UK and Romania Double Taxation Convention
James Murray Excerpts(3 days, 11 hours ago)
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The Exchequer Secretary to the Treasury (James Murray)
A double taxation convention with Romania was signed in London on 13 November 2024. The text of the convention is available on HM Revenue and Customs’ pages of the www.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.
[HCWS229]
Single Trade Window
James Murray Excerpts(2 weeks, 2 days ago)
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The Exchequer Secretary to the Treasury (James Murray)
The Government are considering their future plans for the border and how best to meet the needs of their users. In the context of financial challenges, the Government are pausing delivery of the UK single trade window in 2025-26.
As part of their efforts to support businesses trading across the UK border, the Government will consider the role of the single trade window and will provide an update as part of the next phase of the spending review, reporting in late spring 2025.
[HCWS188]
Oral Answers to Questions
James Murray Excerpts(3 weeks, 2 days ago)
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Mr Will Forster (Woking) (LD)
The Exchequer Secretary to the Treasury (James Murray)
Household energy bills have fallen by 30% since their peak, and are now around £800 lower for a typical household. This Government are committed to improving the quality and sustainability of our housing stock through our warm home plan, further details of which will be set out through the spending review. That will be vital in making sure that the UK is more energy-resilient, in lowering household bills and in meeting our 2050 net zero commitment.
Mr Forster
Given that many constituents of mine in Woking and across the country live in fuel poverty and are fearful of losing their winter fuel allowance, does the Minister or the Chancellor agree that targeted support for low-income families and households should be included in tomorrow’s Budget or in the warm home plan, so that no one has to decide between eating and heating this winter?
James Murray
The hon. Gentleman can see our commitment to supporting vulnerable households with the cost of energy and food in our extension of the household support fund, at a cost of half a billion pounds, from the end of September to the end of March. That will allow local authorities to help low-income families with the cost of essentials, such as food and energy.
Dr Jeevun Sandher (Loughborough) (Lab)
This nation experienced the highest rise in energy bills of all G7 countries after Putin invaded Ukraine, because the Conservatives left us dependent on natural gas and with the worst-insulated homes in western Europe. Can the Minister assure me that we will invest in the clean energy and home insulation that we need to lower energy bills for good?
James Murray
My hon. Friend is absolutely right to say that while it is essential that we tackle high energy bills now, it is also essential that we invest for the future to bring energy bills down for good. Critical to that is investing in our housing stock, as I have mentioned, but also, through GB Energy, in sustainable energy sources to make sure we improve our energy security and bring bills down for families across the country.
John Grady (Glasgow East) (Lab)
Mr James Frith (Bury North) (Lab)
The Exchequer Secretary to the Treasury (James Murray)
As hon. Members know, any changes to tax policy will be set out in tomorrow’s Budget. Members will also know that our approach to fixing the foundations of the economy will be one that protects working people. This Labour Government will honour our commitment to protect working people by not increasing national insurance, basic, higher or additional rates of income tax, or VAT.
Blake Stephenson
The Government have got into an absolute pickle over the definition of working people. People deserve certainty. In Mid Bedfordshire, we are proud of the hard work of the owners of nearly 5,000 small businesses. They are working people creating jobs and growing our economy, and all while providing for their families. They are lying awake at night worrying about yet higher taxes. Will the Chancellor give them a peaceful night’s sleep ahead of tomorrow’s Budget and confirm that she will honour her manifesto commitment not to raise taxes on them?
James Murray
I do not think I am pre-empting anything tomorrow by confirming that the Chancellor will absolutely stick to our commitment not to raise taxes on working people through national insurance, the basic, higher or additional rates of income tax, or VAT. And I might add that what people and businesses in the hon. Gentleman’s constituency might want is stability in the economy, a Government who support investment in the economy, and a Government who will get the economy growing and make people across Britain better off.
Mr Frith
In Bury North, child poverty rates are at 43%, densely populated in three of our nine wards: Bury East, Redvales and Moorside. Does the Minister agree with me that minimising tax rises for working people is just the starting point, and that tackling the crippling level of impoverishment for those in work requires a laser focus and intervention from this mission-driven Government?
James Murray
My hon. Friend is absolutely right that, while keeping taxes on working people as low as possible is crucial, the way to make people better off in the long run is through boosting public and private investment, and delivering sustained economic growth. That is the focus of this Labour Government, and that will guide the choices we make.
Laura Trott (Sevenoaks) (Con)
During the election campaign, I held a press conference at which I outlined the glaring funding gaps in Labour’s plans and the taxes they might raise to pay for them. One of those taxes was employer national insurance contributions. The right hon. Member for Bristol North West (Darren Jones)—now Chief Secretary to the Treasury—responded at the time by arguing that this was a list of things that “Labour isn’t doing.” Is it correct that raising employer national insurance contributions is something Labour isn’t doing?
James Murray
The right hon. Member will have to wait for the Budget tomorrow. She was a Minister not that long ago, so she might still remember that the Budget is the time when such announcements are made. Let me restate our commitment, so it is crystal clear, that we will protect working people by not increasing national insurance, income tax or VAT. Might I add, very briefly, that I note the Conservatives suddenly have a new-found interest in the livelihoods of working people? It is a shame, frankly, that they never prioritised that during their 14 years in office, during which, time and again, they made working people pay for their mistakes.
Anna Dixon (Shipley) (Lab)
Adam Jogee (Newcastle-under-Lyme) (Lab)
The Exchequer Secretary to the Treasury (James Murray)
I know that Newcastle-under-Lyme and, indeed, the whole county of Staffordshire have a proud brewing tradition, and my hon. Friend will be an excellent champion of breweries in his constituency. Supporting pubs and breweries is very important for me as a Minister. Indeed, on my first day in the Treasury’s Darlington economic campus, I visited Durham brewery—it was a work visit—where I heard from the Society of Independent Brewers and associates about the huge contribution that breweries make to British society. Further details will be set out by the Chancellor tomorrow.
Mr Tom Morrison (Cheadle) (LD)
James Murray
I thank my hon. Friend for his question. He is absolutely right to say that pubs make an enormous contribution to our society and economy. The current alcohol duty system supports pubs through draught relief, which ensures that eligible products served on draught are charged less duty. The Government are committed to delivering a fairer business rates system for high streets, including hospitality. Any decisions on future tax policy will be announced by the Chancellor at a fiscal event, the next of which is tomorrow.
Mr Richard Holden (Basildon and Billericay) (Con)
Eighty-two per cent of those who have seen Labour take away their winter fuel payment are either below the poverty line or within £55 a week of it. How can the Government justify this, when they are not even allowing a freedom of information request from the Financial Times to be responded to? They are hiding the figures from the people.
Mr Speaker
Order—[Interruption.] No, these are topical questions and I decide.
James Murray
My hon. Friend will have to wait for the Budget tomorrow, but he will know that we have committed to closing some loopholes, including VAT on private schools, the non-dom loophole and cracking down on tax avoidance.
Caroline Voaden (South Devon) (LD)
In South Devon, the average house price is now 14 times the average salary, at £425,000. What measures is the Chancellor taking to ensure that rural and coastal areas, such as the South Hams, which face huge digital and transport connectivity problems, will be included in measures to boost economic growth?
