Income Tax: Personal Allowance

James Murray Excerpts

Monday 12th May 2025 Westminster Hall

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

It is a pleasure to speak with you in the Chair, Mr Stuart; this is our second debate together in the last few days. I extend my thanks, as many others have, to my hon. Friend the Member for Sunderland Central (Lewis Atkinson) for opening the debate, and I congratulate Mr Frost, who created the petition. I also thank all other hon. Members who have contributed to the debate for setting out their views.

I know that this petition has attracted almost 250,000 signatures, so, given the public interest in this topic, it is important that we are debating it. I recognise the views of everyone who has put their name to the petition, and let me be clear that, as a Government, we want taxes on working people and on pensioners, who have worked hard all their lives, to be as low as possible. We were elected to put more money in people’s pockets and, crucially, we were elected to do so in a fiscally responsible way. That is a critical point to understand. We want to keep taxes on working people and pensioners as low as possible, but if we were to follow the calls of some Opposition parties and abandon fiscal responsibility, it would lead to economic chaos and the collapse of public services, and that would harm working people and pensioners the most.

Raising the personal allowance to £20,000 would cost more than £50 billion. That is more than the £45 billion of unfunded tax cuts announced by Liz Truss in her disastrous mini-Budget. Conservative and Reform MPs may have cheered Liz Truss on, but like the British people, we in the Labour party know the damage that that caused, and we will never let it happen again. To put it another way, if £50 billion was taken out of public services, that would be equal to wiping out almost the entire UK defence budget or slashing the NHS by a quarter. The British people will not be the winners if public services collapse or chaos returns to the economy.

The Chancellor has taken the right decisions to get the UK’s public services back on their feet and to restore fiscal responsibility and economic stability. We will fight to protect those hard-won gains from those who want to see them squandered. In that critical context of fiscal responsibility, however, the Government are doing everything we can to support working people and pensioners. In our first Budget, we decided not to extend the freeze on personal tax thresholds, meaning that people will be able to keep more of their income. We are supporting hard-working families and pensioners through the plan to make work pay and through our significant increases to the national living and minimum wages and the state pension. We know that we will be able to keep taxes down only by delivering sustainable economic growth, which is why our plan for change and our trade deals are so important to make people better off.

Of course, an important context for this discussion is the autumn Budget, in which the Government reset public spending and put the public finances back on a sustainable path. The decisions in the Budget were underpinned by the most ambitious package ever to close the tax gap—the difference between what taxpayers owe and what is paid to His Majesty’s Revenue and Customs—alongside tax changes that make the tax system fairer and more sustainable while protecting people’s payslips. The Government are determined to close the tax gap as far as we can, because ensuring that everyone pays the tax they owe is critical for a well-functioning economy, for protecting revenue to fund our public services and for helping to keep taxes on working people as low as possible. In the spring statement, the Chancellor went further and faster to close the tax gap, raising an extra £1 billion in revenue for the public finances.

Turning to the personal allowance, it is worth beginning by recognising that the UK has one of the more generous personal tax allowances in the OECD, and the most generous in the G7. As we have heard in today’s debate, it was the previous Government who made the decision to freeze the personal allowance at its current level of £12,570 until April 2028. In the Budget last autumn, this Government decided not to extend that freeze and we kept the basic, higher and additional rates of income tax, employee national insurance contributions and VAT unchanged, meaning that people will keep more of their income. We also had to take a number of difficult but necessary decisions on tax, welfare and spending to restore economic stability, fix the public finances and support public services, given the situation that we inherited from the previous Government.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I think the reason so many people signed the petition is that the plight of some of the poorest and most vulnerable in our society is on our collective conscience. I may have a helpful suggestion. I should declare an interest right away: my wife is disabled and I am her carer. I know of people who are carers and live in terror of an unexpected cost coming their way, such as the boiler breaking down in the north of Scotland or some horrifying bill throwing the finances out completely. I wonder whether it would be a kindly and humane step for the Government, or any Government, to provide for a mechanism whereby, when a nasty, surprise bill comes the way of a person caring for someone who is long-term sick or disabled, that bill could be offset against the tax payable by that person, or the married couple together.

[James Murray]

Of course, having a well-functioning welfare state is, in many ways, precisely about protecting people when they have unexpected shocks to their lives. I am not sure that the tax system is the best way to address that, but I think the hon. Gentleman’s broader point about ensuring that the state provides a safety net or cushion against unexpected shocks to people’s lives is an important principle.

The focus of today’s debate is very much on tax thresholds, particularly the personal allowance, so I will return to my comments on that. When we took office in July last year, no responsible Government could have let things carry on as they were. Likewise, no responsible Government could now raise the personal allowance to £20,000 at a cost of more than £50 billion, as such a move would put public services back on their knees or risk economic chaos that would push up inflation, mortgages and taxes.

The petition suggested that

“raising the personal allowance would lift many low earners out of benefits”.

We know that our benefits system is currently failing on all fronts; it is failing those who receive benefits, by not helping them to work where they can, and failing taxpayers more widely, through soaring costs to the public purse. We are fixing that by reforming the benefit system to make it more pro-work, while protecting those who cannot work. When people are in work, we want them to be better paid, which is why in April 2025 we increased the national living wage to £12.21 per hour, the third largest proportional increase since 2016, and that is expected to benefit over 3 million workers.

We have published the “Get Britain Working” White Paper, which sets out the Government’s plans to reform employment, health and skills support to tackle economic inactivity and support people into good work. Our plan to make work pay represents the biggest upgrade in employment rights in a generation, bringing the UK back into line internationally. It tackles poor working conditions and job security, and by making work more flexible and family friendly, it will support our wider programme across employment, health and skills policy to get Britain working.

[James Wild]

The Minister referred to the Employment Rights Bill. Has he seen the survey from the Britain Retail Consortium in which 70% of the businesses that were surveyed, which are major retailers that employ half a million people, said that the legislation would damage their business, and half said that it would make them less likely to take people on?

[James Murray]

Many employers recognise that having a productive, secure workforce who can take pride in their jobs and contribute to their fullest ability at work is important not just for the employees themselves but for the productivity of the businesses. That is why we want to see workers with employment rights that will be upgraded through our plan to make work pay, alongside, as I mentioned a few moments ago, a stronger national living wage and national minimum wage under this Government.

That focuses, however, on working people and their rights at work and their incomes. The petition also raised concerns about the state pension being subject to income tax. In 2025-26 the personal allowance will continue to exceed the basic and full new state pension. That means that pensioners whose sole income is the full new state pension or basic state pension without any increments will not pay any income tax. The state pension continues to be the foundation of support available to pensioners, backed by the Government’s commitment to the triple lock.

This year, over 12 million pensioners have benefited from a 4.1% increase to their basic or new state pension, which means that those on the full new state pension will get an additional £470. Over the course of this Parliament, the yearly amount of the full new state pension is currently projected to go up by around £1,900, based on the latest forecast from the Office for Budget Responsibility. The Government also support pensioners through a range of other means, including free eye tests, NHS prescriptions and bus passes. For pensioners who are eligible for means-tested support, we provide pension credit and housing benefit.

I recognise the substantial support for this petition. Hard-working people and pensioners who have worked hard all their lives want taxes to be as low as possible; I understand that. However, as we have set out today, we inherited a mess from the previous Government and have had to take tough choices to set us on a path to generate economic growth. Raising the personal allowance to £20,000 would undermine the work that the Chancellor has done to restore fiscal responsibility and economic stability, and it would slash the funding available for vital public services. This Government remain committed to keeping people’s taxes as low as possible while ensuring fiscal responsibility. Fiscal recklessness hits working people and pensioners the hardest. Parties promising to raise the personal allowance to £20,000 would have to explain how they would cut the NHS by a quarter, or why they want a rerun of the economic disaster we saw under Liz Truss.

We as a Government are determined to go further and faster to deliver our plan for change with its key goal of putting more money in people’s pockets by kick-starting economic growth. We will always keep taxes as low as possible while never putting security for families and pensioners at risk. I thank all hon. Members who have spoken.

Draft Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025

James Murray Excerpts

Wednesday 7th May 2025 General Committees

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

I beg to move,

That the Committee has considered the draft Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025.

It is a pleasure to serve on this Committee with you as Chair, Mrs Harris. These draft regulations increase the penalties charged for the late payment of certain taxes. They do so by amending the percentage points by which the late-paid tax is multiplied in order to calculate the penalties. The taxpayers affected are those paying VAT, income tax or capital gains tax under Making Tax Digital for income tax.

The reform of penalties by His Majesty’s Revenue and Customs intends to modernise the tax system in relation to late payment penalties, as set out in schedule 26 of the Finance Act 2021, incentivising compliance and protecting the public finances. At this stage, the legislation affects only VAT customers for accounting periods beginning on or after 1 January 2023, and those who have voluntarily joined Making Tax Digital for income tax since April 2024. It is, however, the intention over time for penalty reform to replace other late filing and late payment penalties. The effect of the draft regulations will be to increase the late payment penalties for those who do not pay on time. They will change from two percentage points at days 15 and 30, and four percentage points after 30 days, to three, three and 10 percentage points respectively.

The reason that we are pursuing these changes is as part of a Government package to bring down the debt balance. We inherited a debt balance of more than £44 billion in March 2024—more than double the £19 billion in March 2019 before the pandemic—and we are determined to use all levers at our disposal to reduce it. We know that unpaid tax deprives public services of vital funding, and puts businesses that pay the right tax at a competitive disadvantage. Closing the tax gap plays a key part in the Government’s efforts to restore economic stability and fiscal responsibility.

