elsewhere in the VAT or supply systems. It is important that we complete that work quickly, so that patients across the UK can benefit from innovative medicines as quickly and safely as possible. It is equally important that we get this right to avoid inadvertently omitting important avenues by which medicines are donated, or opening the door to abuse. That is why we are working closely with industry to craft the scope appropriately.
My hon. Friend asked which forms of donation would be in scope, and whether the solution would apply only to donations to the NHS. He will appreciate that I am not in a position to announce any final decisions today, while work remains ongoing with the firms. However, I can reassure him that I have no desire to artificially circumscribe the scope of the new approach and unduly leave out genuine donation practices.
My hon. Friend asked about timelines. I regret that as we are talking about a potential tax change, I cannot give further detail, beyond reassuring him that I have reiterated the urgency that we both feel, and the need to reach a swift resolution, and I have imparted that urgency to my officials. On historical liabilities, the new approach will apply to donations made on or after 23 June 2026, but I am happy to hear input from firms on that point as we go through the process. On co-ordination in the case of AstraZeneca, it would not be appropriate for me to comment on the tax affairs of an individual taxpayer, but I would certainly encourage firms in the round to share the detail of any specific concerns they have with my officials. On whether HMRC could publish a business brief to fix this issue, as a matter of existing law, firms must account for VAT on donated medicines. An HMRC brief can communicate a change in policy only when the law itself has changed, or following a judicial decision requiring a change in law. A Revenue and Customs brief cannot itself make the change in law.
Finally, I share my hon. Friend’s desire to see Bayer return to the early access scheme, so that patients can regain access to innovative medicines. We have committed to applying the new approach retrospectively to donations made on or after 23 June 2026, and I hope that Bayer takes confidence from that and rejoins the early access scheme as soon as possible.
Danny Beales
The Minister is being very generous in giving way, as ever, and I appreciate his response about the limitations of the business brief process. If amending the VAT Act 1994 is the right route, does the Minister know roughly how long that would take to find a resolution? I fully his support his point about Bayer re-engaging. The Government have moved in good faith, and I hope Bayer will, too.
James Murray
As the changes we are discussing concern a potential tax change, I am afraid I cannot give my hon. Friend further detail about any timeline, but I reiterate that I have imparted to my officials in the Treasury and HMRC the urgency that I feel about this, and that my hon. Friend and others will share. I am glad he joins me in calling on Bayer to take confidence from what we have announced and to rejoin the early access scheme as soon as possible.
I again thank my hon. Friend for securing this debate, and for the constructive way in which he has raised this issue, both this evening and in the past. In concluding, I would like to pause to reflect on the impact of continued access to medicines for patients. Individual Members have raised with me the importance that early access to medicines can have, especially for those in the most tragic of circumstances, who sadly have few other options. I have been moved in hearing those cases, and it is vital that we keep those medicines accessible. I am grateful to Members from across the House for bringing this issue the attention it deserves. I am also grateful for the constructive engagement that my officials have had with the pharmaceutical sector, and I know we have a common goal of resolving the issue swiftly. I look forward to setting out further detail once that work has concluded and when final decisions have been taken.
Question put and agreed to.
Employer National Insurance Contributions: Small Businesses in Hampshire
James Murray Excerpts(1 month, 2 weeks ago)
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The Financial Secretary to the Treasury and Paymaster General (James Murray)
It is a pleasure to serve under your chairship, Mrs Barker. I thank the hon. Member for North East Hampshire (Alex Brewer) for raising this issue today and for bringing representatives of businesses in her constituency to Parliament to listen to this debate about such an important issue.
As the hon. Member mentioned, the Government are prioritising growth. In the first half of this year, we were the fastest growing economy in the G7. The Government’s vision is to make sure that growth is felt in every community, high street and postcode. Small and medium-sized businesses are central to that ambition, because they play such an important role in every community across the country, creating jobs, supporting local economies and helping to drive better living standards.
