Oil and Gas Decommissioning Relief Deeds
James Murray Excerpts(2 weeks, 1 day ago)
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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.
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Oral Answers to Questions
James Murray Excerpts(2 weeks, 1 day ago)
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Paul Waugh (Rochdale) (Lab/Co-op)
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)
Andrew George (St Ives) (LD)
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)
Mr Alistair Carmichael (Orkney and Shetland) (LD)
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.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
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.
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)
Brian Leishman (Alloa and Grangemouth) (Lab)
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)
Vikki Slade (Mid Dorset and North Poole) (LD)
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)
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)
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?
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(3 weeks, 6 days ago)
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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.
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National Insurance Contributions (Secondary Class 1 Contributions) Bill
James Murray ExcerptsTuesday 25th March 2025
(4 weeks, 1 day ago)
Commons ChamberRead Full debate National Insurance Contributions (Secondary Class 1 Contributions) Act 2024-26 View all National Insurance Contributions (Secondary Class 1 Contributions) Act 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Message as at 25 March 2025 - (25 Mar 2025)
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.
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.
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 ExcerptsWednesday 19th March 2025
(1 month ago)
Commons ChamberRead Full debate National Insurance Contributions (Secondary Class 1 Contributions) Act 2024-26 View all National Insurance Contributions (Secondary Class 1 Contributions) Act 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Amendments as at 19 March 2025 - (19 Mar 2025)
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.
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—
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—
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.
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—
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(1 month, 1 week ago)
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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(1 month, 2 weeks ago)
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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]
Oral Answers to Questions
James Murray Excerpts(1 month, 2 weeks ago)
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Munira Wilson (Twickenham) (LD)
The Exchequer Secretary to the Treasury (James Murray)
The Government have taken difficult decisions to repair the public finances, fund public services and restore economic stability. The Office for Budget Responsibility predicts that the employer national insurance contribution changes
“will reduce the level of potential output by 0.1 per cent at the forecast horizon”.
It also predicts that growth will pick up next year and that living standards will rise faster during this Parliament than during the last, and in the long term it expects the autumn Budget policies, if sustained, to increase the size of the economy permanently.
Monica Harding
My constituent Alison runs Stepping Stones nursery school, which has been operating in my constituency for 30 years, offering wraparound care to busy families. The increase in employers’ national insurance contributions alone will cost it £16,000 a year and it is still struggling with an increase in utility costs, while other nurseries in the area are also struggling and, indeed, closing. Headmasters, a hairdresser in Walton, is struggling with £15,000 of extra costs, owing primarily to this tax rise. Can the Minister explain to businesses in Esher and Walton how the Government’s national insurance policy will deliver growth or higher living standards, given that it seems to be doing neither?
James Murray
The Government’s decision to increase employer national insurance contributions was one of the toughest decisions that we took at the Budget, but it was necessary to restore stability to the public finances. It is only on the basis of having stable public finances and fiscal responsibility that we can boost the investment and growth that will make people across Britain better off.
Munira Wilson
As the poor growth figures show, the Chancellor’s jobs tax is really hurting businesses, not least in our hospitality sector. In my constituency, pubs such as the Eel Pie and the King’s Head, as well as the family-run restaurant Shambles, are really struggling with soaring costs and putting off hiring people. If the Chancellor will not reverse her jobs tax, will she at the very least consider extending the current 75% business rates relief for hospitality until the new system that she has announced is in place?
James Murray
The hon. Member speaks about business rates relief. We have to remember that the business rates relief for retail, hospitality and leisure was due to end entirely in April 2025 under the plans we inherited from the Conservative party. Despite the toughest of contexts, we decided to extend the 40% relief for another year before the permanently lower rates for retail, hospitality and leisure come in from April 2026.
Dan Tomlinson (Chipping Barnet) (Lab)
Does the Minister agree that planning reform is essential for higher growth and lower taxes? Is he, like me, concerned that the anti-growth Opposition we see before us in this House will vote against the forthcoming planning and infrastructure Bill, which is possibly the most significant piece of pro-growth legislation that this Parliament will see in decades?