UK and Ecuador: Double Taxation Convention
James Murray Excerpts(4 weeks, 1 day ago)
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The Exchequer Secretary to the Treasury (James Murray)
A double taxation convention with Ecuador was signed in Quito on 6 August 2024. 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.
[HCWS160]
Business Property Relief and Agricultural Property Relief
James Murray Excerpts(1 month ago)
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The Exchequer Secretary to the Treasury (James Murray)
It is a pleasure to serve under you in the Chair, Dr Huq. Let me join others in congratulating the hon. Member for Gordon and Buchan (Harriet Cross) on securing the debate. I thank all hon. Members for their contributions —including the advice from the shadow Minister, the hon. Member for Droitwich and Evesham (Nigel Huddleston), on what to expect in my new role from the hon. Member for Strangford (Jim Shannon).
As many Members have rightly highlighted, there has been a great deal of speculation in recent weeks about potential changes to taxation in the Budget, including to the reliefs that we are debating today. Hon Members will understand—indeed, many of them acknowledged in their speeches that they understand—that I cannot add to that speculation. The Budget is on 30 October, and my right hon. Friend the Chancellor of the Exchequer will set out any changes to the tax system then, in the normal way. However, ahead of that, I welcome this opportunity to hear Members’ views on this matter.
Let me start by briefly setting out the context for this Budget. Following the spending audit in July, the Chancellor has been clear that difficult decisions lie ahead on spending, welfare and taxation to address the £22 billion black hole that we inherited from the previous Government. Decisions on how to address that will be taken at the Budget in the round. It is crucial that we get the public finances back on a firm footing so that we can restore economic stability. On those foundations, we will boost investment, increase growth across the UK and improve public services. That is the prize ahead and how we will make people across Britain better off.
Let me turn to how inheritance tax operates in the UK tax system. Inheritance tax, as other Members have said, is a wealth transfer tax and applies to the estate of the deceased. Transfers made in the seven years before death are also taken into account. The estates of all individuals benefit from a £325,000 nil-rate band. The residence nil-rate band is a further £175,000 and is available to those passing on a qualifying residence on death to their direct descendants, such as children or grandchildren. That means that, altogether, qualifying estates can pass on up to £500,000. Furthermore, the qualifying estate of a surviving spouse or civil partner can pass on up to £1 million without an inheritance tax liability, because any unused nil-rate band or residence nil-rate band is transferable to the surviving spouse or civil partner.
Above those thresholds, the headline rate of inheritance tax is 40%, but it is important to remember that that rate is charged only on the part of the estate that is above the threshold, and after the application of reliefs. That is obviously the subject of today’s debate, so let me turn first to business property relief. That relief is a long-standing part of the inheritance tax system. It is designed to ensure that businesses need not be broken up or sold on the death of an owner in order to pay an inheritance tax liability. That reflects concerns that there may not always be enough liquid assets in the business to pay the tax. Subject to certain qualifying conditions, the relief generally applies to unquoted shares and interests in a business. It also applies to shares designated as “not listed” on a “recognised stock exchange”, such as shares that are quoted on AIM, as mentioned by the shadow Minister. The rate of business property relief is usually 100%, but can be 50% in some circumstances. Until March 1992, the maximum rate of the relief was 50% and there was a lower rate of 30% alongside that. Hon. Members may be interested to know that the cost of the relief has risen from £685 million in 2019-20 to a forecast £1.3 billion in 2023-24.
Agricultural property relief is also a long-standing part of the system. It has a similar purpose to business property relief, although the main benefit is to ensure that relief is available when land is let to tenant farmers, as we heard from various hon. Members today. This is largely because owner-occupiers of agricultural land also qualify for business property relief. Again, the rate of agricultural property relief is usually 100%, but can be 50% in some circumstances, and as with business property relief, lower rates existed before 1992. The cost of this relief has risen from £320 million in 2019-20 to a forecast £365 million in 2023-24.
There are many different views on these reliefs. Stakeholders, including Family Business UK and the Country Land and Business Association, have argued strongly against any prospect of the reliefs being abolished. Other organisations are in favour of changes to the reliefs, with the Institute for Fiscal Studies suggesting that a cap on such reliefs could allow those passing on small farms or businesses to be taken out of inheritance tax, while preventing agricultural and business investments from being used to avoid it. The right hon. Member for Orkney and Shetland (Mr Carmichael), whom I thank for his contribution, said that there may be a case for certain reforms to agricultural property relief. Of course, the previous Government had views on these reliefs. I understand from reports in the Telegraph that the previous Government considered abolishing these reliefs as part of reforms to the system.
I welcome the opportunity today to hear from Members on their views, particularly on agricultural property relief, but also on issues relating to farmers and their constituents more widely. The hon. Member for Chester South and Eddisbury (Aphra Brandreth) rightly highlighted the importance of food security for this Government and its importance in our policy making. The hon. Member for Strangford (Jim Shannon)—in nudging me gently, to quote the shadow Minister—spoke eloquently about the importance of farming in his constituency and in the economy of Northern Ireland. The hon. Member for Central Suffolk and North Ipswich (Patrick Spencer) spoke of some of the wider challenges facing the farming community in recent years, not least energy bills. My hon. Friend the Member for Hexham (Joe Morris) is proving to be a very effective constituency MP already, raising a number of important issues on behalf of those he represents, as well as drawing attention to the wider significance of having economic stability and security for farmers and everyone in his constituency.
Mr Carmichael
The Minister reminds us—it is our fault for doing this—that we have focused very much on the family farm as the unit of concern, because that is what concerns most of our constituents. However, a lot of agricultural land is, in fact, owned by bodies such as the Royal Society for the Protection of Birds, of which I am a member. The RSPB is never going to have a succession event, to join the hon. Member for Gordon and Buchan (Harriet Cross) in using that expression. The consequence of abolition could be that two farms right next door to each other—one owned by a charity or an institution of that sort, and the other owned by a family—would be left having to farm in very different economic circumstances. Is that really fair?
James Murray
I thank the right hon. Gentleman for his point, although he presupposes he knows what will happen to agricultural property relief, which, as I set out earlier, I cannot comment on further. He will have to wait a couple of weeks, perhaps, to have further conversations about what the Government will do in this space. I thank him and all hon. Members for their comments today, because it has been an interesting debate. As we have heard, the issue generates some strong views among many of our constituents and the Members present, who represent them.
I understand that there are many different views on what the Government should do, and the debate has allowed me to hear them. As always, the Government welcome all opinions and keep all taxes under review. However, I return to my earlier point: the Chancellor will, of course, announce changes to the tax system at the Budget. There is not long to wait.
VAT: Independent Schools
James Murray Excerpts(1 month, 2 weeks ago)
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The Exchequer Secretary to the Treasury (James Murray)
This Government were elected to break down barriers to opportunity. We are determined to fulfil the aspiration of every parent in our country to get the best education for their children. We are committed to doing so by improving state schools and making sure that every child has access to a high-quality education. We will start to make this happen by expanding early years childcare for all by opening 3,000 new nurseries across England. We will recruit 6,500 new teachers, alongside improving teacher and headteacher training, and we will roll out further mental health support to schools and colleges in England. Those improvements to the state education system will begin our work to make sure every parent’s aspiration for their children can be fulfilled.