Sustainable economic growth depends on stable public finances. Fiscal discipline has to be the bedrock of economic stability, and that stability is necessary to support investment, confidence and long-term growth. As hon. Members will know, the Government have taken decisions on tax, welfare and spending in order to repair the public finances, protect economic stability and fund the public services on which families and businesses rely and into which the hon. Member for North East Hampshire called for greater investment.
As part of that wider fiscal consolidation, changes have been made to employer national insurance contributions. Those changes were introduced from April 2025 and were accompanied by significant protections for smaller employers, including the more than doubling of the employment allowance to £10,500. That means that around 900,000 employers—around 40%—will have no employer national insurance liability at all. In North East Hampshire alone, around 2,300 employers benefited from the employment allowance in ’25-26. Overall across the country, the employment allowance was estimated to be worth around £7.4 billion in the last tax year.
In addition, businesses can claim employer national insurance contribution reliefs, including for under-21s and under-25 apprentices, which are worth around £2.5 billion a year. That means that employers pay no employer national insurance contributions for apprentices under 25 or employees under 21 on earnings up to £50,270.
The UK’s 5.7 million small and medium-sized enterprises are central to growth across the country. The Government are backing them to succeed, supporting entrepreneurship and helping people to live well in every part of the country. Again, I thank the hon. Member for securing today’s debate.
Question put and agreed to.
Oral Answers to Questions
James Murray Excerpts(5 months, 2 weeks ago)
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John Milne (Horsham) (LD)
The Chief Secretary to the Treasury (James Murray)
The Chancellor and the Defence Secretary meet regularly to discuss defence, including the defence industrial strategy. As part of those discussions, they recently met leaders from the UK financial sector to discuss how private investment can also be leveraged to accelerate defence readiness, building on the commitments made in the defence industrial strategy.
John Milne
In my constituency of Horsham, Chess Dynamics, which is part of Cohort, is a world-leading developer of counter-drone and air defence technology—exactly the capabilities that we need. Yet Chess, like much of the defence industry, has been kept on hold since last year, awaiting clarity on the defence investment plan. Without it, it cannot commission new air defence systems, leaving the next generation of Royal Navy frigates potentially exposed. It needs to know now. Will the Minister agree to meet me and Chess Dynamics to provide certainty on the investment that everyone says we need, but which simply is not happening yet?
James Murray
Investment in defence under this Government is under way—just look at the contracts. Over a thousand have been signed since the general election: I point the hon. Gentleman, and anyone else in the Chamber, to the billion-pound contract for medium helicopters in Yeovil, the half-a-billion pounds invested in state-of-the-art radar systems and the £100 million boost to support submarine-hunting aircraft. This Government are raising investment in defence to the highest sustained level since the cold war and it is at the core of ensuring that we are protecting our nation’s security.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
What consideration has my right hon. Friend given to joining the Defence, Security and Resilience Bank to make sure that we are really pushing the investment that we need to see in defence in the current world situation?
James Murray
The UK has already signed up, with Finland and the Netherlands, to the multilateral defence budget, with this Chancellor taking a lead. I know the importance to this Government of security, which is not just something that we can achieve on our own but by working with allies to ensure that we are safer in future. I will add that we on the Government Benches are committed to remaining a core part of NATO, unlike some of the Opposition parties.
James Wild (North West Norfolk) (Con)
The Chancellor said,
“National security always comes first”,
but she delayed the helicopter contract for our industrial base and we know that she is blocking the defence investment plan. Labour’s former Defence Secretary and secretary general of NATO, Lord Robertson, said,
“We cannot defend Britain with an ever-expanding welfare budget.”
He is right, so why is the Chancellor failing to grip the benefits bill and invest in our defence?
James Murray
Those on the Opposition Front Bench have some cheek. The hon. Gentleman is sat next to the hon. Member for Central Devon (Sir Mel Stride), who oversaw the biggest increase in welfare spending on record, with a £33 billion increase in welfare spending in the last year of the Conservative Government. This Government are serious about getting people back into work, while increasing defence investment at the same time to 2.6% of GDP by next April—something the previous Government never managed.