James Murray
My hon. Friend is absolutely right about the centrality of planning reform to getting the economy growing. Indeed, one of the first actions that the Chancellor announced on taking office was to scrap the ban on onshore wind turbines in the planning system, which had been holding back our clean energy transition. I hope that some Opposition Members might take the opportunity during today’s questions to confirm that they will support our reforms to the planning system, because they are indeed vital to growth in this country.
Bill Esterson (Sefton Central) (Lab)
Does the Minister agree that it is in the interests of business to see waiting lists in the NHS reduced, roads repaired and the public finances fixed? Does he agree that if Opposition parties do not agree with Labour’s plans, they should set out how they would pay for such improvements?
James Murray
My hon. Friend is absolutely right that stability in the public finances is crucial to ensure that we boost investment and growth across the country. He is also right to point out that having public services back on their feet, after years of decline under the Conservative party in government, is essential not only to making people in this country healthier, more able to get around and better off, but to getting our economy growing, because it is on that basis that businesses will invest.
James Wild (North West Norfolk) (Con)
Even before Labour’s jobs tax comes into force, we can see the damage that it is doing. Three quarters of a million jobs in hospitality will be subject to employer national insurance for the first time, costing £1 billion. Given that major hospitality and retail businesses are warning that lower-paid and part-time workers will suffer most, will the Chancellor think again? Can the Minister at least commit that there will be no further increases during this Parliament?
James Murray
The businesses to which the hon. Gentleman refers, like businesses in all sectors of the economy, benefit from the stability that this Government have brought to the economy. He wants to talk about unemployment and the rate of jobs. We recognise that making changes to employer national insurance contributions was a tough decision that will have consequences, but the unemployment rate will fall to 4.1% next year and remain low until 2029. When taken together, the Budget measures mean that the employment level in this country will increase from 33.1 million in 2024 to 34.3 million in 2029.
Daisy Cooper (St Albans) (LD)
Health and wealth are two sides of the same coin, and we will not get economic growth without a healthy population. But as a result of the national insurance contribution changes, the Care Provider Alliance reports that 73% of social care providers will have to refuse new care packages from local authorities or the NHS, and that 57% will have to hand back existing contracts. What assurances can the Government provide to the huge number of people who are very scared that they will have to go without care and see their lives deteriorate?
James Murray
The hon. Lady makes an important point, but it is also important to point out that tough decisions on taxation must be made to fund the very services she is keen to support. On her specific point about these pressures, we announced at the provisional local government settlement a further £200 million for adult and children’s social care to support authorities in delivering key services. This will be allocated through the social care grant, which will bring the total increase in this grant in 2025-26 to £880 million, meaning that up to £3.7 billion of additional funding will be provided to social care authorities in 2025-26.
Daisy Cooper
Ministers will be aware of analysis from the Nuffield Trust showing that that additional grant is being dwarfed by the additional costs that the Government are introducing.
On the great British high street, we know that our high streets are beautiful features of our cities, market towns and villages, but hospitality, retail, beauty and other service sectors are saying that the combination of national insurance and other changes will be a real hammer blow. If high street shops start to close, that is bad for economic growth and bad for confidence. What mechanisms will Ministers put in place to monitor the impact of the national insurance contributions changes on the vibrancy and resilience of our high streets?
James Murray
All measures in the Budget were of course analysed by the Treasury and the Office for Budget Responsibility ahead of their announcement, and we keep in constant contact with industry representatives to see how policies are working in practice. I draw her attention to my earlier remarks to her hon. Friend the Member for Twickenham (Munira Wilson) about our business rates reform, which is a vital ask from the retail, hospitality and leisure sector. After years of chopping and changing from the Conservative party—changing reliefs from one year to the next, and offering no stability whatever to people in that sector—we are introducing permanently lower rates for the retail, hospitality and leisure sector from April 2026, and avoiding the complete end of relief that the Conservative party left in the in-tray when we arrived in office.