We want to get on with these important changes right away, and to do so, they must be paid for. That is why to help fund improvements to our state schools, we have made the tough but necessary decision to end tax breaks for private schools. In the July statement, the Government announced that as of 1 January 2025, all education services and vocational training provided for a charge by a private school in the UK will be subject to VAT at the standard rate of 20%.
Graham Stuart
I know the Minister to be an honourable man, so will he take this opportunity to apologise to the House in the absence of the Secretary of State for Education for the malicious and spiteful tweet that she put out this weekend? That tweet was ill-advised, even if one believes that this policy is the right thing to do.
James Murray
Neither I nor any of my colleagues will make any apology for wanting to improve state education across this country to make sure that the aspiration of every parent in our country to get the best possible education for their children can be fulfilled. That is why we have announced that any fees paid from the date of the July statement, 29 July, relating to the term starting in January 2025 onward will be subject to VAT.
Shaun Davies (Telford) (Lab)
This package of support will put thousands of teachers back into school classrooms in Telford and across the country. Has my hon. Friend received any representation to say that if this change did not take place, those plans by this Government—who were elected by the people of this country—would go ahead by any other means?
James Murray
My hon. Friend makes an important point about the reason why we have taken the tough decision to end tax breaks for private schools. It is to fund our education priorities, because we know that the way to improve opportunities for people right across this country is to make sure that our state schools can provide the best-quality education for all children.
Priti Patel (Witham) (Con)
The Minister was in a similar debate this morning, in which he heard a range of views. He is a Treasury Minister, not an Education Minister or the Education Secretary; will he commit to publishing an impact assessment on the overall cost of this policy? There were parents in the Gallery listening to the debate this morning, and it is clear that there will be a legal challenge to this policy. Will the Treasury also publish the potential cost of that legal challenge and the bill that his Department will be footing in order to meet it?
James Murray
I thank the right hon. Member for her contribution. First, in terms of an impact assessment, while developing these policies, the Government have carefully considered the impact they will have on pupils and their families across the state and private sectors, as well as the impact they will have on state and private schools. In addition to having reviewed analysis published by third parties such as the Institute for Fiscal Studies, the Government have conducted their own analysis of the likely impacts of these policies, which draws on a range of sources.
James Murray
I am not going to give way, because I am responding to the right hon. Member for Witham (Priti Patel).
Mr Speaker
Order. It is a point of order, so you do give way, unfortunately.
Mr Speaker
Order. As you know, that is not a point of order—do not waste my time. Carry on, Minister.
James Murray
As I was saying to the right hon. Member for Witham, the Government will publish a tax information and impact note on the VAT policy change at the Budget, once the independent Office for Budget Responsibility has scrutinised and certified the costing of the final policy.
James Murray
I am still replying to the hon. Member’s right hon. Friend. [Interruption.] Maybe Conservative Members could sort this out on their side of the House before they come into the Chamber, but I will continue replying to the right hon. Member for Witham.
Turning to the legal cases, the Government have considered the policy’s interaction with human rights law and are confident that it is compatible with the UK’s obligations under the Human Rights Act. I hope that addresses the right hon. Member’s concerns.
Mims Davies
I thank the Minister for kindly giving way. This policy will have an economic impact in each and every constituency: on librarians, on maintenance people and on those who work in labs, in catering and as minibus drivers—everything that is predicated on schools such as the ones we are discussing. Will the impact assessment and the Treasury look at the wider implications for employment?
James Murray
As the hon. Member knows, there are established processes for developing tax information and impact notes. This one will be developed in line with the OBR costing in the normal way and published alongside the Budget, so she will see all the information.
Several hon. Members rose—
James Murray
I have given way quite a lot, so I am going to make a bit of progress.
Alongside the announcements about VAT, the Government announced in July that private schools in England with charitable status would lose their eligibility for business rates charitable relief from April 2025, subject to parliamentary passage of the legislation. Those changes were set out in a technical note that was published online alongside draft VAT legislation, which together formed a technical consultation. As part of that consultation, the Government—both at official and ministerial level—have engaged with a broad range of stakeholders, including the devolved Governments.
We have listened carefully to the points that people have raised with us. We recognise that while this policy will raise revenue to help support improvements in the state education sector, it may lead to increased costs for some parents and carers whose children are in the private education system. However, let me be clear: while private schools will now be required to charge VAT on the education services and vocational training they provide, we expect that most private schools will be able to absorb a significant portion of this new VAT charge and keep fee increases affordable for most parents. They will be able to make efficiencies and recover the VAT they incur on the things they buy. Those recovered costs can be used to offset increases for fee payers. We are already seeing that some schools have committed to absorbing the VAT liability entirely, while others are choosing to cap fee increases at 5% or 10% to keep fees as low as possible for parents.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
I had a pop at getting the Minister to give way during the debate this morning, and I appreciate his doing so now. I love the irony of what he is saying, which is, “We need to do this to raise all this money, yet it isn’t actually going to raise all that much money because it can be reclaimed.” On the impact assessment, it is really interesting that one line in the consultation document that went out this summer says:
“The government understands that moving schools can be challenging.”
How many of his own constituents have contacted him to say they will have to move schools as a result of this policy, and how do we measure the damage that moving schools is going to cause for so many children in our constituencies?
James Murray
I have been clear: the Government recognise that some pupils may subsequently move into the state education sector as a result of these policies. However, as is set out in a technical note—and I take it from the hon. Gentleman’s comment that he has read it—the
“number of pupils who may switch schools as a result of these changes represent a very small proportion of overall pupil numbers in the state sector. The government is therefore confident that the state sector will be able to accommodate any additional pupils”
whom this policy will cause to move.
Several hon. Members rose—
James Murray
I will make a bit of progress, because I have been quite generous in giving way so far.
I want to address some of the questions that the shadow Secretary of State asked in his speech, particularly about why we are introducing this policy from 1 January 2025. The reason we are doing so is simple: we want to raise the funding we need as soon as possible to deliver our education priorities for state schools across the country. Importantly, a January 2025 start date means that schools and parents will have had five months to prepare for the VAT change, and His Majesty’s Revenue and Customs stands ready to make sure schools are supported in delivering it.
James Murray
I am going to make some progress.
HMRC will put in place a number of measures to ensure that all private schools can be registered ahead of 1 January, including publishing bespoke guidance on gov.uk ahead of 30 October, updating registration systems and putting additional resource in place to help process applications.
Several hon. Members rose—
James Murray
I am going to make some progress, because I have given way quite a lot so far.
Ahead of this policy being implemented, the Government have carefully considered the impact that these changes will have on pupils and their families across both the state and private sectors, as well as the impact they will have on state and private schools. The Government’s costing of these policies is currently being scrutinised by the independent Office for Budget Responsibility. The Chancellor will confirm our approach to these measures at the Budget, when we will set out our assessment of the expected impacts of this change in the normal way.
We recognise that, as hon. Members have said, these changes may lead to some pupils moving into the state education sector. While the impact of this policy is being fully considered, we know that projections by the Institute for Fiscal Studies indicate that the number of pupils who may switch schools as a result of these changes is likely to represent a very small proportion of overall pupil numbers in the state sector—less than 0.5%—with any displacement expected to take place over several years.