Zöe Franklin (Guildford) (LD)
Catherine Fookes (Monmouthshire) (Lab)
The Chief Secretary to the Treasury (James Murray)
The Government are investing in Wales’s industrial future and unlocking economic growth, including by providing £2.5 billion for the UK’s first small modular reactor in Anglesey to support up to 3,000 jobs and power 3 million homes. We have also recently agreed a new £50 million defence growth deal for Wales. We are backing Welsh freeports and investment zones, and we are connecting people and businesses with at least £445 million-worth of rail infrastructure investment right across Wales.
Catherine Fookes
The people of Magor and Undy have been celebrating the fact that they are getting a new train station, thanks to two Labour Governments working together to deliver it. It is therefore unbelievable that Reform’s leader in Wales recently said that nobody wants or needs these new stations. Does the Minister agree that new railway stations are essential for economic growth, and does he think that Reform does not listen to what people in Wales want, or that it just does not care?
James Murray
I completely agree with my hon. Friend that the UK and Welsh Labour Governments’ generational commitment to the future of rail in Wales is fantastic for her constituents right across Monmouthshire. It is frankly outrageous to hear Reform’s leader in Wales trying to tell people what they want, and even more shocking that Reform has promised to rip up our plan. New railway stations are indeed critical for economic growth, and only Labour will build the rail network that people in Wales need and deserve.
Dr Beccy Cooper (Worthing West) (Lab)
The Chief Secretary to the Treasury (James Murray)
The Government are acting to ease the cost of living for commuters, including by extending the £3 national bus fare cap to March 2027. We have also frozen regulated rail fares for the first time in 30 years, which will save the average commuter travelling from Worthing to London using an annual season ticket £360 a year.
Dr Cooper
I thank my right hon. Friend for freezing rail fares, which will indeed help to ease the cost of living for many commuters, such as my constituents in Worthing West, many of whom have jobs here in London or in Brighton. Southern has been rated the worst value for money rail operator in a national passenger survey. As we move to nationalisation of our service and finally see the back of Southern rail next month, will the Minister ensure that investment is available for key issues such as reducing overcrowding and improving the reliability and punctuality of our vital south coast services?
James Murray
My hon. Friend is right to make it clear that improving services for passengers is our absolute priority as rail operations come into public ownership. When Southern rail is brought into public ownership, it will be expected to focus relentlessly on improving passenger experience, reliability and punctuality, and it will be held to account for doing so.
Alicia Kearns (Rutland and Stamford) (Con)
In rural areas like Rutland and Stamford, we are reliant on our cars, so fuel costs are hitting us hard. I have a simple ask that the Chancellor could deliver on now: will she expand the 5p per litre rural fuel duty relief to more areas as soon as possible, particularly Leicestershire, Rutland and Lincolnshire, where it is desperately needed?
James Murray
As my hon. Friend the Exchequer Secretary has already set out many times today on fuel duty, we inherited plans from the previous Government that would have seen fuel costs go up for people across the country. We have extended the 5p cut on fuel duty and extended the freeze, which is an important way of helping people with the cost of living right now.
Bradley Thomas (Bromsgrove) (Con)
Chris Coghlan (Dorking and Horley) (LD)
The Chief Secretary to the Treasury (James Murray)
Whatever the purpose, spending funded from bonds issued by the Government adds to the national debt and so must be considered within the fiscal rules. But the hon. Gentleman is right to point to the importance of research and development within the defence industry to support economic growth. I am proud that last year we allocated £400 million for UK defence innovation to foster a world-leading UK defence tech sector.
Michael Wheeler (Worsley and Eccles) (Lab)
European Union Finances: Annual Statement
James Murray Excerpts(6 months, 3 weeks ago)
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The Chief Secretary to the Treasury (James Murray)
I am today laying before Parliament, “European Union Finances Statement 2025: Statement on the implementation of the Withdrawal Agreement” (CP 1538). This is an annual publication; this year’s edition covers the period from 1 January 2025 to 31 December 2025. This publication is available on the gov.uk website.