Let me be clear to Committee members that these changes to late payment penalties do not affect compliant taxpayers who pay their tax on time. This approach continues to encourage taxpayers to pay what they owe on time, while providing a greater disincentive for those taxpayers who are continuously non-compliant, do not engage with HMRC and still owe tax after 30 days. It therefore removes any unfair financial advantage for those who choose not to pay over compliant taxpayers who pay on time. We believe that an increase in these penalties will be an important step in closing the tax gap and encouraging those who owe tax into compliance.

For those taxpayers in genuine difficulty, HMRC continues to operate a time to pay scheme. This can spread out debt over a manageable period and, importantly, if payment schedules are abided by, no penalties will be issued. Under the changes that we are making, taxpayers retain the same right of appeal if they disagree with the penalty issued. For those who have a reasonable excuse for their failure to pay, no penalty will be owed, although, as with the current policy operated by HMRC, this can be considered only once the debt has been resolved.

As set out in the spring statement by my right hon. Friend the Chancellor, these penalty increases are an essential part of a package of measures to bring down the debt balance and help to close the tax gap. The measures will encourage those who owe their tax to pay their debts or enter into an agreement to do so, while also raising £125 million by 2029-30, according to the Office for Budget Responsibility, from those who do not pay what they owe.

In summary, these regulations give effect to the Government’s decision to increase late payment penalties. They increase the differential between those who pay on time and those who do not, as part of the Government’s wider plans to make sure that everyone pays what they owe, to bring down the debt balance and to close the tax gap. I therefore commend the draft regulations to the Committee.

--- Later in debate ---

[James Murray]

I welcome the Opposition’s support for the draft regulations. The hon. Members for Grantham and Bourne and for North East Fife asked about wider efforts to improve HMRC’s service. I will address that briefly, although I realise that it strays a little beyond the strict boundaries of the regulations, but they are very important questions.

As Members might know, when I became Exchequer Secretary to the Treasury and chair of HMRC’s board, I set out our three priorities for HMRC: close the tax gap, improve customer service and reform and modernise HMRC. In fact, they all come together around measures such as these changes to late payment penalties, because we need to make sure that we close the tax gap, modernise the service and improve the service that individual taxpayers and businesses receive.

We are in the process of going through the spending review. We will publish a transformation road map after that has concluded, which will set out our plans to improve HMRC’s service. The answer to extended waiting times on the phones cannot simply be to recruit more people to pick up the phones; it has to be to reform the way that HMRC services are delivered. More needs to be done through automation and self-service, with tax being paid without people even having to engage with the system by picking up a phone, because it will happen in a more automated fashion. When they need help, they should be able to get it online rather than having to pick up a phone, so there is a lot of progress there. If Opposition Members want to talk to me about that in future, they are welcome to grab a moment in the Division Lobbies, although we are usually in different ones.

The draft regulations will give effect to the Government’s specific decision around the late payment penalties that I set out. It is important to emphasise, because the theme of customer service and supporting individual taxpayers has been raised by other Members, that the Government are encouraging taxpayers facing genuine difficulty to contact HMRC to enter a time to pay arrangement. As I mentioned, that enables taxpayers to pay by instalments over a longer time period.

I am grateful to hon. Members for their contributions and I hope all Members will be able to support the draft regulations before us today.

Question put and agreed to.

Tax Simplification, Administration and Reform

James Murray Excerpts

Monday 28th April 2025 Written Statements

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

At the autumn Budget 2024 and the spring statement 2025, the Government committed to bringing forward a package of measures in spring 2025 aimed at simplifying the tax and customs system to help deliver the plan for change. Today, the Government deliver that commitment with a package of 26 measures.

In addition, the Government are setting out two further administrative measures designed to strengthen the integrity of the tax and customs system, as well as a package of 11 measures that reform the tax system, ensuring that it continues to be fit for the modern world.

This includes new plans to reduce bureaucracy and increase efficiency at His Majesty’s Revenue and Customs to deliver the Government’s ambition to become a more productive, agile and effective state.

Simplification

Measures announced today will support economic growth by reducing burdens on employers and small businesses, modernising HMRC systems and processes to simplify the experience for individuals and traders, and simplifying HMRC guidance and communications.

The Government have engaged widely with stakeholders, including representative bodies, business organisations, the border industry and small businesses, and are implementing five ideas submitted by the Administrative Burdens Advisory Board as their priorities for simplification.

The Government will continue to work with stakeholders to identify further measures and priorities for simplifying the tax and customs administration system.

These measures will collectively reduce administrative burdens so that businesses and individual taxpayers spend less time on tax and customs administration and more time adding value to the economy.

Measures being announced today that reduce burdens on businesses, employers, and employees include:

Capital goods scheme simplification: To support small businesses, secondary legislation will be laid at a later date to remove computers from the assets covered by the scheme, and increase the capital expenditure value of land, buildings and civil engineering work, currently set at £250,000—exclusive of VAT—to £600,000.

Spirit drinks verification scheme simplification: At the autumn Budget, the Government announced their commitment to support the UK spirits industry by, among other measures, investing up to £5 million into HMRC’s spirit drinks verification scheme. The Government have decided to use this funding to modernise HMRC’s IT system and introduce a simpler flat fee model, significantly reducing the fees paid by operators to £250 per facility.

Mandating the payrolling of benefits in kind: As recommended by the Administrative Burdens Advisory Board, the Institute of Chartered Accountants of England and Wales, and the Employment and Payroll Group, the Government have announced a delay to the introduction of mandatory reporting and paying of income tax and class 1A national insurance contributions (NICs) on benefits in kind via payroll software—“Mandatory Payrolling.”

Mandatory Payrolling will be introduced from April 2027 instead of April 2026, to reduce the burden on businesses by giving them more time to prepare for changes. HMRC will continue to engage on design and delivery issues to ensure minimum disruption to employers.

These steps to reduce burdens on employers build on the 28 January 2025 announcement that the Government will not be taking forward the draft Income Tax (Pay As You Earn) (Amendment) Regulations 2025, initiated by the previous Government. This means employers will no longer have to provide more detailed employee hours data to HMRC from April 2026.

Additionally, today the Government have set out further measures to modernise HMRC systems and processes to simplify the customer experience, including:

Cultural gift scheme: The Government are announcing their intention to introduce legislation at the next Finance Bill to reform the scheme by removing the restriction on jointly owned objects and allowing tax credits to be used more flexibly. This will simplify the scheme by making it more accessible and improve take-up and will come into effect from April 2026.

Income Tax Self-Assessment (ITSA) criteria review: the Government confirmed their intention to raise the ITSA reporting threshold for trading income and align it with new ITSA reporting thresholds for property and “other taxable” income, at £3,000 gross each. This will remove the requirement for up to 300,000 taxpayers to file a self-assessment return. These changes will be implemented within this Parliament.

Reviewing National Insurance Contributions (NICs) Annual Maximum refunds process: A review of the process for refunding national insurance contributions under the annual maximum rules, to make it easier and faster for customers to access the refunds they are entitled to.

Voluntary NICs: enhancing “Check Your State Pension” forecast service: The Government also intend to further enhance the “Check Your State Pension” forecast service, which supports people who want to pay voluntary national insurance contributions to fill gaps in their national insurance record.

These measures build on the Government’s announcement at the spring statement 2025 that, from summer 2025, employed individuals who become liable to the high-income child benefit charge will be able to opt to pay HICBC directly through PAYE, without the need to register for self-assessment.

Simplifying HMRC guidance and communications is crucial to helping taxpayers get their tax right first time and reducing the worry and stress of managing their tax affairs. Therefore, the Government are announcing five measures to improve HMRC guidance and communications, including:

Clarifying self-assessment registration obligations: As recommended by tax professionals, HMRC will simplify guidance on self-assessment registration obligations to ensure clarity on when individuals must register for self-assessment.

Simpler communication and AI solutions: HMRC is working with external stakeholders to simplify HMRC guidance and communications by:

Working with the Administrative Burdens Advisory Board and others to simplify the language used in HMRC letters, making them more accessible and easier to read.

Collaborating with third parties and the Government Digital Service to investigate how businesses could leverage HMRC’s gov.uk guidance in their own AI-powered products and services. This could make it easier for taxpayers to get the information they need with the help of the latest AI solutions, reducing the need to contact HMRC, and access a more personalised experience to meet their needs.

The Government are also announcing a package of measures that simplify customs processes, reduce burdens and improve customer experience, while ensuring that we place targeted and appropriate control on movements. This includes:

Improvements to temporary admission: A package of simplifications and improvements to temporary admission, which relieves import duties on temporary imports.

Customs digitalisation: Announcing the details of Government pilots progressing trade and customs digitalisation, including a technical pilot with US Customs and Border Protection to test methods to speed up processes for trade for UK and US businesses.

Transit improvements: An informal stakeholder engagement exercise on potential improvements to modernise the transit process.

Authorisation by Declaration: Increasing how often AbD—authorisation by declaration—can be used from three times to 10 times per 12 months. AbD allows importers to use certain special procedures to suspend or relieve duties without getting an authorisation from HMRC beforehand.

Post and parcel exports consultation: A summary of responses to the customs treatment of post and parcel exports consultation. This includes a new authorisation scheme for ETOE—extraterritorial office of exchange—operators and sites to ensure that they operate with appropriate security standards. It also announces plans to conduct a further review of the export and transhipment memoranda of understanding, with the aim of clarifying existing rules and ensuring consistency and alignment with other comparable facilitations.

These measures are part of our ambition to embed innovation in customs processes and systems to support digitalised trade and supply chains. The Government are committed to continuing to work closely with industry to deliver on our ambitions and further improve our customs system.

Tax Administration

The Government are introducing administrative measures as part of this package of tax and customs policies.

This includes legislative amendments to ensure that all border locations are responsible for funding and operating their own customs infrastructure.

Reform

The Government have announced a package of measures that help to reform the tax system, ensuring that it continues to be fit for the modern world.