Dr Evans
I am very grateful to the Minister for giving way. This is about children—and even the Prime Minister made a choice to better the education of his children—so putting this in place in January, halfway through a year, is going to have a significant emotional impact on families and children. That is why it should be delayed. If it is good enough for the Prime Minister to make such choices for himself, why cannot this Government make choices for the rest of the nation, and support the most impacted families and children?
James Murray
I have made clear the reason why we are proceeding with this policy to a January 2025 date, which is that we want to raise the money as soon as possible to invest in our improvements to state education. There will have been five months for parents and schools to prepare for the change.
James Murray
I am still responding to the hon. Member for Hinckley and Bosworth (Dr Evans), so please let me come back to that point. HMRC is putting in place bespoke guidance, and it is standing by to make sure that schools are properly registered for the change. All the evidence we have seen from the IFS and so on suggests that the impact on the state sector will be very small, which means that it will not have a material effect on children’s education.
Several hon. Members rose—
James Murray
I am going to make some progress.
To pick up the point made by the hon. Member for Hinckley and Bosworth, I am not denying that some pupils may have to move into the state sector, but we expect much of this to take place at natural transition points, such as when a child moves from primary to secondary school, or at the beginning of their GCSE or A-level years. As I have said, the IFS expects any displacement to take place over several years. We are confident that the state sector will be able to accommodate any additional pupils, and that these policies will not have a significant impact on the state education system as a whole.
Several hon. Members rose—
James Murray
I am going to make some progress. I am sorry, but I have taken a lot of interventions.
I would like to address the issue of special educational needs. It is a point that many hon. Members have raised, and I know that some parents are concerned about the impact of this policy on pupils in private schools with special educational needs. Let me start by saying that we have considered this element of the policy very carefully. Our proposed policy makes sure that pupils will not be impacted where they have acute additional needs and an education, health and care plan in England, or its equivalent in other nations, specifies that these can be met only in a private school.
Marie Goldman (Chelmsford) (LD)
I thank the Minister for giving way on that specific point, because he is relying on those schools still being open because other parents have not left. How will he address the situation in which parents of children needing that extra support rely on such schools for their special educational needs, yet those schools have closed because they cannot afford to stay open any longer?
James Murray
We will take a community-wide approach that sees improved SEND provision in mainstream state schools, as well as ensuring that state special schools cater for those with the most complex needs.
Jen Craft (Thurrock) (Lab)
As a parent of a disabled child, the issue of SEND education in this country is very important to me, as it is to a number of my friends and acquaintances. Let us be clear that the SEND system in this country is broken, and it was the actions of the previous Government that left us with parents being desperate and having to search for alternatives to mainstream education for their children. The vast majority of my constituents who find themselves without suitable education placements for their children, for reasons of disability or educational needs, are unable to afford to send their children to a private school. Does the Minister agree with me that perpetuating a system of inequality is not the solution for our broken SEND system?
James Murray
I thank my hon. Friend for her comments. She is absolutely right to say that we need to improve SEND provision for all children in this country in a financially sustainable way, and she speaks with great experience.
Several hon. Members rose—
James Murray
Let me make a bit of progress.
We want to improve state schools across this country so that when people have children with special educational needs, they never need to send them to a private school because the provision in state schools is better. That is the crucial point behind our approach, which my hon. Friend the Member for Thurrock (Jen Craft) was right to highlight.
Several hon. Members rose—
James Murray
I am going to make a bit of progress, because I have been quite generous in giving way so far.
I was talking about when EHCPs in England, or their equivalents in other nations, specify that a child’s education can be met only in a private school. In cases where pupils’ needs can be met only in a specified private school, local authorities will fund their places and be able to reclaim the VAT. Similarly on business rates, the Government are developing an approach to address the potential impact of these changes when private school provision has been specified through an EHCP. More widely, as we have just been addressing, we as a Government are committed to transforming the system for supporting children and young people with SEND in all schools. We need to deliver better outcomes in a financially sustainable way.
James Murray
I am going to make a bit of progress.
To address some other points raised in this debate, we know that a small number of diplomatic officials and service personnel are posted abroad for extended periods. In such circumstances, the Foreign, Commonwealth and Development Office and the Ministry of Defence provide the continuity of education allowance to ensure that this does not interfere with their children’s education. I can give the reassurance today that the Government will monitor closely the impact of these policy changes on affected diplomatic and military families, with any changes to the scheme being considered as—[Interruption.]
James Murray
I am not quite sure what happened there, but I will carry on. I was making an important point, which is that the Government will monitor closely the impact of our policy changes on affected diplomatic and military families, with any changes to the scheme being considered as part of the ongoing spending review.
James Murray
I will make a bit of progress. In our consultation on the technical detail of this policy, we have been engaging widely and in depth, and the views of MPs are an important part of that. As I said earlier, it has been a tough but necessary decision to end tax breaks for private schools. We believe it is the right decision, and one we need to implement as soon as possible to help raise the funding that we need to deliver our priorities for state education in this country. We are determined to make sure that education, which is available for all, is of the highest possible quality, because that is how we ensure that we meet the aspiration of every parent to get the best possible education for their children.
Independent Schools: VAT and Business Rates Exemptions
James Murray Excerpts(1 month, 2 weeks ago)
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The Exchequer Secretary to the Treasury (James Murray)
It is a pleasure to speak in this debate with you in the Chair, Dame Caroline. I start by congratulating the hon. Member for Bromsgrove (Bradley Thomas) on securing this debate, and thanking all hon. Members for their contributions. I have listened carefully and, although I do not have much time, I will attempt to address as many of the points raised as possible.
Every member of the Government cares deeply about education, and we are committed to breaking down barriers to opportunity. We are determined to fulfil the aspirations of every parent in our country to get the best education for their children. We are committed to doing so by improving state schools, and by making sure that every child has access to high-quality education.
We will start to make that happen by expanding early years childcare for all, by opening 3,000 new nurseries across England. We will recruit 6,500 new teachers, alongside improving teacher and headteacher training. We will roll out breakfast clubs to all primary schools, so that no child starts class too hungry to learn.
Those improvements to the state education system will begin our work to make sure that every parent’s aspiration for their child can be fulfilled. We want to get on with those important changes right away, and to do so, they must be paid for.
James Murray
I will make some progress first. That is why, to help fund those improvements to our state schools, we have made the tough but necessary decision to end tax breaks for private schools. At the July statement, the Government announced that as of 1 January 2025, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20%. Any fees paid from the date of the 29 July statement, relating to the term starting in January 2025 onwards, will be subject to VAT. As hon. Members know, the Government also announced that private schools in England with charitable status would lose their eligibility for business rates charitable rate relief from April 2025, subject to parliamentary passage of the legislation.
Those changes were set out in a technical note published online, alongside draft VAT legislation, which formed a technical consultation. As part of that consultation, the Government, at both official and ministerial level, engaged with a broad range of stakeholders, including the devolved Governments, to make sure that we understand the impact of the policy in each nation of the UK.
We have listened carefully to the points people have raised with us. We recognise that, while this policy will raise revenue to help support improvements in the state education sector, it may lead to increased costs for some parents and carers whose children are in the private education system. Let me be clear that while private schools will now be required to charge VAT on the education services and vocational training they provide, we expect most private schools will be able to absorb a significant proportion of this new VAT charge to keep fee increases affordable for most parents. They will be able to make efficiencies and recover the VAT they incur on the things they buy.