Kevin Bonavia (Stevenage) (Lab)
Julia Lopez (Hornchurch and Upminster) (Con)
The Exchequer Secretary to the Treasury (James Murray)
The Government are committed to keeping taxes on working people as low as possible, which is why we are not increasing the basic, higher or additional rates of income tax, employee national insurance contributions or VAT. The Government have published tax information and impact notes for tax policy changes made at the Budget, which give a clear explanation of the policy objective together with details of the tax impact on individuals. The OBR publishes an economic and fiscal outlook alongside the Budget, which sets out its assessment of the effects of Government decisions taken on tax.
Julia Lopez
Borrowing costs are soaring, the economy is weakening and we need to spend much more on defence. In those circumstances, can people be absolutely confident that to meet her fiscal rules, the Chancellor will not be raising income tax in the course of this Parliament?
James Murray
The OBR’s spring forecast will take place on 26 March and be accompanied by a statement to Parliament from the Chancellor. Ahead of the statement, the Government will not give a running commentary responding to forecasts and economic developments, but I reassure the hon. Member that the Chancellor’s commitment —indeed, the whole Government’s commitment—to our fiscal rules is non-negotiable.
Brian Leishman (Alloa and Grangemouth) (Lab)
It should not be working people who pay more tax, because wealth inequality is growing in the UK and improving living standards is ultimately what the Government will be judged on. Does the Minister see the merit in introducing an annual wealth tax of 2% on people with over £10 million-worth of assets, which would go an awful long way to raising £26 billion per annum to equalise society?
James Murray
I hope my hon. Friend will welcome the £200 million investment in the Grangemouth facility, which has already been spoken about today. I hope he will also support the Government’s decision to restore fiscal responsibility to public finances within the tough fiscal rules that the Chancellor set out at the Budget.
John Cooper (Dumfries and Galloway) (Con)
Sir Ashley Fox (Bridgwater) (Con)
The Exchequer Secretary to the Treasury (James Murray)
We have frozen the small business multiplier this year and we will be introducing permanently lower multipliers for retail hospitality and leisure premises from April 2026, which will benefit pubs. Meanwhile, they also benefit from our decision to increase the duty relief for draft products.
Sir Oliver Dowden (Hertsmere) (Con)
James Murray
As part of the reforms announced at the autumn Budget, we are modernising the system for people from overseas spending time in the UK with a new residence-based test. We are always looking at ways to encourage people from overseas to spend time in and invest in the UK and to help grow our economy.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
I congratulate the Government on announcing the greatest level of financial sanctions last week. Does the Chancellor agree that keeping dirty money out of the City of London and homes and communities across our country is vital for our national security, as well as our economic stability?
Luke Taylor (Sutton and Cheam) (LD)
St Raph’s hospice in my constituency faces a £140,000 increase in staff costs due to the Government’s national insurance hike. That means the hospice will have to further cut staff services that take pressure off the NHS. Will the Chancellor think again and provide an exemption for healthcare providers from the national insurance rise?
James Murray
The Chancellor set out our Budget, and I set out during debates on the Finance Bill and related legislation exactly how we will implement the changes announced at the Budget. In the case of employer national insurance contributions, there are defined ways in which public sector organisations are reimbursed. The changes do not apply to hospices, as they are largely charities or are not directly part of the public sector. I also point him to the £100 million of extra investment that we have announced in improving hospices.
Dr Allison Gardner (Stoke-on-Trent South) (Lab)
Does the Minister agree that investment in the fifty500 midlands growth corridor will provide an excellent opportunity to deliver this Labour Government’s mission for growth and opportunity for all?
Jim Allister (North Antrim) (TUV)
With farmers protesting again in Westminster today, why is the Chancellor of the Exchequer running away from meeting farming unions from across this nation? Why do those who feed our nation not deserve some of the Chancellor’s time?
James Murray
Just two weeks ago, I spent a fair amount of time meeting representatives from the National Farmers Union and other representative organisations from different nations within the UK. I listened to their concerns and what they had to say. We have to be honest that we disagree. They do not agree with the Government’s policy, and I need to be direct about that because we had to take a number of difficult decisions at the Budget. But I do not apologise for the importance of balancing the public finances and sticking to our fiscal rules.