New proposals are being published for consultation, including on a single remote gambling duty, as committed to at the autumn Budget 2024, and on the VAT treatment of business donations of goods to charity. The Government are also consulting on proposals to reform the soft drinks industry levy in order to strengthen incentives to reduce sugar in soft drinks, proposals to reform landfill tax, and are exploring the merits of reform to online marketplace liability for VAT.

In addition, the Government will outline next steps on reform work already under way, including on the modernisation of the stamp taxes on shares framework and the response to the technical consultation on vaping duty.

The Government are committed to modernising HMRC to become a digital-first organisation. The Government are announcing today that HMRC will reduce paper post sent, saving £50 million per year by 2028-29, while maintaining paper post provision for critical correspondence and for the digitally excluded. The Government will do this by investing in digital services to send and receive taxpayer information and will bring forward legislation to support a digital-first approach.

The Government are committed to improving value for money in the system of tax administration, and so will be reducing the HMRC estate in central London by 25%. HMRC is already a national organisation and by 2030, 85% of HMRC staff will be based outside of London. Moving roles out of London, in line with the Government’s wider “Places for Growth” initiative will ensure that the civil service is closer to the communities it serves.

Ahead of their review of all arm’s length bodies, the Government are confirming that they will bring the functions of the Valuation Office Agency, an executive agency of HMRC, within HMRC by the end of this financial year. Moving the VOA’s functions into HMRC will strengthen direct accountability to Ministers, helping to improve the experience of taxpayers and businesses and support the delivery of the Government’s commitments to reform business rates and modernise the tax system. This move will support the Government to deliver change more quickly and effectively, by combining the expertise and experience of both organisations in policy, valuations and programme delivery. It will also drive efficiencies in the administration of the tax system, resulting in between 5% and 10% in additional savings in VOA administrative costs by 2028-29.

The full list of publications and announcements can be found at: https://www.gov.uk/government/collections/tax-update-spring-2025-simplification-administration-and-reform

[HCWS607]

Oil and Gas Decommissioning Relief Deeds

James Murray Excerpts

Tuesday 8th April 2025 Written Statements

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

The Government’s fiscal approach for oil and gas aims to balance encouraging investment with ensuring a fair return for the nation in exchange for the use of its resources. Currently, inclusive of the temporary Energy (Oil and Gas) Profits Levy, companies engaged in the production of oil and gas in the UK and on the UK continental shelf (UKCS) are subject to a 78% headline tax rate on their profits.

At Budget 2013, the Government announced that they would begin signing decommissioning relief deeds. These deeds represented a new contractual approach to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.

Since October 2013, the Government have entered into 109 decommissioning relief deeds. Offshore Energies UK estimates that these deeds have so far unlocked approximately £14.7 billion of capital, which can now be invested elsewhere.

The Government committed to report to Parliament annually on progress with the decommissioning relief deeds. The report for financial year 2023-24 is provided below.

Number of decommissioning relief agreements entered into: the Government entered into three decommissioning relief agreements in 2023-24.

Total number of decommissioning relief agreements in force at the end of that year: 108 decommissioning relief agreements were in force at the end of the year.

Number of payments made under any decommissioning relief agreements during that year, and the amount of each payment: three payments were made under a decommissioning relief agreement in 2023-24, for £87 million in total. These were made in relation to the provisions recognised by HM Treasury from 2015 onwards as a result of companies defaulting on their decommissioning obligations.

Total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and the total amount of those payments: 19 payments have been made under any decommissioning relief agreement as at the end of the 2023-24 financial year, totalling around £347 million.

Estimate of the maximum amount liable to be paid under any decommissioning relief agreements: the Government have not made any changes to the tax regime that would generate a liability to be paid under any decommissioning relief agreements. HM Treasury’s 2024-25 accounts will recognise a provision currently estimated to be £123 million in respect of decommissioning expenditure incurred as a result of companies defaulting on their decommissioning obligations^[1]. The majority of this is currently expected to be realised over the next several years.

^[1] This figure, which is an estimate at the last interim reporting period, is unaudited and takes into account payments made subsequent to the financial year covered by this written ministerial statement. The estimate is under review ahead of the year end reporting period and may be updated to reflect newer information.

[HCWS584]

Oral Answers to Questions

James Murray Excerpts

Tuesday 8th April 2025 Commons Chamber

[Paul Waugh (Rochdale) (Lab/Co-op)]

1. What steps she is taking to help tackle tax evasion.

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

Closing the tax gap and ensuring that everyone is paying the tax they owe is one of the Government’s top priorities. The autumn Budget marked a step change to close the tax gap with the most ambitious package ever. The Government built on that in the spring statement, taking the total additional gross tax revenue raised per year to £7.5 billion by 2029-30.

[Paul Waugh]

The UK tax gap grew by a shocking £5 billion in 2023, in the dying days of the Conservatives, and former Chancellor Nadhim Zahawi was sacked for failing to declare an investigation by His Majesty’s Revenue and Customs into his tax affairs. I welcome the Treasury’s crackdown on tax avoidance. Does my hon. Friend agree that Labour’s prudence with a purpose will be shown by investing those taxes in the child poverty strategy this summer?

[James Murray]

I thank my hon. Friend for his remarks. He is right to say that the £7.5 billion of additional revenue from closing the tax gap is a huge boost to the public finances, which enables us responsibly to fund public services and deliver key priorities. Those priorities include free breakfast clubs at all primary schools in England. The first 750 of them are beginning this month via our early adopters scheme, which is worth £450 to parents and carers. To go further the Government will bring forward their comprehensive child poverty strategy as soon as possible.

[Ben Lake (Ceredigion Preseli) (PC)]

What steps are the Government taking to address the concerns of overseas companies that are evading VAT and online sales by fraudulently registering UK addresses?

[James Murray]

At the spring statement the hon. Gentleman will have seen the Government set out progress on measures in the autumn Budget to tackle a range of sources of tax avoidance and the tax gap. That includes prosecuting more fraudsters, introducing a new HMRC reward scheme for informants, tackling phoenixism and tackling the offshore non-compliance tax gap.

[Deirdre Costigan (Ealing Southall) (Lab)]

2. What steps she is taking through the spending review to help increase levels of economic growth.

--- Later in debate ---

[Andrew George (St Ives) (LD)]

3. What assessment she has made of the potential impact of her tax policies on investment in second homes.

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

While short-term lets and second homes can benefit the tourist economy, we recognise that they can impact the availability and affordability of main homes in some communities. That is why we have enabled councils to charge a premium of up to 100% on the council tax bills of second homes, increased the higher rates of stamp duty land tax on the purchase of second homes and abolished the furnished holiday lets tax regime.

[Andrew George]

I am grateful to the Minister for that response, but I believe we can go further, because this is not about the politics of envy but about the politics of social justice. In Cornwall, it cannot be right that through the small business rate relief system, over £500 million of taxpayers’ money has gone into the pockets of holiday homeowners in the last 10 years. Many of those homeowners have flipped their second homes into the small business rating system to take advantage of that loophole. Will the Minister meet me so that we can find a more equitable way of spending public money that goes into first homes rather than second homes?

[James Murray]

I thank the hon. Gentleman for his remarks. I agree with him about the importance of taking the right action to tackle second homes. I understand he had a meeting with the Minister for Housing and Planning last week, and I would be happy to follow up any items that arose from that. Our plan to build more homes includes 4,500 new homes in every year in Cornwall, and I hope he will support those building plans too.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

I wish to add my voice as an MP from Cornwall to say that some of the actions the Government have taken so far on second homes have been really helpful. The Renters’ Rights Bill will help with those evictions when people are flipping their houses. I also ask that we look at the loophole between council tax and business rates, and at the registration or licensing scheme on second homes, which the Government will hopefully bring in soon.

[James Murray]

I appreciate the concerns that second home owners may move to the business rates system. I emphasise that there are requirements that must be met before properties can be assessed for business rates. Those have recently been strengthened, but we will keep them under review.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

4. What steps she is taking with Cabinet colleagues to increase the affordability of new homes.

--- Later in debate ---

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

6. If she will meet farming representatives to discuss the potential impact of changes to agricultural property relief and business property relief on farmers. [R]

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

As the Minister with responsibility for the UK tax system, I have had several meetings with organisations on this matter since the autumn Budget last year. On 18 February, I and the Minister for Food Security and Rural Affairs met the National Farmers Union, the Tenant Farmers Association, the Country Land and Business Association, the Central Association of Agricultural Valuers, the Ulster Farmers Union, NFU Cymru, NFU Scotland and the Farmers Union of Wales.

[Mr Carmichael]

I thank the Chancellor’s human shield for that answer, but the fact that the Chancellor—who is sitting on the Front Bench—was not prepared to stand up and answer for herself demonstrates a distinct lack of respect for farmers, bordering on contempt. Will she not meet the farming unions, the banks, the professional organisations, and even the supermarkets themselves to hear why they all think her calculations are wrong? If the Minister wants to ask her before he stands up, I am sure we will all allow him a second or two.

[James Murray]

That was not the most dignified question from the right hon. Gentleman. On the Chancellor’s behalf, I have met numerous organisations about this matter, including those I listed a moment ago. I met the right hon. Gentleman himself when he came to the Treasury, and of course there have been extensive debates in this place. We may not agree on the way forward, but I do not think anyone can accuse us of not having listened.

--- Later in debate ---

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

13. What steps she is taking with Cabinet colleagues to support people on the lowest incomes following the spring statement 2025.

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

Helping people into good work and financial independence is at the heart of our approach to supporting people on the lowest incomes. That is why we have increased the national living wage by 6.7%, which is equal to £1,400 this year for someone working full-time. Our plan to make work pay will tackle the poor job security and working conditions that have been holding back our economy, and the pathways to work Green Paper announced an additional £1 billion investment in employment, health and skills support.