James Murray
I am going to make some progress. Those recovered costs can be used to offset the increases to feepayers. We are already seeing that some schools have committed to absorbing the VAT liability entirely, while others are choosing to cap fee increases at 5% or 10% to keep fees as low as possible for parents. Members have asked today why we will introduce this policy in January 2025. The reason for doing so is simple: we want to raise the funding we need as soon as possible to deliver our education priorities to state schools across the country.
James Murray
I do not have much time and I need to address the other points that hon. Members have made in this debate. Importantly, a January 2025 start date means that schools and parents will have had five months to prepare for the VAT change. HMRC is ready to ensure that schools are supported in delivering this change. To respond to the shadow Minister’s comment, HMRC will put in place a number of measures to ensure that all private schools can be registered ahead of 1 January 2025, including publishing bespoke guidance on gov.uk ahead of 30 October, updating registration systems and putting additional resource in place to help process applications.
Ahead of the policy being implemented, the Government have carefully the considered the impact the changes will have on pupils and their families across both the state and private sectors, as well their impact on state and private schools. The Government’s costings of this policy are currently being scrutinised by the independent Office for Budget Responsibility. The Chancellor will confirm our approach to the measures at Budget, where we will set out our assessment of the expected impacts of the change in the normal way.
We recognise, as some hon. Members have raised, the changes may lead to some pupils moving into the state education sector. However, we believe that the number of pupils who may switch schools as a result of the changes will represent a very small proportion of overall pupil numbers in the state sector and such switches will take place over several years. We are confident that the state sector will be able to accommodate any additional pupils.
James Murray
I have only a few moments left to address a number of points, so I will make some progress. Several hon. Members in their contributions today also raised their concern about the impact of the policy on pupils in private schools with special educational needs. We have carefully considered that element of the policy. Our proposed approach makes sure that pupils will not be impacted where they have acute additional needs and an education, health and care plan—in England, or its equivalent in other nations—specifies that those can be met only in a private school. In such cases, where a pupil’s needs can be met only in a private school, local authorities will fund their places and will be able to reclaim VAT. Similarly, on business rates, the Government are developing an approach to address the potential impact of the changes in cases where private school provision has been specified for pupils through an EHCP. More widely, as a Government, we are committed to transforming the system for supporting children and young people with SEND in all schools. We need to deliver better outcomes in a financially sustainable way.
I close by again thanking all hon. Members for taking part in this debate. In our consultation about the technical detail of this policy, we have been engaging widely and in depth, and of course the views of MPs are an important part of that. As I said earlier, it has been a tough but necessary decision to end tax breaks for private schools. We believe it is the right decision and one we need to implement as soon as possible to help raise the funding we need to deliver our priorities for state education in our country. We are determined to improve the education that is available to all, because that is how we will ensure that the aspiration of every parent to get the best possible education for their children can be fulfilled.
Dame Caroline Dinenage (in the Chair)
Bradley Thomas has one minute to wind up.
Winter Fuel Payment
James Murray Excerpts(2 months, 1 week ago)
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The Exchequer Secretary to the Treasury (James Murray)
This is a serious topic and we know from the debate earlier this afternoon that it is one on which Members across this House and people across this country have strong feelings. We understand that. This is a difficult decision to have to take. By means-testing winter fuel payments, we know that we will be ending future payments to most pensioners while maintaining our steadfast commitment to protecting those in greatest need. But although they do not like to be reminded of it, Conservative Members know exactly why we need to take this step. Because it was Conservative Members—and, indeed, former Members of this House who have now been voted out by the British public—who did such damage to our country’s economy and the public finances. The legacy of the last—
Dame Harriett Baldwin (West Worcestershire) (Con)
On a point of order, Madam Deputy Speaker. This is the second Government Minister we have heard from the Dispatch Box today, yet only moments ago we saw the Chancellor sitting on the Front Bench. It was the Chancellor who chose to spend billions on setting up Great British Energy. It was the Chancellor who chose to spend billions giving pay rises to their union paymasters. It was the Chancellor—
Madam Deputy Speaker (Caroline Nokes)
Order. I thank the hon. Lady, but she will be aware that that is not a point of order; it is more of a speech that she is seeking to make. Perhaps she will find an opportunity to contribute in the debate.
James Murray
Thank you, Madam Deputy Speaker. The hon. Member who just intervened, and indeed everyone on that side of the House, might like to reflect on what the legacy of the last Government truly was. It was one of irresponsible overspending, of uncosted commitment after uncosted commitment, and of Ministers running away from taking difficult decisions. As a direct consequence, when we came to power we were faced with a £22 billion black hole in the public finances for this year alone.
Paul Holmes (Hamble Valley) (Con)
I am genuinely grateful to the Minister for giving way. He is a Minister at the Treasury, so I am hoping he will be able to outline some of the facts and answer my question. He will outline today that the saving made by cutting the winter fuel payment is £1.1 billion. If everybody accepted the means-testing that he is proposing, it would cost £3.3 billion, so can he outline to the House, despite the bluster that he has just made about saving money for the great British people, how it will save money when it will cost more under his proposals?
James Murray
I thank the hon. Gentleman for his intervention. The announced savings include an assumption of an increased take-up of pension credit, which is in line with the highest levels ever achieved. Frankly, if more people are taking up pension credit when they are eligible for it, we should welcome it because it means that support is being targeted at those in greatest need.
Several hon. Members rose—
James Murray
I am going to make some progress.
The Opposition did not like to be reminded of their legacy when they were in government, but let us have a look, shall we? What do they have to show for their years of reckless overspending? A failed asylum system, prisons at breaking point, more than 1 million people waiting for council homes, 4 million children growing up in poverty, and more than 7.5 million people on NHS waiting lists. This Government and every Member of this House who stood on my party’s manifesto were elected to turn things around.
Kit Malthouse (North West Hampshire) (Con)
Yesterday, in the other place, the Transport Minister cast doubt on the continuation of travel concessions for pensioners, which has caused significant alarm in my constituency and others. Notwithstanding the discussion we are having today, could the Minister reassure us that travel concessions for pensioners will continue under a Labour Government?
James Murray
I thank the right hon. Gentleman for his intervention. The Chancellor will take all decisions in the Budget on 30 October—[Interruption.] Let me make one important point to him as we approach the Budget on 30 October: we know there are going to be difficult decisions that we have to take in the Budget and, frankly, that is a direct consequence of the decisions taken by him and his colleagues when they were in government.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
As he is a Treasury Minister, I wonder whether he could help me with this question. How many of the pensioners who will lose the winter fuel allowance today receive less than the average train driver the Government have just given a pay rise to?
James Murray
I understand the political point that the hon. Lady is trying to make. But let me be clear. If she is talking about pensioners, the foundation of state support for pensioners is the state pension, which is why the Government have committed to maintaining the triple lock for the duration of this Parliament.
Several hon. Members rose—
James Murray
I am going to make some progress.
The triple lock means that pensioners are receiving £900 more this year. Figures released this morning indicate that they may get well over £400 more next year. Over the course of this Parliament, they will get £1,700 more under the state pension. That is the foundation of state support for pensioners.
Several hon. Members rose—
James Murray
I am going to make some progress.
We have seen clearly how Conservative Members do not like to be reminded of their legacy in government, of the mess in which they left the economy, our public services and the rest of our country after their 14 years in office. This Government and every Labour Member were elected to turn things around.