Amanda Martin (Portsmouth North) (Lab)
Next month will see a rise and an extension to the minimum wage. In Portsmouth North, there are 9,600 minimum wage workers—higher than the national average—leaving many in in-work poverty and in desperate need of a boost to living standards. What steps are the Government taking to help improve living standards for those low-paid workers?
Dame Harriett Baldwin (West Worcestershire) (Con)
The art of taxation is extracting the largest amount of money with the lowest amount of squeaking from the goose. Yet the Chancellor will have heard the honking of the tractors on Whitehall today in response to her raising an amount of money that will pay for less than one day of NHS spending. Will she commit to reversing the family farm tax?
James Murray
As we have debated several times in this Chamber and Westminster Hall, the changes to agricultural property relief and business property relief retain a generous relief for people accessing those benefits within the taxation system. That means that people will get £1 million before inheritance tax is due, in addition to the existing nil rate band for spousal transfers. Over that, it is up to an effective rate of 20%, and any money due can be paid over 10 years, interest free.
Luke Murphy (Basingstoke) (Lab)
The Government’s recent £100 million investment in hospices, including St Michael’s hospice in Basingstoke, will help to modernise facilities, enhance digital services and provide more comfortable spaces for patients and their families. Given the vital role that hospices play in all our communities, will the Treasury continue to work with the Department of Health and Social Care to ensure the sector’s long-term financial stability?
James Murray
As my hon. Friend rightly points out, £100 million is being made available for hospices—£25 million in 2024-25 and £75 million from April 2025. That capital funding is intended to help charitable hospices in his constituency and elsewhere across the country to improve and modernise their facilities and physical estate.
Tim Farron (Westmorland and Lonsdale) (LD)
Britain is only 55% food secure. In these deeply uncertain times internationally, is it not time to change policy when it comes to agriculture? Is this not the day to get rid of the family farm tax, undo the 76% cut in basic payments and invest in the people who keep us food secure?
James Murray
As I have made clear to other hon. Members, the changes to agricultural property relief are a fair way to raise the money necessary to balance the public finances. Britain has excellent food security, and that is a priority for the Government.
Draft Double Taxation Relief and International Tax Enforcement (Belarus) (Revocation) Order 2025
Draft Double Taxation Relief (Russian Federation) (Revocation) Order 2025
James Murray Excerpts(1 month, 2 weeks ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Exchequer Secretary to the Treasury (James Murray)
I beg to move,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Belarus) (Revocation) Order 2025.
The Chair
With this it will be convenient to consider the draft Double Taxation Relief (Russian Federation) (Revocation) Order 2025.
James Murray
It is a pleasure to serve on this Committee with you as Chair, Dr Huq. The orders before us give effect to the suspension of the 2018 UK-Belarus and 1994 UK-Russia double taxation conventions in UK law. The orders revoke earlier legislation that previously gave effect to the treaties in UK law. The effect of the orders is that UK tax law will apply as if no treaty were in place with those countries from the new tax year, which begins on 1 April for corporation tax and on 6 April for income tax and capital gains tax, and for the equivalent taxes of Russia and Belarus.
The UK will tax UK-sourced income and gains without reference to the limits agreed in the treaty. Unilateral relief is available in UK domestic law to UK resident taxpayers, meaning that when a UK resident taxpayer has paid foreign tax, credit is available for the foreign tax already paid. That provides protection to UK resident taxpayers against the harmful effects of double taxation, and the rules apply wherever income or gains are not covered by a double taxation convention. However, benefits will no longer be available to residents of Russia or Belarus. The UK has decided to suspend the treaties in response to the actions of those countries, which have not been honouring their obligations under these conventions for some time.
In August 2023, Russia partially suspended its tax treaties with 38 countries, including the UK and other G7 countries that it termed “unfriendly.” Russia left in place only definitional and some administrative provisions, suspending all the articles concerning taxation of income, including those that contain limits on what can be taxed at source.