[Ms Abbott]

It is all very well for the Minister to talk about helping people into work, but is he aware of the many millions of people on personal independence payments who rely on them in order to work? Yet that PIP will be slashed as a consequence of the spring statement. Is he also aware that very many people would prefer the Government not to balance their books on the backs of some of the poorest and most vulnerable people in our society? Why are the Government rejecting a tax of just 2% on people with assets of over £10 million, which would raise over £24 billion?

[James Murray]

At the autumn Budget last year, the Chancellor announced a series of reforms to fix the public finances in as fair a way as possible, and make sure that the wealthiest in society pay their share of tax. The welfare reforms announced in the spring statement are principled reforms to help get people back into work, because work is the best way out of poverty. The reforms also provide support for those who need it and make sure that the system is sustainable for the future.

[Zöe Franklin (Guildford) (LD)]

Earlier this year, I spoke to members of my local Christians Against Poverty debt support team in Guildford, and they explained to me that they support many low-income individuals out of debt, but they are no sooner out of debt than they start accruing it again, because universal credit is insufficient to cover their basic needs due to the cost of living in areas such as Guildford. What work has the Minister done to assess whether universal credit levels are sufficient to cover the varied and increasing basic living costs across the country, and to prevent people on the lowest incomes from getting further into difficulty and debt?

[James Murray]

The Government have already taken action on the fair repayment rate, lowering the cap on deductions from universal credit to 15%—it was 25% before the autumn Budget last year. That will benefit 1.2 million households by an average of £420 a year, and 700,000 of the poorest families with children will benefit.

[Mr Speaker]

I call the shadow Minister.

[James Wild (North West Norfolk) (Con)]

Businesses have just been hit by the Chancellor’s £25 billion jobs tax, which will cost working families £3,500; also, business rates are nearly doubling for hospitality and retail businesses. How does imposing taxes that the Office for Budget Responsibility says will result in lower wages, higher prices and fewer jobs help growth and those on the lowest incomes, and will the Chancellor keep her promise not to come back with more taxes in this Parliament?

[James Murray]

The shadow Minister talks about business rates support. I remind him that if we had carried on with the plans inherited from the Conservative party, business rates relief would have ended entirely this month. It is only thanks to a decision of this Government that rates relief is continuing for this year, ahead of permanent reforms that will permanently lower tax rates for retail, hospitality and leisure premises on the high street from April 2026. That is thanks to a decision this Government made.

[Neil Duncan-Jordan (Poole) (Lab)]

14. What recent assessment she has made of the potential merits of introducing a wealth tax.

[Brian Leishman (Alloa and Grangemouth) (Lab)]

19. If she will make an assessment of the potential implications for her policies of the findings of Oxfam’s poll on taxation, published on 25 March 2025.

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

This Government are committed to ensuring that the wealthiest in our society pay their fair share of tax. The Chancellor announced a series of reforms at autumn Budget 2024 to help fix the public finances as fairly as possible. Those reforms included increasing the rates of capital gains tax, increasing air passenger duty for private jets, and raising stamp duty for buyers of second or more homes.

[Neil Duncan-Jordan]

Analysis from a number of disability groups shows that the “Pathways to Work” Green Paper will have a detrimental effect on more than 3 million people, while polling from Oxfam shows that 77% of the public would rather the UK Government increased taxes on the very richest than cut the benefits of the poorest in society. Should we not be looking at raising funds from those with the broadest shoulders?

[James Murray]

As I made clear earlier, the Government have already made changes to make the tax system fairer, and to ensure that the wealthiest pay their fair share. The reforms to the welfare system are principled reforms to tackle perverse incentives that encourage inactivity. We need to support those in most need, get people back into work wherever possible, and protect the sustainability of the welfare system.

[Brian Leishman]

Let us be frank and not spin it: for 14 years, we saw austerity that ripped the heart out of communities; we then had a global pandemic, during which inequality was accelerated; and we are still feeling the effects of a cost of living crisis that is making ordinary people poorer. The public do not want cuts or austerity—they want an annual wealth tax on the very wealthiest in society. Is it not time we had a Government who do something different, give people what they want, and are willing to redistribute wealth for the benefit of many in society, and to improve living standards?

[James Murray]

I politely suggest that if my hon. Friend thinks we are imposing austerity, he has not read the Budget very carefully. It contains increases to revenue spending in all Departments—across the public spending envelope—and an increase in capital investment. We are ensuring that we build for the future while protecting our fiscal rules. Let me be clear: those fiscal rules are not a nice-to-have addition to the way we approach the economy. Fiscal irresponsibility has a huge cost, as we saw under the previous Government.

[Mr Gregory Campbell (East Londonderry) (DUP)]

We support the Government in trying to determine a fair level of tax, especially for the very wealthy. However, will the Minister establish, if he can, the number of people who might leave the country as a result of a wealth tax, and therefore pay no income tax whatsoever?

[James Murray]

The hon. Gentleman makes an important point: we need to ensure that the wealthiest in society pay their fair share, while also attracting talent from around the world to the UK to work, invest and help to grow our economy. It is on the back of that investment and economic growth that we will make people across the UK better off, and get more money into their pockets.

[Sir Julian Smith (Skipton and Ripon) (Con)]

15. What steps she is taking to ensure rural communities have access to banking hubs.

--- Later in debate ---

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

T2. I have been contacted by many local businesses, including the Cross Keys pub in the Holt Heath nature reserve and the BEAR café in Wimborne. They are two different venues in two different locations, but both tell me that these are the most extreme trading conditions ever seen in hospitality. With national insurance, minimum wage and energy and food costs, will the Chancellor consider a reduction in VAT on hospitality sales to protect high streets and local producers and to save our communities?

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

I am unclear, given the hon. Lady’s remarks, whether she is opposed to the increase in the national minimum wage, but she should know that we have extended support for businesses in business rates relief this year, which would have been ended entirely under the plans we inherited from the previous Government, and there will be permanently lower multipliers for retail, hospitality and leisure premises on the high street from April 2026.

[Dan Tomlinson (Chipping Barnet) (Lab)]

T7. As a north London MP, I know that tackling the high housing costs in this city is a priority for my constituents. It is my belief that one route to that is investing in the country as a whole, so that we are not just flying on one London-shaped engine. To that end, did you know, Mr Speaker, that Leeds is the largest city in western Europe that does not have a tram or a mass transit system? That is a damning indictment of decades of economic failure. Will the Chancellor do all she can to ensure that the Leeds tram is built as fast as possible so that her constituents and mine can be better off?

--- Later in debate ---

[James Murray]

I think that was a question about business rates reform. As the right hon. Lady will know, we published a discussion paper on transforming business rates. I am sure that the right hon. Lady will have read and responded to that, so I will look out for her consultation response in what we have received. Transforming businesses rates is about ensuring that we make the business rates system fit for the future to support investment and business growth right across the UK.

[Dr Allison Gardner (Stoke-on-Trent South) (Lab)]

T8. Will the Minister join me in congratulating Goodwin International, which is building a multimillion-pound production unit in Newstead in Stoke-on-Trent South, creating up to 100 jobs in defence manufacturing? Does he agree that increased investment in defence spending will have a tangible impact on my constituents, fuelling jobs and local investment?

--- Later in debate ---

[Margaret Mullane (Dagenham and Rainham) (Lab)]

Will the Minister introduce a 12-month delay to the incoming change in taxation for double-cab pick-up trucks? The manufacturers and their commercial customers feel that they have had insufficient time to adjust to the new changes this month. Can he share with us any impact assessment work carried out on the reclassification of double-cab pick-ups and what effect it would have on the sector in Britain?

[James Murray]

We have engaged with the automotive sector on this issue, and there are generous transitional arrangements in place to mitigate the impact. The Government have had to take difficult decisions, but at the autumn budget 2024 we prioritised long-term support for growth-driving sectors, including more than £2 billion over five years to support the automotive sector.

[Wera Hobhouse (Bath) (LD)]

Ineffective energy trading with the EU is a major barrier for global investors. According to Energy UK, we are losing out on £30 billion of investment in interconnectors alone. What will the Government do to improve our energy trading with the EU to unlock this vital opportunity?

[James Murray]

The Prime Minister’s plan for change sets out our ambitious but achievable target of clean power by 2030. The clean power action plan demonstrates the significant investment requirements to reach that target, including in renewable infrastructure, and the actions that we will take to facilitate that. We have already taken action to remove the de facto ban on onshore wind in England, approved major solar projects and delivered a record-breaking renewables auction.

[Josh Fenton-Glynn (Calder Valley) (Lab)]

The last Government left 4.5 million children in poverty, but, like many colleagues, I am alarmed that the impact assessment of the spring statement suggests that that number will rise, not fall. Will the Minister tell me when we can expect the results of the child poverty taskforce? Will they be delivered in time to influence decisions in the spending review?

--- Later in debate ---

[Carla Lockhart (Upper Bann) (DUP)]

On 30 October, the Chancellor upended our economy through tax rises and punitive death taxes. She has delivered a devastating blow to family farms and small family businesses—the very backbone of our economy. When will the Chancellor recognise that she is elected by the people, for the people? Every day that she avoids engaging with the farming community is another day of wilful neglect. Our farmers are being driven out, not by market forces but by a Government blind to their struggles and deaf to their voices. When will she listen and speak with them?

[James Murray]

As the hon. Lady and I have discussed in several debates in recent months, the decision we took on agricultural property relief and business property relief was difficult, but it was the right and balanced one to ensure we protect family farms and small businesses while fixing the public finances in a fair way. Fixing the public finances is in the interest of every Member of this House and all the constituents we represent, because it underpins the investment we are putting into the future of this country and into getting the economy growing.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

Many thousands of my constituents in Paisley and Renfrewshire South work in and rely on public services that are on their knees after 18 years of under-investment by the SNP Government at Holyrood. Will my right hon. Friend set out how the views of my constituents will be reflected in the spending review?