Several hon. Members rose—
James Murray
I am going to make some progress.
We are under no illusions. We know it will be a slow and difficult process when the damage goes so deep, but we are determined to fix the foundations of our country so that, on the bedrock of financial stability and fiscal responsibility, we can get our economy growing after 14 years under the Conservatives.
Dave Doogan (Angus and Perthshire Glens) (SNP)
I thank the Minister for giving way on the point about fiscal responsibility. I am not sure of the morality of trying to balance this country’s fiscal books on the backs of pensioners. He referenced the manifesto on which the Labour party stood at the election. “No austerity under Labour” was said in Scotland, so what should the 37 Scottish Labour MPs do in this vote? Should they bow down to the Chancellor, or should they stand up for their Scottish constituents?
James Murray
Every Labour Member was elected on a promise to restore economic stability and fiscal responsibility to our country, and it is on that basis that we will get the economy growing to make people across the country better off and to put our public services on a sustainable footing. I remind the hon. Gentleman that winter heating assistance is a devolved matter in Scotland. The Scottish Government intend to legislate to introduce a means-tested payment this winter which is equivalent to the winter fuel payment in England and Wales.
Several hon. Members rose—
James Murray
I have taken several interventions, so I will make some progress.
The point of this debate is to focus on why we have to take difficult economic decisions, even if they risk us being unpopular. We know that the universal application of winter fuel payments was already recognised as unfair. In the face of our dire economic inheritance, it is simply unsustainable.
We should be clear that, when the winter fuel payment was introduced in 1997, a higher percentage of pensioners than people of working age were in poverty. That is no longer the case. Put simply, there are now pensioners receiving winter fuel payments who do not need them and that is a reality we cannot afford.
Let me put it in financial terms. Over a quarter of pensioners have wealth of more than £1 million, half have wealth of over £500,000 and a fifth of pensioner households have gross incomes equivalent to £41,600 a year. That is why it is right to means-test winter fuel payment.
Dame Caroline Dinenage (Gosport) (Con)
Pensioners in my constituency will be saddened by the way the Minister is caricaturing pensioners as wealthy and not in need of this winter fuel support. Age UK has said that, in the Gosport constituency alone, 15,000 pensioners stand to lose their winter fuel payment. These are not wealthy people; they are people who, in many cases, are just outside the pension credit limit and are hanging on by their fingertips. Does he agree that caricaturing them as wealthy and not in need is unbelievably insulting?
James Murray
I think the hon. Lady unintentionally misunderstood my point. I will put the question back to her. Does she feel that pensioners who have wealth of over £1 million or who earn more than £41,600 a year should get the winter fuel payment in the context of the financial circumstances? The argument we are making is that, given the dire economic situation we face and given our dire inheritance, we should means-test the winter fuel payment.
Several hon. Members rose—
James Murray
I will make some progress, because it is important to explain why we are choosing to means-test the winter fuel payment. Means testing will allow us to make sure that those in the greatest need still receive the help they need. We will make sure that all pensioners continue to benefit from the triple lock, and we will start to deal with the shocking state of the public finances that we have inherited.
Several hon. Members rose—
James Murray
I am going to make some progress, as I have taken many interventions already.
Under our approach, those eligible for pension credit will continue to receive winter fuel payments. We want to target winter fuel payments to those on the lowest incomes, which is why we are linking the payment to eligibility for pension credit and other qualifying income-related benefits and tax credits. That is the right approach to help those on the lowest incomes. We are determined to make it as effective as possible by making sure that people who are eligible for pension credit make a claim.
Jamie Stone
The point I made to the shadow Secretary of State, the right hon. Member for Central Devon (Mel Stride), is a fair one. Distance and remoteness militate against take-up. People living in very remote hamlets in the highlands do not necessarily perceive the Department that they should. Can I have an undertaking from the Minister that the Government will look at this issue?
James Murray
I thank the hon. Gentleman for his comment, and I know that my colleagues are aware of this issue. In fact, it is one reason why the automatic payment of pension credit and other benefits is so important. For instance, the merging of housing benefit and pension credit would help to overcome some of the problems. It would help some of the people in the situation he describes. That merger of housing benefit and pension credit was first mooted in 2012, and was delayed several times by the previous Government—I think they intended to leave it until 2028. My right hon. Friend the Secretary of State for Work and Pensions is looking at that as a matter of great priority, to ensure that people get the help that they deserve.
Several hon. Members rose—
James Murray
I am going to make some progress.
The important point to focus on in this debate is making sure that everyone eligible for pension credit takes up that offer, not only so they receive the benefit of pension credit, but so that we can better target the winter fuel payments, given the financial inheritance that we have. We estimate that 880,000 pensioners are missing out on pension credit to which they are entitled, and frankly the Conservatives failed to act on that for years. That is why it is so important that we are now conducting a campaign to make sure that as many people as possible make a claim.
Our approach is already showing signs of success. The Government have received around 38,500 pension credit claims in the five weeks since the announcement on 29 July. That is more than double the number in the previous five weeks, and we will continue to do all we can to encourage pensioners who are eligible to apply for pension credit. We have used a wide range of media to reach pensioners and key stakeholders, and have been working with voluntary organisations such as Age UK and Citizens Advice, local authorities and the devolved Governments to raise awareness through their networks and channels. The Secretary of State for Work and Pensions is taking the further unprecedented step of writing to 120,000 pensioner households who are in receipt of housing benefit but who are not yet claiming the pension credit that they are likely to be entitled to.
Our national pension credit campaign will run right through until the application deadline on 21 December.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
On 11 February 2021, the temperature in Braemar in my constituency sank to minus 23°. Some 17,000 pensioners there will lose their winter fuel allowance through a decision taken by this Labour Government. Can the Minister explain to those pensioners in one of the coldest constituencies in the country why they have to surrender that important support at the same time as the Government have found £11 billion to give pay rises to their union paymasters?
James Murray
I would be interested to understand why the hon. Gentleman is backing a candidate to lead his party who supports the means-testing of the winter fuel payment. He might want to have a conversation with that candidate before he starts criticising our approach of targeting support at those in greatest need. The critical point is that the combination of the state pension rising under the triple lock with those in greatest need getting winter fuel payments alongside pension credit, not to mention the extension of the household support fund, means that the right measures are in place to give all pensioners the support they need.
Opposition Members want to know why the legislation is being progressed urgently. I will be really clear: it is urgent because we need to deal urgently with the £22 billion black hole—the huge in-year spending pressure—that we inherited from the Government that they ran. It is crucial that we act quickly to restore responsibility to our public finances and stability to our economy. On top of that, it was important that we made sure that regulations were in place at the start of the qualifying week for winter fuel payments, while wasting no time in doing all we can to raise pension credit take-up.
Graham Stuart (Beverley and Holderness) (Con)
We have heard that the Transport Minister yesterday could give no assurance to pensioners about their transport concessions. Last week, I asked the Deputy Prime Minister about the single person council tax discount. There is a very real prospect that pensioners could lose even more than £300—another £300 or £400. Will the Exchequer Secretary take this opportunity to reassure pensioners that there is no way that the Government will remove the single person discount from the council tax? It would be politically good for him and the Labour party, and it would be enormously important for people who need to hear some reassurance at this time.