In March 2024, Belarus took action similar to Russia’s in relation to 27 countries, including the UK. It partially suspended the treaties, including the UK-Belarus treaty. Belarus suspended articles dealing with dividends, interest and capital gains, and then introduced higher rates of tax targeting foreigners in its domestic law.
Both Russia and Belarus have claimed that their action is in response to sanctions. Sanctions imposed on Russia and Belarus are a legitimate response to the illegal invasion of the sovereign nation of Ukraine. The sanctions are a reasonable and lawful response to Russian aggression, and to Belarus’s support and enabling of Russia’s actions. Their action to suspend material provisions of our tax agreement is therefore totally unjustified in international law.
The actions of Belarus and Russia are a material breach of the tax treaties and justify reciprocal action from the UK. In line with international law, the UK wrote to Russia and Belarus in December notifying them of our intention to suspend the treaties unless they remedied their material breach of the tax treaties within three months. Neither Russia nor Belarus has remedied their breach or returned to compliance. As a consequence, and in common with partner countries, the UK intends to suspend the tax treaties with Russia and Belarus unless they remedy their breach before the three-month deadline expires: on 24 March for Russia and 23 March for Belarus. They have been given ample time and opportunity to rectify their breach.
International law permits the UK to suspend the treaties in full. The UK has chosen this action as a proportionate response to the violation by Russia and Belarus of their obligations under the terms of their treaties with the UK. If either country comes back into compliance with its treaty obligations and remedies the material breaches, the UK can take steps internationally and domestically to give effect to a treaty again. But until such a time, the UK will apply domestic tax law without granting any of the limits agreed in the tax treaties in relation to payments of dividends, interest and royalties, and other types of income or capital gains arising in the UK.
The UK has been acting in lockstep with partners, including other G7 countries, ever since Russia and then Belarus unlawfully suspended provisions of the tax treaties. Countries including the United States, Canada, France and Germany have also suspended their tax treaties with Russia. Other partner countries have suspended their tax treaties with Belarus.
In summary, the orders give effect to the Government’s decision to suspend the UK’s double taxation conventions with Russia and Belarus in response to their material breach of treaty obligations. That means that Russian and Belarusian taxpayers will no longer be entitled to receive treaty benefits in UK law in circumstances where those countries have withdrawn benefits from UK resident taxpayers. UK tax law will apply from April, as though no tax treaty were in place with either Russia or Belarus.
I commend these orders to the Committee.
James Murray
I thank the hon. Members for Grantham and Bourne and for Wokingham for their contributions to this short but important debate.
In response to the shadow Minister’s question, I clarify that these orders do not terminate the treaties. Rather, they are a suspension under the Vienna convention. Had we chosen to terminate, it would not have taken effect until at least 2026. Suspension is therefore a quicker and more effective way to ensure balance in our obligations.
As I made clear in my earlier remarks, the UK has acted in line with the majority of our allies, including the G7, by suspending these treaties. The hon. Member for Wokingham asked about the timetable for suspending these provisions, and we believe that the Government have acted reasonably and responsibly by giving time for the other countries to come back into compliance with their legal obligations and to act consistently with other like-minded countries. None the less, I welcome his support for what we seek to achieve today.
The orders before the Committee will give effect to the Government’s decision to suspend the double taxation conventions with Russia and Belarus. This will prevent Russian and Belarusian residents from continuing to be entitled to benefits in circumstances where those countries do not grant benefits to UK taxpayers.
I am grateful to hon. Members for their contributions and for the united front across the House.
Question put and agreed to.
DRAFT DOUBLE TAXATION RELIEF (RUSSIAN FEDERATION) (REVOCATION) ORDER 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief (Russian Federation) (Revocation) Order 2025.—(James Murray.)