[Tessa Munt (Wells and Mendip Hills) (LD)]

In July 2023, my constituent Alison claimed a refund of overpaid tax that was mistakenly paid twice. In February 2024, she was told that her claim would be assessed by 20 March, in July 2024 she was told that it would be by 22 October, and in December she was told that she could not have a date but that the department had definitely received her claim 16 months previously. She has heard nothing since. Will the Chancellor agree to meet me to discuss this very vexed situation for someone who has very little money, given that this claim is nearly 21 months delayed?

[James Murray]

I was sorry to hear about the hon. Lady’s constituent’s experience with, I assume, His Majesty’s Revenue and Customs. Even though, as the Minister with responsibility for HMRC, I cannot get directly involved in individual cases, I am happy to raise it with HMRC and make sure that it gives the matter proper attention to try and resolve it.

[Baggy Shanker (Derby South) (Lab/Co-op)]

Local businesses have huge potential to create local growth in our community. It was fantastic to see my right hon. Friend the Chief Secretary to the Treasury visiting Derby South earlier this year and engaging with business leaders. Does the Minister agree that continued engagement with business leaders is absolutely key to building the business confidence that we so desperately need and which was shattered by the previous Government?

Double Taxation Convention: United Kingdom and Peru

James Murray Excerpts

Thursday 27th March 2025 Written Statements

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

A double taxation convention with Peru was signed in London on 20 March. The text of the convention is available on the HM Revenue and Customs pages of the gov.uk website and will be deposited in the Libraries of both Houses. The text of the convention will be scheduled to a draft Order in Council and laid before the House of Commons in due course.

[HCWS560]

National Insurance Contributions (Secondary Class 1 Contributions) Bill

James Murray Excerpts

Consideration of Lords message
Tuesday 25th March 2025 Commons Chamber

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

I beg to move, That this House disagrees with Lords amendment 1B.

[Madam Deputy Speaker]

With this it will be convenient to consider the Government motions to disagree with Lords amendments 5B, 8B and 21B.

[James Murray]

I welcome the opportunity to consider the new Lords amendments to the National Insurance Contributions (Secondary Class 1 Contributions) Bill. I start by repeating my thanks to Members of both Houses for their careful scrutiny and consideration of the Bill. Four new amendments have been made during consideration of the Bill in the other place, which we will seek to address today.

As I reminded hon. Members last week, when we entered government, we inherited a fiscal situation that was completely unsustainable, and we have had to take difficult but necessary decisions to repair the public finances and rebuild our public services. The measures in the Bill represent some of the toughest of those decisions, but they, along with other measures in the Budget, have enabled us to restore fiscal responsibility and get public services back on their feet. The amendments from the other place before us today put at risk the funding that the Bill seeks to raise. Let me be clear again: to support the amendments is to support higher borrowing, lower spending or other tax rises.

It is with that in mind that I turn to the first group of amendments: Lords amendments 1B, 5B and 8B. These amendments seek to create powers as part of the Bill to exempt certain groups from the changes to employer national insurance rates and threshold in the future, including exemptions for care providers, NHS GP practices, NHS-commissioned dentists and pharmacists, charitable providers of health and care and those providing hospice care. It also includes powers to exempt businesses or organisations with fewer than 25 full-time employees from the changes to the employer national insurance threshold.

[Gregory Stafford (Farnham and Bordon) (Con)]

I thank the Minister for giving way so early in his speech. I just want to understand very clearly why the Government think that the NHS, under the banner of NHS England, should—rightly, in my opinion—be exempt from national insurance contributions, but that other parts of the NHS, such as GP surgeries, dentists and hospice care, should not.

--- Later in debate ---

[James Murray]

As I set out during consideration of Lords amendments last week, and, indeed, at pretty much every other stage of consideration of the Bill, the response to the changes in employer national insurance contributions that we are undertaking as a Government is in line with what the hon. Gentleman’s Government did with the health and social care levy in the previous Parliament—namely providing direct support for public employers, meaning central Government, local government and public corporations. That is the standard way in which support for employer national insurance contribution changes is responded to.

As I have set out, the revenue raised from the measures in the Bill will play a critical role in repairing the public finances and rebuilding our public services. Clearly, any future changes that would exempt certain groups from paying national insurance would have cost implications, which, as I have made clear, would necessitate higher borrowing, lower spending or alternative revenue-raising measures. It is for that reason that I ask the House to support the Government’s position by disagreeing to amendments 1B, 5B and 8B.

[Sir Roger Gale (Herne Bay and Sandwich) (Con)]

The Commons’ disagreement to Lords amendment 1, debated last week, states that the amendment

“interferes with the public revenue, and the Commons do not offer any further Reason.”

Does the Minister not think that those we represent would—just perhaps—prefer to see their taxed income generously donated via spending on children’s hospices, rather than spent on an idiotic deal to spend millions of pounds on the Chagos islands?

[James Murray]

The right hon. Gentleman raised the question of hospices during last week’s debate on amendments from the other place. As I made clear at the time, although hospices do not receive support to meet the changes in employer national insurance contributions, we greatly value the work they do. I pointed to the wider support that the Government are giving the hospice sector—namely, the £100 million boost for adult and children’s hospices to ensure they have the best physical environment for care, and the £26 million revenue to support children and young people’s hospices.

The right hon. Gentleman also referred to people giving to hospices, which are established as charities. Of course, the Government provide support for charities, including hospices, through the tax regime, which is among the most generous in the world, with tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024.

Lords amendment 21B would require the Government to conduct assessments on the economic and sectoral impacts of the Bill. As we have discussed previously, the Government have already published an assessment of this policy in a tax information and impact note published by His Majesty’s Revenue and Customs. That note sets out that, as a result of measures in the Bill, around 250,000 employers will see their secondary class 1 national insurance contributions liability decrease, and around 940,000 employers will see it increase. Around 820,000 employers will see no change. The Office for Budget Responsibility’s economic and fiscal outlook also sets out the expected macroeconomic impact of the changes to employer national insurance contributions on employment, growth and inflation. The Government and the OBR have therefore already set out the impacts of this policy change. The information provided is in line with other tax changes, and the Government do not intend to publish further assessments. However, we will of course continue to monitor the impact of these policies in the usual way.

I hope that right hon. and hon. Members will understand why we are not supporting these amendments from the other place. The measures in the Bill will play a crucial role in fixing the public finances and getting public services back on their feet. The amendments require information that has already been provided, do not recognise other policies the Government have in place or, most seriously, seek to undermine the funding that the Bill will secure. I therefore respectfully propose that this House disagrees with these amendments, and urge all hon. and right hon. Members to support the Government on that disagreement.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

--- Later in debate ---

[Gregory Stafford]

My right hon. Friend makes an excellent point, echoing one made by the hon. Member for Angus and Perthshire Glens (Dave Doogan). That is correct: there will inevitably be a net cost to the Exchequer because of this policy. He is right that home care has not been touched on but will be affected. Home care companies in my constituency will not be able to expand their staff, which is vital to meeting people’s needs.

Pharmacies, which we have not touched on a lot, are in the same position. A few weeks back, I visited Badgerswood pharmacy in Headley in my constituency, and I was told that the measure will hit it hard and cause a real problem in service delivery for my constituents.

This measure will not only have a massive effect on those businesses—GPs, pharmacies, the hospice sector and the home care sector—on the economy, because there will be a net cost, and on patients, who will not receive the services in the wider NHS family that they deserve, but it runs entirely contrary to the Government’s stated policy of wanting to bring healthcare close to home and close to the community. Although they are exempting acute hospital care, which takes place away from the community, they are taxing the bit that they say they want to expand. It is totally illogical, even on the Government’s own policy. I hope that the Government have an 11th hour change of heart, either today or at the emergency Budget tomorrow, because it is vital that we support these sectors.

We see with Lords amendment 21B that the proof of the pudding is in the eating, as it were. If the Government were so convinced that their policy was the right, just, fair and proper one, they would allow a review to go ahead so that we could see its impact. The fact that Government Members will be walking through the Division Lobby to hide this policy from the British people tells us all that we need to know: they know that this policy does not stand up to scrutiny, and they are running from it.

[James Murray]

With the leave of the House, I will respond briefly to some of the comments made by Opposition Members.

Although I feel that the Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), will not support us on the Bill, I none the less recognise that she seems to support the extra funding that we put into public services in terms of GPs, dentists, hospices commissioned by the NHS and so on. Although she will not agree with the difficult decision that we have taken to raise that funding, I got the impression that she supports our spending on those public services.

I turn to the official Opposition. The shadow Minister, the hon. Member for Grantham and Bourne (Gareth Davies), claimed that very small businesses will feel the greatest impact from the changes in the Bill. I can only conclude, therefore, that he has not read the Bill, because he would have seen that we are doubling the employment allowance to £10,500, with the result that the very smallest businesses will not pay any national insurance contributions at all when they are employing up to four people earning the national living wage.

More widely, the shadow Minister and many of his Opposition colleagues refuse to take any responsibility whatever for the state of the public finances or the public services after 14 years of the Conservative party being in control. They also resisted the opportunity to acknowledge that the approach we are taking in government to compensate the public sector for changes in employer national insurance contributions is the same one that the previous Government took with the health and social care levy. That came up time and again, and even when the shadow Minister was intervened on, he missed the opportunity to acknowledge that our approach is the same one that he and his colleagues took in government.

The amendments from the other place would require information that has already been provided. Either they do not recognise other policies that the Government have in place, or—most seriously—they would undermine the funding that the Bill will secure. Let me be clear: to support the amendments that create exemptions is also to support higher borrowing, lower spending or other tax rises. I therefore ask the House to support the Government’s position by disagreeing to Lords amendments 1B, 5B, 8B and 21B.