James Murray
The right hon. Gentleman will not be surprised to hear me say that the Chancellor will take all decisions in the Budget. However, he might like to reflect on the record of his party in office on encouraging take-up of pension credit. We have been painfully aware since taking office how little the Conservatives did to increase take-up of pension credit during their 14 years in office. That is why it is so urgent for us to make progress in getting those eligible to sign up for pension credit. By doing so, they will get pension credit, which they may have been missing out on for years under the Conservatives, and they will continue to receive the winter fuel payment.
Pensioners may well be angry at the Conservatives for how little they did to get people to sign up for pension credit while they were in office. Pensioners may well be angry at the Conservatives for leaving the country with a legacy of a £22 billion black hole in the public finances.
We on the Government Benches are committed to protecting the triple lock. That will mean that pensioners on the full new state pension, who have received an extra £900 this year, will, pending the uprating review by the Secretary of State for Work and Pensions this autumn, receive a boost that could be worth well more than £400, so by the end of this Parliament they could be receiving around £1,700 more than they do today.
Conservative Members are keen to play politics with the tough decisions that this Government are taking. They are desperate to take attention away from the fact that, as people across this country know, it is the Conservatives who are to blame for the economic mess we have gained. They created a mess and now they want to criticise us for cleaning it up. If they had governed more responsibly, they might not have been sitting on the Opposition Benches, in opposition to a Government who are fixing the foundations they left to rot.
Andrew Pakes (Peterborough) (Lab)
Does the Minister agree that the only shameful thing in this debate is the legacy that the Government were left? It forced the new Government—[Interruption.] The reality that 800,000 pensioners are not receiving pension credit is a shameful legacy. If Conservative Members wanted to show humility and learn from their party’s record in government, they would acknowledge that they are the ones who crashed the economy, left the NHS in a way that pensioners cannot get to see a doctor, and broke NHS dentistry. Does the Minister agree that it is our job to fix the economy so that we can keep on helping pensioners?
James Murray
My hon. Friend is absolutely right. Frankly, it is time for Conservative Members to recognise and accept what they have done to this country, and to show some contrition and accept responsibility. However, no matter what the Conservatives choose to do, we are getting on with the tough decisions that are necessary in government. By changing the winter fuel payment and making it means-tested, we are beginning to take the necessary steps to address the black hole they created, while protecting the most vulnerable in society.
The Prime Minister has said that we must be prepared to be unpopular if we are to govern responsibly, which means facing up to tough challenges and tackling them head-on. The motion laid by the Opposition sets out several “regrets”, but they have never once shown regret for all the reckless decisions they took and the damage they did to our public services, public finances and economy. Our task now in government is to fix the mess they made and to give our country the chance of the better future we deserve.
Madam Deputy Speaker (Caroline Nokes)
I call the spokesperson for the Liberal Democrat party.
Enterprise Investment Scheme and Venture Capital Trust Scheme: Extension
James Murray Excerpts(2 months, 2 weeks ago)
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The Exchequer Secretary to the Treasury (James Murray)
On 3 September 2024, the Treasury made the Finance Act 2024, Section 11 (Extension of Enterprise Investment Scheme Relief and Venture Capital Trusts Relief) (Appointed Day) Regulations 2024 (S.I., 2024, no. 897). These regulations bring into effect the extension of the enterprise investment scheme and the venture capital trust scheme sunset clause to 2035. When this extension was legislated for in the Finance Act 2024, a tax information and impact note was published. This set out that there is no additional Exchequer impact from this measure, as the costs were already accounted for in the forecast. The schemes will continue to support early-stage companies to raise the financing they need to grow and succeed.
The attachment can be viewed online at https://www.gov.uk/government/publications/extension-of-the-enterprise-investment-scheme-and-venture-capital-trust-scheme.
[HCWS69]
Oral Answers to Questions
James Murray Excerpts(2 months, 2 weeks ago)
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Dr Danny Chambers (Winchester) (LD)
The Exchequer Secretary to the Treasury (James Murray)
I welcome the hon. Member to his place. Since taking office, the Government have set up the clean energy mission board to enable progress towards the 2030 target. That will accelerate the transition away from fossil fuels to clean, home-grown power, and it will boost Britain’s energy independence and security. The Government will also set up a new publicly owned energy company, Great British Energy, which will save families money by ensuring that electricity bills are no longer exposed to gas price shocks, and a warm homes plan will improve energy efficiency in homes and cut bills.
Dr Chambers
Over the past few weeks, I have been inundated with questions from the people of Winchester about the cuts in the winter fuel allowance, and it seems as though people from all parts of the House are getting similar correspondence. Although I totally understand that there are many wealthy pensioners who do not rely on the winter fuel allowance to heat their homes, a large proportion of pensioners live on or near the poverty line and will be plunged into crisis this winter. Given the huge strength of feeling in all parts of the House, will the Chancellor reconsider her decision? If not, will she at least commit to a vote and a debate in the House about how we best protect our most vulnerable—
Mr Speaker
Order. Sorry, I have to get through the Order Paper. Put in for an Adjournment debate. Minister, I think you got the gist.
James Murray
I thank the hon. Member for his comment, but as my right hon. Friend the Chancellor set out, the state pension is £900 more this year than it was last year, thanks to the triple lock. We have committed to maintaining the triple lock as the foundation of state support for pensioners throughout the rest of this Parliament. Energy bills are lower this year. It is crucial that he and other Members across the House support our goal to increase the take-up of pension credit. If we make sure that all pensioners who are eligible for pension credit take it up, they will thereby receive the other benefits, including the winter fuel payment, to which they are entitled.
Gareth Davies (Grantham and Bourne) (Con)
During the general election, the Labour party committed to bring down energy bills by £300. Now that the election is over, energy bills are going up by some 10%. On behalf of the British electorate, especially the 10 million pensioners who are having their winter fuel payment taken away, I ask the Minister to confirm to the House that the £300 cut is still Labour policy. If it is, specifically how is the £300 calculated, and when will it be delivered?
James Murray
I thank the shadow Minister for his comment and welcome him to his new place. He referred to the cost of energy. As we know, the cost of energy is substantially lower than it was this time last year, but we are under no illusions about how much more we need to do to make sure that energy bills are truly affordable and that we tackle the cost of living crisis. That is why we have set to work straight away in establishing Great British Energy, alongside our national wealth fund, which will help to invest in the clean energy sources of the future and bring down energy bills for good.
Sarah Olney (Richmond Park) (LD)
We know that the Government have inherited a mess, and that at the centre of that mess is a £22 billion hole left in the public finances by the previous Government, but that cannot be allowed as cover for measures that cause suffering for the most vulnerable in society. The Chancellor will have heard Lib Dem colleagues talk about the hardship that the scrapping of the winter fuel allowance will mean for their constituents, so can she assure us that she will give her full support to measures to boost the uptake of pension credit? Most crucially, will she give the House the opportunity to have a proper debate and a vote on this cut, which will have such an impact on so many?
James Murray
I thank the Liberal Democrat spokesperson for her comments and for recognising the state of the finances that we inherited—the £22 billion in-year black hole that we need urgently to address to put our finances on a firm footing. It is essential to boost the uptake of pension credit, as the Chancellor set out. Some 800,000 pensioners who are eligible for pension credit are not taking it up. We saw a lack of action under the previous Government to drive up that uptake, and we are overseeing a campaign across Government to increase the number of pensioners who access pension credit and thereby the winter fuel payment.