Finance Bill
James Murray ExcerptsMonday 3rd March 2025
(1 month, 2 weeks ago)
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Graham Stuart
I said I would speak for six minutes and I have now spoken for six minutes, but interestingly I have not talked about the main topic I was going to touch on: oil and gas. I made my point in an earlier intervention, but I appeal to the Government because putting up taxes on oil and gas in the North sea will mean that there will be tens of thousands of job losses, and a loss of engineering and other capacity in this country, which is vital to the transition to net zero. In response to my interaction with the hon. Member for Barking (Nesil Caliskan) earlier, no one expects the tax take from this sector to go up in the coming years as a result of the measure; the tax take will go down. The rate can be put up to such a level that it means there will be a lower tax take; the hon. Member for Angus and Perthshire Glens (Dave Doogan) spoke powerfully about that as well.
The hon. Member for Barking appeared to accept that point, and she seemed to have a belief in the Minister on the Front Bench that they would listen if it turned out that that was a short-sighted move. If it means that we import more oil and gas from abroad—by the way, that almost always has a higher embedded carbon content than domestically produced oil and gas—that does not benefit the environment, it certainly does not benefit all the jobs that we would have in this country, and it loses us tax revenue. It is truly a crazy policy.
I appeal to Labour Members, especially the new Members, on this point. We heard from the distinguished economist the hon. Member for Loughborough (Dr Sandher) earlier, who was retreading his speech for about the fourth time, little realising it was supposed to be focused on these particular amendments—[Interruption.] Anyway, he did it with great good humour. But I would ask him to take his finely honed mind and address these issues. If the oil and gas policy is as crazy as every expert witness says it is, then he and others should suggest that the Government change course. The hon. Member for Barking said that the Government should consider changing course if the policy did not deliver what it was supposed to deliver, so I ask Government Members to support the amendments that we have put down tonight and oppose this ridiculous Bill. I look forward to hearing from the Minister.
The Exchequer Secretary to the Treasury (James Murray)
At the heart of the Prime Minister’s plan for change is our mission to grow the economy to put more money in people’s pockets. We are determined to make people better off. We know that investment and growth depend on the essential foundations of economic stability, fiscal responsibility and public services being on a firm footing, but this Government inherited a challenging and unsustainable set of future spending plans based on unfunded commitments that had not been shared with the OBR or the British people.
No responsible Government could have let things carry on as they were. That is why at the autumn Budget, my right hon. Friend the Chancellor set out the Government’s plans to fix the foundations of the economy and deliver change—a plan to protect working people, fix public services, including the NHS, and rebuild Britain. That has meant taking difficult decisions on tax, spending and welfare to repair the public finances and support investment in public services, and the Government have done that while protecting people’s payslips. We have also ensured that the UK is one of the best places in the world to grow a business, with corporation tax capped at 25% and reforms that will support small businesses and the British high street. This Finance Bill represents the next step in delivering on the autumn Budget by legislating for several key manifesto commitments, supporting businesses to invest and implementing reforms to the tax system.
I thank all hon. Members for their contributions during the debate; before I turn to the individual amendments, I will briefly address some of the points that they made. I thank my hon. Friend the Member for Loughborough (Dr Sandher) for setting out the importance of growth and making people better off, and for his thorough analysis of all the amendments and new clauses to the Bill, which I seem to recall. Perhaps that was in fact my hon. Friend the Member for Dartford (Jim Dickson), who did go through all the new clauses—I thank him for his contribution. I also thank my hon. Friend the Member for Barking (Nesil Caliskan) for being on the Finance Bill Committee, although I note her description that she “sat through” it, rather than thoroughly enjoying the episode.
I also thank Opposition Members for their contributions to the debate. The hon. Member for Bridgwater (Sir Ashley Fox) recognised that even in his view, he could agree with a few points in our Bill, which I welcome.
Sir Ashley Fox
I invited the Minister to explain how the Budget would improve the lot of farmers. In particular, I gave the example of the £5 million family farm that would incur an inheritance charge of £400,000. How will that family pay that out of an annual income of about £50,000? That is eight years’ income, with nothing to live on.