The publication sets out the Government’s updated estimate of the financial settlement on withdrawal from the EU. HM Treasury estimates that the total net value of the financial settlement is £30.9 billion since the UK ceased to be an EU member state in February 2020. Of this, £25.7 billion has been paid up to the end of December 2025, and the forecast of future outstanding net liabilities is £5.3 billion.
[HCWS1478]
Devolved Governments: 2025-26 Funding
James Murray Excerpts(6 months, 3 weeks ago)
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The Chief Secretary to the Treasury (James Murray)
In addition to changes in devolved Government funding at supplementary estimates 2025-26, and in line with the statement of funding policy, the Welsh Government have chosen to draw down £285.901 million in resource DEL (excluding depreciation), £53.395 million in capital DEL (general) and £10.704 million in capital DEL (financial transactions) from the Wales reserve in 2025-26. This is in line with the funding arrangements set out in the Welsh Government’s fiscal framework. £ million Welsh Government Scottish Government Northern Ireland Executive Resource DEL (excluding depreciation) 18,420.286 41,568.082 16,894.052 Capital DEL (general) 3,348.033 6,415.194 2,206.792 Capital DEL (financial transactions) 89.669 156.851 54.409 Total DEL 21,857.988 48,140.127 19,155.253
There have been further changes to devolved Government funding due to the application of the Barnett formula that were processed after the finalisation of supplementary estimates 2025-26. In 2025-26 these have resulted in changes of:
-£0.208 million resource DEL (excluding depreciation) and £2.890 million capital DEL (general) for the Welsh Government
-£0.344 million resource DEL (excluding depreciation) and £0.188 million capital DEL (general) for the Scottish Government
-£0.468 million capital DEL (general) and -£0.921 million capital DEL (financial transactions) for the Northern Ireland Executive in 2025-26.
The Northern Ireland Executive will also carry forward an increase of £0.078 million capital DEL (general) and defer a -£0.145 million resource DEL (excluding depreciation) reduction to 2026-27.
The Welsh Government will also return £11.790 million resource DEL (excluding depreciation).
Revised 2025-26 devolved Government funding is as follows:
[HCWS1441]
Northern Growth Strategy: Next Steps
James Murray Excerpts(6 months, 4 weeks ago)
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The Chief Secretary to the Treasury (James Murray)
My noble friend the Financial Secretary to the Treasury (Lord Livermore) has today made the following written ministerial statement.
On Tuesday 17 March, the Chancellor updated Parliament on the Government’s economic plan to increase living standards, build resilience and bolster the security of the UK economy. I am today setting out more detail on a core part of that plan—how the Government will drive growth in the north of England, working alongside local leaders, as part of our wider regional growth strategy.
Today the Government have laid the “Northern Growth Strategy: Next Steps” (CP 1549). As set out in the “Northern Growth Strategy: Case for Change” (CP 1485) published in January, there is significant national benefit to boosting growth in the north. Just growing the north’s five most populous mayoral strategic authority areas’ productivity to the national average could add around £40 billion per year in gross value added, alongside around £15 billion per year in fiscal revenues. That is why the Government have put the north of England at the centre of their regional growth plans including through unlocking the northern growth corridor, stretching from York to Liverpool across the Pennines; and making the most of unique strengths in the north-east, and wider north.
The publication laid today sets out how investment in Northern Powerhouse Rail will serve as the backbone for economic transformation across the region, alongside action to grow and densify northern cities, to back industrial strategy clusters where they excel, and to decentralise our political system and put real power in the hands of local leaders. This publication begins a new phase of deeper engagement with a wide range of local partners, to further develop the northern growth strategy, with a further update intended for the autumn.