Question put, That this House disagrees with Lords amendment 1B.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

James Murray Excerpts

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

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

I beg to move, That this House disagrees with Lords amendment 1.

[Mr Speaker]

With this it will be convenient to consider Lords amendments 2 to 19 and 21, and Government motions to disagree.

[James Murray]

I welcome the opportunity to consider the Lords amendment to the Bill. I thank Members of both Houses for their careful scrutiny and consideration of the Bill, and I place on record particular thanks to the Financial Secretary to the Treasury, Lord Livermore, for his invaluable support and for so expertly leading the Bill through the other place.

During consideration of the Bill in the other place, 21 amendments were made, 20 of which we will address today, but before I do so directly, let me remind both Houses of the context for the Bill. When we entered government, we inherited a fiscal situation that was completely unsustainable. We have had to take difficult but necessary decisions to repair the public finances and rebuild our public services. The measures in the Bill represent some of the toughest decisions that we have had to take as a result. To restore fiscal responsibility and get public services back on their feet, we needed to raise revenue, including through the measures that the Bill will introduce. Many of the amendments from the other place put at risk the funding that the Bill seeks to raise, so let me be absolutely clear: to support the amendments is also to support higher borrowing, lower spending or other tax rises. With that in mind, I now turn to the first group of Lords amendments.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

The Minister has talked about the growth mission, which is the Government’s raison d’être, but last week we found out that the economy had shrunk. Has he done any work to find out how much that 0.1% drop will cost the Government? It will have huge tax implications.

[James Murray]

As I have set out to the hon. Gentleman in a number of debates in recent weeks, the Government have had to take difficult but necessary decisions to restore fiscal responsibility after the completely unsustainable situation that we inherited from the Conservative party. That fiscal responsibility and economic stability are essential for greater investment in the economy, which is the bedrock of the growth that we are so determined to pursue.

[Graham Stuart (Beverley and Holderness) (Con)]

Will the Minister outline how many billions the Government will spend this year, what percentage £22 billion represents in that amount, and—if I may be so greedy as to ask an additional question, Mr Speaker—how much the flatlining of the economy has cost the Government compared with that £22 billion? I put it to the Minister that the impact of the national insurance contributions rise has been much greater than that of the mythical £22 billion alleged by the Government.

[James Murray]

I am not clear from the right hon. Gentleman’s intervention whether he finally accepts that we inherited a £22 billion black hole when we entered government. I know that several of his colleagues have sought to rewrite history, but the facts are there. We inherited a completely unsustainable fiscal situation, with pressures and a £22 billion black hole, and we had to take difficult but necessary decisions to remedy that. It was important to do so, because without the basic fiscal responsibility and economic stability that a Government should deliver, investment, which is the basis for growth, will not happen.

[Richard Tice (Boston and Skegness) (Reform)]

The Minister speaks about facts. Is he aware of the fact that when the Labour party won the election, the economy was growing, and is he aware of the fact that it is now shrinking?

[James Murray]

I am very aware of the fact that we inherited an economy and a fiscal situation in a mess. That was completely unsustainable, and it was our duty as a Government to address it. No responsible Government could have let things carry on as they were, with the fiscal situation the way it was. That is why we took the action we did.

[Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)]

Will the Minister give way?

[James Murray]

I will not, as I have already given way several times and must make progress.

We had to take those decisions to put the fiscal responsibility back at the heart of government, to return economic stability to the public finances, and to have the basis for the investment on which we can grow the economy and put more money in people’s pockets.

Lords amendments 1, 4, 5, 9 and 13 relate to the NHS and social care providers. The amendments seek to maintain the employer national insurance contribution rates and thresholds at their current level for NHS-commissioned services, including GPs, dentists, social care providers and pharmacists, as well as those providing hospice care. As Members of both Houses will know, as a result of the measures in this Bill and wider Budget measures, the NHS will receive an extra £22.6 billion over two years, helping to deliver an additional 40,000 elective appointments every week.

Primary care providers—general practice, dentistry, pharmacy and eye care—are important independent contractors that provide nearly £20 billion-worth of NHS services. Every year, the Government consult the general practice and pharmacy sectors.

[Jim Shannon (Strangford) (DUP)]

One question raised regularly in my constituency relates to GP surgeries. The national insurance contributions will hit them immensely hard. GPs tell me that their only choice is to reduce staff and cut back appointments. The Minister mentions £22 billion extra for the NHS, but if GP surgeries and health clinics are reducing staff and reducing their capacity to deliver services, is that not a step down in what is delivered in my constituency and beyond? Will he reconsider the measures given the impact on GP surgeries?

[James Murray]

I thank the hon. Gentleman for raising the question of GPs and the funding and support that the Government are providing them. We are investing an additional £889 million in general practice, which brings the total spend on the GP contract to £13.2 billion in 2025-26. That is the biggest increase in over a decade. The changes to the contract will improve services for patients and help to make progress towards the Government’s health mission—shifting from analogue to digital, from sickness to prevention, and from hospital to community care—as set out in the Prime Minister’s plan for change. That support for GPs is an essential part of what the Budget, including the national insurance measures we are debating, delivers.

[John Milne (Horsham) (LD)]

Age UK in my constituency has told me that the employer NICs rise will cost it £50,000 a year. Does the Minister agree that it is impossible to improve the public sector by taxing the public sector?

[James Murray]

We inherited public services that were on their knees and needed urgent support. Part of the reason why we took the difficult but necessary decisions at the Budget last October was, of course, to restore fiscal responsibility, but it was also to get public services back on their feet. That is not just about the public services that people across the UK enjoy; it is also about ensuring that we have the stability for economic growth. If we do not have a health service that works well, we do not have a healthy population who can go to work. If we do not have a transport system that works well, people cannot get to work. That investment to get public services back on their feet after 14 years of Conservative control is essential for the experience of people in the UK, but it will also ensure that we have the economic growth that will enable us to put more money in people’s pockets.

[Dr Neil Hudson (Epping Forest) (Con)]

Will the hon. Gentleman give way?

[James Murray]

I will make a little progress. I have spoken about GPs, but the Department of Health and Social Care has entered into consultation with Community Pharmacy England regarding the 2024-25 and 2025-26 community pharmacy contractual framework. The final funding settlement will be announced in the usual way, following the consultation.

[Dr Luke Evans]

I am grateful to the hon. Gentleman for giving way yet again. The National Pharmacy Association announced for the first time ever, in 104 years, that it is planning action by reducing services because of the implications of the Budget. One of its requests is the release of an independent report commissioned by NHS England on the future funding of pharmacies. Now that the Government are in charge of NHS England, will the Minister ask his colleagues in the Department of Health and Social Care to release that report before the consultations finish, so that the public and the pharmacies can see exactly what the financial situation in that independent report will be?

[James Murray]

Reports on work that the Department of Health and Social Care is carrying out are a subject for Ministers in that Department, but on the funding that I am speaking about, the final funding settlement will be announced in the usual way, following the consultation that is under way.

The NHS in England invests around £3 billion every year on dentistry, and NHS pharmaceutical, ophthalmic and dental allocations for integrated care systems for 2025-26 have been published, alongside NHS planning and guidance. On social care, the Government have provided a cash increase in core local government spending power of 6.8% in 2025-26, including £880 million of new grant funding provided to social care—funding that can be used to address the range of pressures facing the adult social care sector.

[Dr Hudson]

The figures that the Minister is presenting, along with the answer that he gave to the hon. Member for Strangford (Jim Shannon), and similar to the Prime Minister, involve money going into sectors that will not mitigate the national insurance rise. Will he confirm that sectors such as hospices, social care, GPs and pharmacies will have some support, rather than tell us about money that is not going to help people with regard to the jobs tax that is coming in?

[James Murray]

The various organisations or services that I am talking about, whether GPs, pharmacies or organisations that provide social care, receive money from Government, and the way that those discussions take place is by considering pressures on the providers of those services in the round—that is the way the negotiations take place. Direct support for employer national insurance contributions obviously applies to central Government, local government and public corporations, which is much the same way that the previous Government approached things under the health and social care levy. Pressures on social care or GPs, as I have been outlining, are considered in the round in terms of their funding settlements, and as I said, the £880 million of new grant funding can be used to address a range of pressures facing adult social care.

[Sir Gavin Williamson]

The hon. Gentleman makes an interesting point, but let us look at children’s hospices, which will be down £4.9 million. Most funding for children’s hospices does not come from the Government; it comes from communities and from people supporting them. Can the Minister, at the Dispatch Box, assure children’s hospices such as Acorns in the west midlands that they will not be down the money that they will be losing through extra NI contributions, and that that £4.9 million will be replaced by the Government for children’s hospices?

[James Murray]

I thank the right hon. Gentleman for mentioning hospices, and perhaps I may set out the Government’s position on hospices and some of today’s amendments. The Government recognise the vital role that hospices play in supporting people at the end of life, and their families, and they also recognise the range of cost pressures that the hospice sector has been facing over a number of years. We are supporting the hospice sector with a £100 million increase for adult and children’s hospices, to ensure that they have the best physical environment for care, and £26 million of revenue to support hospices for children and young people. The £100 million will go towards helping hospices to improve their buildings, equipment and accommodation, to ensure that patients continue to receive the best possible care.

[Wendy Morton (Aldridge-Brownhills) (Con)]

The point that Opposition Members are trying to emphasise is that the Government appear to be giving with one hand, but taking away with the other. The hospice sector is just one example of many sectors that have been adversely affected by the Government’s cruel tax.

[James Murray]

As I said a few moments ago, the way that the Government support central Government, local government and public corporations—that is Departments and other public sector employers—is the same way that the previous Government responded to the health and social care levy. That is a standard way in which the Government offer support for employer national insurance costs.

[Several hon. Members rose—]

[James Murray]

I will make some progress.