James Murray
The debate on this Finance Bill has to focus on matters that are within the Bill and in the new clauses and amendments. As the hon. Gentleman will know, and as Madam Deputy Speaker reminded him, he strayed rather outside the ambit of the Finance Bill by referring to important changes to agricultural property relief that are not dealt with by the Bill or by any of the new clauses or amendments. I gently point out that any of his constituents, whatever industry they work in, will see that the income tax on their earnings does not go up as a result of this Government keeping their commitment in that regard.
Dr Luke Evans
The Minister is right to point to the amendments in front of us. New clause 3 looks at household income specifically. If he is so confident in the measures he and the Chancellor are putting forward, why will he not accept new clause 3, which has the ability to show just how fantastic the Budget and the Finance Bill are from the evidence base that we have?
James Murray
I was hoping that the hon. Gentleman would again leap to the defence of Liz Truss, as he did just last week. Sadly, that was not to be the case in his intervention. I will come on to the new clauses in a moment; I am only halfway through thanking people on his side of the House for intervening, so I would be grateful if he would let me make a little progress.
The hon. Member for Wimbledon (Mr Kohler) spoke about his concerns that things will be unworkable when the wine easement ends, but it ended over a month ago. Our early indications are that firms, warehouse keepers and HMRC have adapted well to the new system, although I and my officials will carefully monitor the situation.
James Murray
I have been in routine contact with people from the wine industry throughout my time as Exchequer Secretary, and my officials are also in touch with the industry. As I said, the end of the wine easement happened at the beginning of February, and our early indications are that firms, warehouse keepers and HMRC have adapted well.
The hon. Member for Strangford (Jim Shannon) made a rare early speech during the debate, which rather took me by surprise. He raised his points with typical grace and forthrightness. I will address some of his points later in my remarks, but on the point about the impact of changes in the Finance Bill on some of the firms that export their spirits, I remind him that duty does not apply to exports. That part of the legislation would not be relevant to those considerations.
Graham Stuart
The Minister is gracious, if not always in the Whips’ best books. Does he expect pensioners who are solely reliant on the state pension to get drawn into tax and the need to produce a tax return? Has he made an assessment of that, and what kinds of numbers would there be?
James Murray
As the right hon. Gentleman will be aware, in the coming financial year 2025-26 the personal allowance will be above the level of the new state pension, so what he said should not apply when it is people’s sole income. However, there are already cases of individual pensioners who do owe tax; indeed, around two thirds of pensioners pay tax, because they also have private pensions. They pay via pay-as-you-earn or self-assessment.
I will not go into detail about the Government amendments to visual effects relief, because I assume they have the consent of the whole House. However, I will briefly speak to some of the amendments tabled by Opposition Members, as I feel I should address them. I will take together new clauses 1, 2, 3, 5, 6 and 8, which would require the Government to review the number of individuals receiving the full state pension and their income tax liabilities over the next four years, and to publish various impact assessments regarding the impact of changes to the energy profits levy, as well as the impact of the Bill on households, small and medium-sized enterprises, distilleries, wine producers and the hospitality industry.
The Government remain opposed to all of these new clauses, for the same reasons that I gave in Committee. First, the relevant information on those receiving the state pension and their tax liabilities is already published by HMRC, the Department for Work and Pensions and the OBR, and is publicly available.
Daisy Cooper
In new clause 8, which deals with alcohol pricing, we have made explicit that we are not just looking for an impact assessment of the tax that the Government intend to raise. It is about the estimate of administrative operational costs—that is, the red tape that is going to be put on the industry. Does the Minister agree that we need that impact assessment, and will he meet me to discuss how we can do it?
James Murray
The impacts of the changes to the alcohol duty and the energy profits levy have already been set out in the tax information and impact note that was published alongside the autumn Budget, so that information is already in the public domain. Information on the impact on households was also published alongside the autumn Budget in the “Impact on households” report, which demonstrated that households are on average better off in 2025-26 as a result of these decisions.