The document sets out the next steps the Government are taking now, to support their strategy, including through:
City Investment Funds
The city investment funds, announced earlier this week by the Chancellor, provide £2.3 billion of new grant, loan and patient capital funding, with up to £1.7 billion going directly to mayors of the largest city regions in the north, to unlock large-scale city centre development, in particular where there are issues around viability.
The fund will bring together different types of finance, deployed flexibly to accelerate projects, expand city-centre housing and office markets, and support major regeneration schemes across the north, including:
The Victoria North development in Manchester, one of the largest city-centre regeneration schemes in the UK
Transformation of Liverpool central gateway and sites at the Knowledge Quarter
Regeneration and densification around Leeds City station, Leeds South Bank, and the new Bradford Northern Powerhouse Rail station
Developing projects in the Don Valley corridor, Sheffield city centre innovation spine, and Rotherham town centre
Accelerating development across the proposed mayoral development zone spanning Newcastle and Gateshead, with Gateshead Quays and Forth Yards as flagship anchors.
By combining early catalytic funding with a long term focus on reinvestment, city investment funds will support sustainable growth, crowd in private capital, and help cities realise their full economic potential.
Industrial Strategy Cluster Partnerships
The Government are backing five areas in the north, supported by £150 million clusters investment from the British Business Bank, supercharging growth driving sectors where they already excel. New place based partnerships will be established with local leaders, businesses and universities to strengthen and accelerate growth in the north’s globally competitive industrial strategy clusters. For example:
Transforming Greater Manchester into a “global growth cluster” in life sciences, advanced manufacturing and digital and technologies, including through investing hundreds of millions into the development of Manchester digital campus. The campus will bring together 8,800 civil servants and Ministers in the heart of the city, solidifying Manchester’s status as a digital and AI hub, bringing more high-skilled jobs to the area, and saving the taxpayer billions through consolidating existing estate.
Strengthening Liverpool city region’s role as a leading centre for life sciences and digital technologies, including through investment in a new national cryogenics facility that will help establish the north-west as a hub for ultra-low temperature research, expected to attract investment from sectors such as quantum, healthcare and fusion; creating high-quality jobs and boosting our national security.
Supporting West Yorkshire’s financial services and professional and business services “Northern Square Mile” in Leeds, promoting it as a destination for global financial services businesses supported by the Office for Investment: Financial Services concierge service.
Working with partners to further develop the clean-energy “supercluster” across the north-east, Tees Valley, York and North Yorkshire, and the Humber. The Government will work in partnership with local leaders and businesses to attract and develop clean energy industries investment and infrastructure into the region.
Building on South Yorkshire’s strengths in advanced manufacturing and defence through its £50 million defence growth deal to strengthen sovereign manufacturing capability. This will boost the region’s strengths in the research, development and engineering of materials critical to the next generation of defence capabilities.
Fiscal Devolution
Looking ahead to the Budget, the Chancellor confirmed that she has asked Treasury officials to work with mayors and businesses to develop a road map for future fiscal devolution. This will set out plans to give regional leaders a share of the revenue from some national taxes and will consider income tax alongside other taxes. The Chancellor’s objective is to provide mayors with the long-term financial certainty that they need to invest in a way that is practical and responsible. Therefore this work will be guided by four key principles: empowerment, accountability, sustainability and fairness.
The Government will continue to develop the northern growth strategy in partnership with local stakeholders. To support this, an invitation for views is being launched alongside the document laid today. This sets out a series of questions around connectivity, regeneration and densification of cities, business investment, skills, and culture. The invitation for views will close on 31 July 2026. The Government will review responses over the summer to strengthen the approach, ahead of a further update in the autumn.
Across the north, places are demonstrating what sustained investment, strong local leadership and clear long-term direction can achieve. The challenge now is to build on that momentum and scale it up at pace. We look forward to working together with mayors and local partners on this collective endeavour over the coming months.
The report is published on gov.uk: https://www.gov.uk/government/publications/northern-growth-strategy-case-for-change/northern-growth-strategy-case-for-change
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