[Sir Roger Gale (Herne Bay and Sandwich) (Con)]

Will the Minister give way on that point?

[James Murray]

No, I will make some progress. The Government want to shift healthcare out of hospitals and into the community, to ensure that patients and their families receive personalised care in the most appropriate setting.

[Carla Lockhart (Upper Bann) (DUP)]

I thank the hon. Gentleman for giving way. Southern Area hospice, which is located just outside my constituency, has to raise £3.6 million per year, or £300,000 per month. It is not Government funded, as has been mentioned, so what reassurance can the Minister give to those currently using Southern Area hospice for end of life care that the Government will do the right thing and support our hospices by not including them in the increase to national insurance contributions?

[James Murray]

I have explained how the Government are approaching employer national insurance contributions and the support that they offer for central Government, local government and public corporations. That is an established way of responding to changes to employer national insurance contributions, which the previous Government did—

[Sir Roger Gale]

rose—

--- Later in debate ---

[James Murray]

The right hon. Gentleman is being so persistent. He must have an amazing point to make, so I will give way to him. I wait with bated breath.

[Sir Roger Gale]

It is an amazing point, and I hope that the hon. Gentleman will get it, because it was clear that the Prime Minister did not get it at Prime Minister’s questions. Let’s tell the real truth: the money that is being given by the Government—taxpayers’ money—to children’s hospices such as Shooting Star and Demelza hospices, is for buildings. The national insurance increase is directly hitting the people who do the work on which very sick children depend. Why is that imposition being made?

[James Murray]

The £100 million that the right hon. Gentleman alluded to is important funding to help hospices improve their buildings, equipment and accommodation, to ensure that patients receive the best care possible. As I said a few moments ago, there will be £26 million of revenue to support children and young people’s hospices. More widely, the Government provide for charities, including hospices, through the wider tax regime, which is among the most generous in the world. That included tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024. Finally, as the right hon. Gentleman will know, all charities, including hospices that are set up as charities, can benefit from the employment allowance that the Bill more than doubles, from £5,000 to £10,500. That will benefit charities of all sizes, particularly the smallest.

[Sir Gavin Williamson]

The Minister knows that that is funding for one year, and mainly for buildings, as he has admitted. This will be a cost on hospices every single year going forward. It will be cumulative and mean that hospices have to ask their communities for more and more, just to give that basic help. Will he commit to funding children’s hospices by the £4.9 million that the Government are taking off them every year, or not—yes or no?

[James Murray]

The points I was making before I gave way to the right hon. Gentleman are recurrent features of the tax system. The support through the tax regime for charities and their donors, which was worth more than £6 billion in April 2024, is a feature of the system that happens every year. The increase in the employment allowance from £5,000 to £10,500, which will benefit hospices that are set up as charities, is a permanent change that we are making through the Bill.

[Richard Fuller (North Bedfordshire) (Con)]

As is evident to many hon. Members, the Minister has, for the first time, found himself unable to answer some very straightforward questions from Opposition Members about the difference between the allocation of funding for capital expenditure and for current expenditure, and the impact that that difference will have on our hospices, children’s hospices, GPs and others affected by Labour’s jobs tax.

I am sure Members of the House of Lords who brought these amendments back will also have noticed that the Minister has been unable to answer those questions. Prior to the Bill going back to the House of Lords, will the Minister agree to speak to the Chancellor or the Chief Secretary to the Treasury to get a clear answer to the questions that have been raised today about which money will be available for capital and which money will be available to offset the national insurance charge increase?

[James Murray]

I am sorry that the hon. Gentleman felt that I was being unclear—I think I was being perfectly clear on the Government’s position. He may not agree with that position—he is entitled not to—but on the employer national insurance contribution changes I have been very clear that the Government will provide support directly to central Government, local government and public corporations, such as Departments and other public sector employers, as was the case under his Government with the health and social care levy. That does not apply to GPs, dentists, hospices and the other organisations that we have been discussing today.

The important point that I was making, which I hope was clear to him and his colleagues on the Conservative Benches, was about the wider support that the Government are providing to hospices, the funding that we are providing to GPs and the discussions we are having with other primary care providers. That is the context in which the Bill has to be seen. We are able to take decisions around funding for public services because of the difficult decisions that we took at the Budget last year, and this Bill implements one of those decisions.

At Prime Minister’s questions earlier today, it was noticeable that when the Prime Minister asked the Leader of the Opposition whether she would reverse the national insurance contribution rise that we are bringing in through the Bill, she refused to commit to that. I am unclear exactly what the Conservative position is—[Interruption.]

[Several hon. Members rose—]

[James Murray]

I think one of the Conservative Members said that he will update me in his speech later. I may have misheard him, but I think I heard him say that he will confirm later whether the Opposition will reverse the national insurance changes we are making, so I look forward to that update.

[Jim Allister (North Antrim) (TUV)]

Will the Minister explain to the House how it is right for the Government to cover the extra national insurance contributions of those working in the public sector, for example in hospital provision, but it is not right to do that for those working in hospices, in end of life care? How can that circle be squared? Why will they cover the national insurance contributions for those working in hospitals that are treating people, but not for those working in hospices that deliver end of life care?

[James Murray]

The fundamental principle is about which organisations the Government will support in response to the changes to national insurance contributions. The approach the Government are taking, which is in line with the approach taken by the previous Government in the health and social care levy, is for the Government to provide support for Departments and other public sector employers for additional employer national insurance contributions. As I said to the hon. Member for North Bedfordshire (Richard Fuller), that means central Government, public corporations and local government. Primary care providers are independent contractors and will therefore not be exempt from the changes.

[Calum Miller (Bicester and Woodstock) (LD)]

The Minister makes the point that this is secondary for primary care providers. However, he does not acknowledge that primary care providers still do not know how they will be compensated by the Government, as I hear from dentists, community pharmacies and social care providers in my constituency. We are very close to the start of the tax year and those small businesses are providing critical primary care services in our communities. How can they operate when the Minister obfuscates and says other people might talk to them at a later stage about the money that they might receive? Would it not be easier for the Minister to accept the Liberal Democrat amendment from the House of Lords and clear up this matter today?

[James Murray]

For clarity, primary care providers who are independent contractors will not receive the direct support that the Government provide to Departments and other public sector employers. The pressures that those providers face are considered in the round before funding is provided to them, so the solution is arrived at in a different way from the way suggested by the hon. Gentleman.

As I set out earlier, the revenue raised by the decisions set out in the Bill will help fund public services, including those provided by the NHS and other social care providers. The amendments would put much of that funding at risk, so to support these amendments is to support higher borrowing, lower spending or other tax rises.

[Mr Joshua Reynolds (Maidenhead) (LD)]

What advice can the Minister give Thames hospice and Alexander Devine children’s hospice service in Maidenhead, which are looking at a £300,000 and £50,000 increase in bills respectively? Is he saying that they should cut services, or is he expecting residents in our constituencies to raise more money for them, for it to be given directly back to the Chancellor?

[James Murray]

I do not know the situation of those hospices, so I will not give them direct advice on managing their operations. More generally, I have set out the Government’s approach to providing direct support for Departments and other public sector employers. It depends how hospice care is provided. In many cases, integrated care boards are responsible for commissioning palliative and end of life care services to meet the needs of local populations. Where hospices are commissioned by the NHS, contractual arrangements should be discussed with the integrated care board at local level.

[Sir Julian Smith (Skipton and Ripon) (Con)]

The Minister has a capital budget and revenue budgets. We are talking about a small amount of money—£4 million or £5 million—so will he consider switching £4 million or £5 million from the capital budget to the revenue budget? Opening up that opportunity would have merit, and would help these very vulnerable organisations.

[James Murray]

I have set out the Government’s approach to supporting Departments and other public sector employees when it comes to the changes to employer national insurance contributions. As I said to the shadow Chief Secretary to the Treasury, the hon. Member for North Bedfordshire, we are taking the same approach that his Government took to the health and social care levy. We are talking about the wider pressures faced by organisations, be they GPs or hospices, and what we can do to support them and their processes. We are considering the pressures on them in the round. I have made a considerable number of points about Lords amendments 1, 4, 5, 9 and 13. In the light of those points, I urge the House to disagree with those amendments.

I turn to the Lords amendments relating to charities, local government and special educational needs transport. Lords amendments 2, 7, 12 and 16 seek to exempt charities from the changes to employer national insurance contribution rates and thresholds. The Government recognise the crucial role that charities play in our society. We recognise the need to protect the smallest charities; that is why we have more than doubled the employment allowance to £10,500 pounds, meaning that more than half of businesses, including charities with national insurance liabilities, either gain or will see no change next year.

As I have noted, it is important to recognise that all charities can benefit from the employment allowance. The Government provide wider support for charities via the tax regime; tax reliefs for charities and their donors were worth just over £6 billion in the tax year to April 2024. Again, the amendments would put much of the funding that the Bill seeks to raise for public services at risk, so supporting these amendments is support for higher borrowing, lower spending or other tax rises.

[Dr Luke Evans]

After yesterday’s announcement about benefit changes and benefit cuts, the Government have said that they want more people to go into work. A lot of help to get people into work is delivered by charities, so we are expecting a greater need for such charities. How will they cope if they are being taxed through further NICs? They will have to reduce their services and their ability to provide support, so there will be a gap in the market. Will the Minister explain how the Government intend to bridge that gap?

[James Murray]

I thank the hon. Gentleman for drawing attention to the very important reforms that my right hon. Friend the Secretary of State for Work and Pensions set out in this House yesterday, which are a crucial part of getting people back into work. Further details on interventions to help people back into work will be set out. We recognise that charities may, in some cases, provide that support, which is why many of the elements of support for charities in the tax regime remain so generous. There was £6 billion for tax relief for charities and their donors in the tax year to April 2024 through features that will continue in the tax year that we are entering. The employment allowance is more than doubling from £5,000 to £10,500, which will benefit all charities in this country. Charities, particularly small charities, will benefit directly from changes that we have made to the employment allowance. [Interruption.] Sorry, Madam Deputy Speaker—I thought you were going to intervene on me.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

The Minister is making a lengthy contribution; I am just waiting for a conclusion.