Sarah Olney
I welcome that response, but if the Government are asking us all to make difficult sacrifices, people need to know that the Government are making the vital investments that will protect the vulnerable and help to deliver economic growth. Does the Chancellor agree that now is the time to work across Government to launch an emergency home energy upgrade programme to provide free insulation and heat pumps for low-income households?
James Murray
A crucial part of the manifesto commitments that we brought into Government is to increase the insulation of up to 5 million homes across the country. We will set out further details of our plans for insulation in due course, but we know that that is the kind of investment that brings down energy bills for good.
Chris Webb (Blackpool South) (Lab)
Rachel Taylor (North Warwickshire and Bedworth) (Lab)
The Exchequer Secretary to the Treasury (James Murray)
The Government are focused on improving living standards across the country, which is why growth is a key priority. If real household disposable income per capita had grown from 2010 to 2023 at the same rate as it did between 1997 and 2010, it would have been £4,000 higher last year. This Government’s approach will centre on fostering good work. The Government will reform employment support to offer more people dignity and purpose in meaningful employment. The plan to make work pay sets out a significant and ambitious agenda to ensure that workplace rights are fit for the modern economy and to empower working people and deliver economic growth. We have launched a ministerial taskforce on child poverty and updated the Low Pay Commission’s remit to consider the cost of living when making recommendations on the national living wage.
Chris Webb
I thank the Minister for that reply. Many of my Blackpool South constituents have contacted me regarding the means-testing of winter fuel allowance and the link to pension credit. There are probably thousands in my constituency who do not receive pension credit and are potentially missing out on £3,900 a year. What steps are the Government taking to ensure that all pensioners in my constituency and across the country receive what they are entitled to?
James Murray
I welcome my hon. Friend to his place. He is absolutely right to highlight how important it is to make sure that all those who are eligible for pension credit but are not claiming it sign up and thereby receive the benefits to which they are entitled, which now include the winter fuel payment. The Government are undertaking a new campaign to drive take-up, and the Department for Work and Pensions is holding a pension credit week of action in the first week of September, when promotional activities will be supported by organisations including Age UK and local authorities. There will be further action in the coming months, including on TV, in the press and on radio, and we will be writing directly to up to 120,000 pensioners who receive housing benefit but are not claiming pension credit to encourage a claim where they may be eligible.
Dan Tomlinson
The economic chaos of previous Conservative Governments pushed up interest rates, causing mortgage costs to rise by £500 a month for families in Barnet. What steps is the Chancellor taking to bring down those rates so that families who have worked hard and saved hard can get the living standards boost that they so desperately need?
James Murray
I welcome my hon. Friend to his place. As he rightly points out, the recklessness of the previous Government has had a direct impact on his constituents’ living standards. As a new Government, we recognise that many households right across the country have faced higher mortgage costs in recent years, and we are already taking action to fix Britain’s economic foundations with a new approach to growth, with the three pillars of stability, investment and reform. Sustainable public finances are necessary for economic stability and long-term growth. The Government will therefore set out the difficult decisions needed to secure the public finances in the Budget on 30 October.
Rachel Taylor
In North Warwickshire and Bedworth, like in the constituency of my hon. Friend the Member for Chipping Barnet (Dan Tomlinson), monthly mortgage costs rose by an average of 22% in the year following the previous Government’s disastrous mini-Budget. That made life really difficult for hard-working families in my constituency. What steps is the Chancellor taking to ensure that such a devastating situation can never happen again to families in my constituency and across the country?
James Murray
I welcome my hon. Friend to her place. She is absolutely right to highlight just how much damage the Conservatives’ recklessness in 2022 caused to families in North Warwickshire and beyond. The decisions of Conservative Ministers unleashed economic turbulence that pushed up people’s mortgages and made people across Britain worse off. Our new Government will hardwire Budget responsibility into Government with our new fiscal lock in the Budget Responsibility Bill, which will make sure that the disaster we saw nearly two years ago can never happen again.
Dame Harriett Baldwin (West Worcestershire) (Con)
The living standards of nearly 50,000 pensioners in Malvern Hills district and Wychavon district are going to deteriorate very sharply this winter in the face of a 10% increase in their energy bills and no winter fuel allowance. Many of those pensioners have incomes just above the pension credit threshold, and many are too frail and too old to work. Yet within the first few days of coming into office, the Chancellor managed to spend over £22 billion very quickly by setting up Great British Energy and a national wealth fund, and by giving in to the pay demands of her party’s union paymasters. Is it not the case that this Chancellor has made the chilling political choice to balance the books of this country on the very frailest shoulders?
James Murray
I am disappointed that the hon. Member is talking down essential investments that we have made in our country’s future. She also seems to be confused: there is a £22 billion black hole because of the unfunded spending commitments made by the Conservative party when it was in government. But she makes an important point about protecting pensioners, which is why it is so important to ensure that all those pensioners who are eligible for pension credit take it up, and I look forward to her support in making sure that they do so.
Wendy Chamberlain (North East Fife) (LD)
Statistics from the Trussell Trust published today show that half of people on universal credit ran out of money and could not afford to buy food before the end of the month. What prospect do those people have of an increase in their living standards? The reintroduction of the household support fund is welcome, but what steps is the Treasury taking to make sure that people do not go hungry this winter?
James Murray
As the hon. Member rightly points out, the Government are providing £500 million to extend the household support fund in England for another six months, and that will include Barnett consequentials. That is an important measure to help people in the months ahead, but the crucial way to increase people’s living standards and tackle the cost of living crisis in the longer term is to get the economy growing. We have spoken at length about the measures that we have already taken as a new Government—from planning reform and the national wealth fund to Great British Energy. All that is about getting the economy growing, because that is the sustainable way to make people better off and to invest in our public services.
Kirsty Blackman (Aberdeen North) (SNP)
Means-testing the winter fuel payment increases the burden on many vulnerable people and reduces their living standards. Unlike the Scottish Government, who have many statutory constraints on their budgets, the Chancellor’s fiscal rules are entirely self-imposed. Does the Minister think that sticking to the Chancellor’s fiscal rules is more important than the health and wellbeing of pensioners?
James Murray
Let me be clear: if we do not have fiscal responsibility—if we do not stick to fiscal rules—we will lack the economic stability that is so crucial to getting the economy growing and ensuring that people across Britain are better off. We must return stability and fiscal responsibility to our country following the Conservative Government’s record. We saw what happened when they lost control of the public finances and made unfunded spending commitments. We need to ensure that that never happens again, which is why we are hardwiring fiscal responsibility into the future of government through our new Budget Responsibility Bill.
Damien Egan (Bristol North East) (Lab)
The Exchequer Secretary to the Treasury (James Murray)
As Ministers, we greatly value and respect trade unions and the work of trade union representatives in supporting their members. While it is not appropriate for me to comment on individual cases, I will look into this matter further and respond to my hon. Friend in due course.
Sir Ashley Fox (Bridgwater) (Con)
The Chancellor’s decision to cut the winter fuel payment is forecast to save £1.5 billion. Can she advise the House what other options she considered for making savings in the Department for Work and Pensions budget before deciding to make this cut?