Finally, I will address the amendments tabled by the Opposition that deal with VAT on private school fees—several hon. Members have spoken about that matter. Amendments 67 to 69 would collectively remove clauses 47 to 49, which remove the VAT exemption for private schools and set out anti-forestalling provisions and the commencement date.
Ending the VAT tax break for private schools is a tough but necessary decision that will secure the additional funding needed to help deliver on our commitments, including those relating to education and young people. This policy took effect at the beginning of January, and I note that in his speech, the shadow Minister, the hon. Member for North West Norfolk (James Wild), did not say how his party would pay for its decision to reintroduce that tax break for private schools. The policy will raise £1.7 billion by the final year of this Parliament, so it is essential that the Opposition explain what they would cut from the schools budget, from education services, or from any other public services to pay for the reintroduction of that tax break. I will happily give way if the shadow Minister would like to make an intervention to place on record how he will pay for it. I do not see him leaping to his feet, so I will move on.
Finally in the debate we are having about VAT on private schools, the Government set out the expected impacts of this policy in the autumn Budget, so I do not believe that new clause 7—which would require the Government to make a regular statement on the impact of pupils with special educational needs and disabilities—is necessary. However, I take this opportunity to make clear that in developing this policy, the Government carefully considered the impact it would have, including on pupils with special educational needs and disabilities. I am sure that the hon. Member for St Albans (Daisy Cooper) and her colleagues will welcome the extra £1 billion next year for high needs funding that we have been able to announce thanks to our decisions on tax policy, including on private schools.
I hope I have set out why the Opposition amendments are unnecessary, and indeed why reintroducing the VAT tax break for private schools not only runs counter to the manifesto on which the Government were elected, but represents an unfunded tax cut from the Opposition—have they learned nothing? I therefore urge the House to reject those amendments, and I commend our amendments to the House. Again, I extend my thanks to all Members who have contributed to this debate.
James Wild
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 2
Energy (oil and gas) profits levy: impact assessment of increase in rate
“(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, commission and publish an assessment of the expected impact of Sections 15 to 17 of this Act on—
(a) domestic energy production and investment;
(b) the UK’s energy security;
(c) energy prices, and;
(d) the UK economy.
(2) The assessment must examine the impact of provisions in this Act in comparison with what could have been expected had the energy (oil and gas) profits levy remained unchanged.”—(James Wild.)
This new clause would require the Chancellor to commission and publish an assessment of the expected impact of changes to the energy (oil and gas) profits levy on domestic energy production, the UK’s energy security, energy prices and the UK economy.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
James Murray
I beg to move, That the Bill be now read the Third time.
At the autumn Budget, my right hon. Friend the Chancellor laid the essential foundations for boosting investment and growth to put more money in people’s pockets, the No. 1 mission of the Government under the Prime Minister’s plan for change. The Budget was built on robust fiscal rules, rules that put a stop to day-to-day spending being funded through borrowing and to get net financial debt falling as a share of GDP.
The Finance Bill delivers on our manifesto commitments by removing the outdated concept of domicile status from the tax system, increasing the capital gains tax rate for carried interest, increasing the higher rates of stamp duty for additional dwellings, introducing the 20% standard rate of VAT on private school fees, and changing the energy profits levy by extending the period over which it applies and adjusting its rate by 3 percentage points.
As we know, my right hon. Friend the Chancellor set out at Budget how the fiscal inheritance was far worse than we had expected. The Opposition, when in government, let public spending plans become unsustainable. They did not share this with the OBR or the British people. It fell to us to fix that mess when we took office. That is why we had to make an increase to capital gains tax, changes to inheritance tax thresholds and a plan to close the tax gap by a record package of £6.5 billion of additional tax revenue by the end of the Parliament.
I thank right hon. and hon. Members from across the House for their often helpful and insightful contributions to the debates during the Bill’s passage. I would like to thank officials at the Treasury and in Parliament for their work on the policies and the legislation that have led to the Bill whose consideration we are now concluding. The Bill plays a key role in delivering economic stability, repairing the public finances and laying the essential foundations for growth. It is through that growth that we will put more money into the pockets of people across Britain, and I commend it to the House.