--- Later in debate ---

[James Murray]

In that case, I will not take any more interventions, and I will make speedier progress. I will address Lords amendments 3, 6, 11 and 15, which relate to employers who provide transport for children with special educational needs. In the Budget and the recent provisional local government finance settlement, the Government announced £2 billion of grant funding for local government in ’25-26, which includes £515 million to support councils with the increase in employer national insurance contributions. That funding is not ringfenced, and it is for local authorities to determine how to use it across relevant services and responsibilities.

Lords amendments 8, 10, 14 and 17 to 19 together seek to maintain the current threshold for businesses employing fewer than 25 members of staff. When it comes to protecting the smallest businesses, the Government are taking action through this Bill by increasing the employment allowance from £5,000 to £10,500, as I have said. That means that next year, 865,000 employers will pay no national insurance at all, and more than half will see no change, or will gain overall as a result of this package.

Finally, Lords amendment 21 would require the Government to conduct assessments on the economic and sectoral impacts of the Bill. As we have discussed previously in this place, the Government have already published an assessment of this policy in a tax information and impact note published by His Majesty’s Revenue and Customs. That note states that as a result of the Bill, around 250,000 employers will see their secondary class 1 national insurance contributions liability decrease, and around 940,000 employers will see it increase. Around 820,000 employers will see no change. The Office for Budget Responsibility’s economic and fiscal outlook also sets out the expected macroeconomic impact of the changes to employer national insurance contributions.

I hope that hon. and right hon. Members will understand why we are not supporting these amendments from the other place. Through this Bill, the Government are making difficult but necessary decisions in order to fix the public finances and get public services back on their feet. The amendments from the other place require information that has already been provided, do not recognise other policies that the Government have in place and, most seriously, undermine the funding that this Bill seeks to secure. I therefore respectfully propose that this House disagrees with the amendments, and urge all hon. and right hon. Members to support the Government on that disagreement.

[Several hon. Members rose—]

--- Later in debate ---

[Sarah Dyke (Glastonbury and Somerton) (LD)]

I rise to speak to Lords amendments 1, 4, 5, 9 and 13. These amendments tabled by the Liberal Democrats in the other place would ensure that care providers, NHS GP practices, NHS-commissioned dentists, NHS-commissioned pharmacies, charitable providers of health and social care, and hospice care continue to pay secondary class 1 contributions at the rate of 13.8%.

With healthcare in such a dire state in Glastonbury and Somerton, it is essential that providers are not put into further financial difficulties due to increases in employer national insurance contributions. Like so many Members, my inbox has been brimming with correspondence on this matter from organisations across my constituency. The measure will disproportionately impact businesses run by women. For example, early years provider Acorn Day Nursery in Somerton has told me that it believes that the employer national insurance contribution increases, in combination with other recent funding announcements, could be the final nail in the coffin for its business, leaving families without crucial early years care provision. I have heard from hospice care providers such as Dorothy House, which provides crucial end of life care for my constituents. It will be hard hit by the rise in employer national insurance contributions, which will impact care provision for people who live in rural areas.

Vine GP surgery in Street shared with me its concerns about the impact of the changes to employer national insurance contributions, stating that it will undermine access to patient care following years of neglect from the previous Conservative Government. A constituent from Langport recently wrote to me to raise their concerns about the negative impact of the rise in national insurance on care homes. Already stretched care homes could see an increase of around £650 per employee for anyone working more than eight hours a week. That will have a knock-on impact on the cost of care provision.

Community pharmacies play an essential role in providing care in the community, in line with the Government’s strategic agenda. However, if the rise in national insurance contributions goes ahead, pharmacies such as Bruton, Castle Cary, Stoke-sub-Hamdon and Martock could all be put at risk. If they go, vital frontline services for rural communities will be lost. The National Pharmacy Association has predicted that around 1,000 will close by 2027. The combined effect of changes to the national insurance contributions and the national living wage could add an extra £25,000 to each pharmacy in rural Somerset, affecting their viability. Given the rate of pharmacy closures in Glastonbury and Somerton is nearly double the national average, my constituents will be hard hit by this tax hike.

In rural areas we simply cannot afford to lose any more pharmacies or our critical frontline services. I fear that these measures will only increase the pressure on GPs and other services that will be badly impacted by this decision. I urge colleagues to back the Liberal Democrats’ amendments so that we can protect frontline health providers, who, shockingly, are not included in the Government’s exemption. Without it, health and early years provision across the country will be drastically reduced.

[James Murray]

I will respond briefly to some of the points raised in the debate. I thank all hon. Members for their contributions. The shadow Minister, the hon. Member for Grantham and Bourne (Gareth Davies), repeated many points that I addressed in my opening remarks. He asked a fundamental question: why must the Bill be implemented? My response is because of the mess that his party left when we won the election last July. I noted that he refused to say whether he would reverse the national insurance changes that we are making, despite being asked by Government Members. He refused to make clear his party’s position, as the leader of his party did earlier.

The hon. Member for Gosport (Dame Caroline Dinenage) spoke of choices in politics. She is right that politics is about choices. But she was also incapable of explaining what different choices she and her colleagues would make, since they oppose our changes to national insurance contributions. Would they go for higher borrowing, lower spending or other tax rises?

My hon. Friend the Member for Poole (Neil Duncan-Jordan) Poole and the hon. Member for Chester South and Eddisbury (Aphra Brandreth) spoke about special educational needs transport facilities. I mentioned in my earlier remarks that the Budget and the provisional local government finance settlement set out £2 billion of new grant funding for local government in 2025-26. That includes £515 million to support councils with employer national insurance contributions. However, it is not ringfenced, which means that it is for local authorities to determine how to use this funding across relevant services and responsibilities.

There was a comment from the right hon. Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson), although he is not in his place and I do not know where he is—perhaps he is off feeding his spider. He made a rather colourful comparison between some of my points and those made by a former colleague of his. I do not know whether he realised that in doing so he implied that the position that the former Secretary of State for Health was defending was indefensible. I would be interested to see which of the previous Government’s policies he thought were indefensible. When he returns from his spider-care duties I will ask him, but in his absence, let me say what is indefensible: for Conservative Members to have voted for the Liz Truss mini-Budget. What is indefensible is what they did to public services over 14 years. What would have been indefensible would have been our letting the situation carry on as it was when we won the general election.

The Bill makes some of the difficult but necessary decisions that we as a Government have had to take to fix the public finances and get public services back on their feet. The amendments from the other place require information that has already been provided. They do not recognise other policies that the Government have in place, and most seriously they seek to undermine the funding that the Bill will secure. I therefore respectfully propose that this House disagrees with the Lords amendments.

Question put, That this House disagrees with Lords amendment 1.

Horizon Shortfall Scheme

James Murray Excerpts

Thursday 13th March 2025 Written Statements

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

As the Minister for Services, Small Business and Exports (Gareth Thomas) has previously announced, the Department for Business and Trade is introducing an independent Horizon shortfall scheme appeals process to ensure all claimants have a fair opportunity to receive full compensation, in line with the recommendations of the Horizon Compensation Advisory Board.

The Government are committed to taking swift action to ensure affected postmasters receive the financial redress they are owed, with minimal administrative burden. To this end, the Government will ensure that no income tax, capital gains tax, national insurance contributions, corporation tax, or inheritance tax will be payable on any compensation received through the appeals process.

The Government will legislate via secondary legislation to formalise this tax exemption shortly.

[HCWS519]

Oil and Gas High Price Mechanism Consultation

James Murray Excerpts

Wednesday 5th March 2025 Written Statements

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

Today, HM Treasury and HM Revenue and Customs have published a consultation on how the oil and gas fiscal regime will respond to future oil and gas price shocks once the energy profits levy (EPL) ends.

The EPL was introduced in 2022 in response to extraordinary profits made by oil and gas companies driven by global events, including resurgent demand for energy post-covid 19 and the invasion of Ukraine by Russia. The EPL will end in 2030, or earlier if the EPL’s price floor, the energy security investment mechanism, is triggered.

The Government are committed to ensuring that there is a new permanent mechanism in place to respond to future oil and gas price shocks. This new mechanism will form an integral part of the fiscal regime, responding only when there are unusually high prices. This will also ensure that the oil and gas industry has the certainty it needs on the future fiscal landscape helping to protect businesses and jobs now and for the future.

The consultation sets out the Government’s policymaking objectives and design options for a new mechanism inviting stakeholder feedback. The Government will work together with the sector and others to ensure we take account of as wide a range of views as possible during this consultation.

The consultation will remain open for three months, closing on 28 May. After this, the Government will consider findings before announcing the final design of the new mechanism in due course.

The Department for Energy Security and Net Zero has launched a separate consultation, “Building the North Sea’s Energy Future”, which sets out the framework for the future of offshore energy in the North sea to support our mission to become a clean energy superpower. This Government want to foster a leading offshore clean energy industry, which ensures good, long-term jobs, growth and investment across the North sea, in tandem with a sustainable transition from oil and gas. Both consultations are integral to the Government’s wider efforts to build the UK’s energy future while promoting economic growth and environmental sustainability.

The HM Treasury high price mechanism consultation can be found at the following link: https://www.gov.uk/government/consultations/oil-and-gas-price-mechanism-consultation

The Department for Energy Security and Net Zero’s “Building the North Sea’s Energy Future” consultation can be found at the following link: https://www.gov.uk/government/consultations/building-the-north-seas-energy-future

We look forward to receiving responses from stakeholders, industry and the public.

[HCWS501]