Oral Answers to Questions

James Murray Excerpts

Tuesday 3rd September 2024 Commons Chamber

[Dr Danny Chambers (Winchester) (LD)]

6. What steps she is taking with Cabinet colleagues to help support households with energy bills.

[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.

[Mr Speaker]

I call the shadow Minister.

[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.

[Mr Speaker]

I call the Lib Dem spokesperson.

[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)]

7. What steps she plans to take to help improve living standards.

[Rachel Taylor (North Warwickshire and Bedworth) (Lab)]

17. What steps she plans to take to help improve living standards.

[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)]

9. What progress she has made on increasing economic growth.

--- Later in debate ---

[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?

Budget Responsibility Bill

James Murray Excerpts

2nd reading
Tuesday 30th July 2024 Commons Chamber

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

I welcome your election to the Chair, Madam Deputy Speaker. It is a privilege to close this debate on the Budget Responsibility Bill on behalf of the Government. I thank all hon. Members for their contributions; in a moment I will address many of the points that they have raised.

Let me start by reminding the House why the Bill is so important and what it is designed to achieve. At the general election earlier this month, the British people voted for change. They voted to turn the page on 14 years of economic failure. People across Britain voted to remove the Conservatives from power. They voted to remove the party that crashed the economy, and whose Ministers we now know were reckless with the public finances right till the very end. People voted to give Labour the chance to serve. With that honour afforded to us, we have got to work straightaway in fixing the mess the previous Government left and getting our economy growing.

That economic growth is at the heart of our national mission as a Government. That growth underpins our plans in government to make people in every part of the UK better off and to get public services back on their feet in a sustainable way. We know that a crucial foundation for sustained growth is economic stability and fiscal responsibility. We have brought that stability and fiscal responsibility back into the heart of government. Our fiscal rules are non-negotiable. As the Chancellor set out yesterday, meeting them is a principle on which this new, Labour Government were elected, and that will guide her at October’s Budget.

But we want to go further in restoring the trust that was so badly damaged by the Conservatives during their time in office, by embedding fiscal responsibility not just into our country’s government but also into its laws. That is why one of the first Bills to be presented to the House of Commons by our new Government was the Budget Responsibility Bill whose Second Reading we are debating today. The Bill will hardwire fiscal responsibility into significant financial decisions of any future Government, and it will prevent any party ever again being able to play fast and loose with the public finances.

We saw under the previous Government what happens when politicians fail to show respect for taxpayers’ money. People across Britain are still feeling the impact of Liz Truss and Kwasi Kwarteng’s recklessness nearly two years on from the economic disaster they created. The Conservatives’ recklessness in 2022 showed just how much damage unfunded spending commitments can cause. Ministers at the time unleashed economic turbulence that pushed up people’s mortgages and rents and made people across Britain worse off, though it hit the least well-off the hardest. We must never let that happen again.

Budget responsibility must never be optional. That is why Labour will hardwire this responsibility into Government through our fiscal lock, which will mean that all significant fiscal announcements in future will be guaranteed independent scrutiny from the Office for Budget Responsibility. This Bill empowers the OBR to independently produce an assessment of a Government’s fiscal plans if it judges that the fiscal lock has been triggered. That will make sure that there is always proper scrutiny of a Government’s fiscal plans, and guard against large-scale unfunded commitments and disasters such as the Conservatives’ so-called mini-Budget ever happening again. This Bill is a crucial step in fixing the foundations of what we have inherited.

I will take a pause from focusing on the substance of the Bill to thank so many hon. Members for their truly excellent maiden speeches. We had a real tour around Britain, and I feel I have got to know places in all corners of our country through their passionate speeches about the places and people they are all so proud to represent.

We began with my hon. Friend the Member for Glasgow North (Martin Rhodes), who spoke about Kelvingrove park, which I went to when I visited Glasgow. He spoke about the serious work of Government, and the importance of delivery and rebuilding trust in politics.

My hon. Friend the Member for East Renfrewshire (Blair McDougall) said that the hard decisions we make today are what create a better tomorrow. There is no better summary of the position we find ourselves in today. He spoke passionately about the history of his constituency and the importance of a better future for the next generation.

The hon. Member for Carshalton and Wallington (Bobby Dean) spoke movingly about his upbringing and how it has influenced his politics. He also spoke about his anger at the previous Government’s recklessness. I have to say that while I enjoy going to the pub when there are big games on, I do not know that much about football, so I actually understood the fiscal bit of his speech more than the football analogy.

[The Minister of State, Home Department (Dame Angela Eagle)]

Shame!

[James Murray]

I am just being honest—honesty in politics!

My hon. Friend the Member for Southend West and Leigh (David Burton-Sampson) made a very important point that we should all heed about civility in politics. He spoke about the diverse community spirit in his area, but I am not going to even begin to compete with him on how impressive the coastline is in my landlocked suburban constituency.

The hon. Member for Chichester (Jess Brown-Fuller) spoke about how special and sunny her constituency is. She began a new competition; now it is not only who has the most beautiful constituency, but the sunniest. I was very touched by her recognition of the importance of family for both inspiration and practical support in politics.

My hon. Friend the Member for Peterborough (Andrew Pakes) spoke about his Co-operative and trade union values, which I think many of us Labour Members share. I did not know until he spoke about the connection between Peterborough and mustard, so that is something I have learned today. I thought that his focus on the promise of new towns really sums up our sense of optimism for the future. There is the idea of being proud of one’s heritage, and honest about the challenges that we face, but he is also ready to achieve more in the future with a Government who support him. I wish him great stability in his seat.

The hon. Member for Maidenhead (Mr Reynolds) gave a particularly rich history of his constituency, which went from bridges to “Carry On” movies, and he also mentioned the Spice Girls. I think a Spice Girls CD was the first I ever bought, but he may not know what a CD is. That sums up the different perspectives we come from.

My hon. Friend the Member for West Ham and Beckton (James Asser) spoke about the Royal Docks, where I spent much time in a previous role working at City Hall; I saw the great potential that that area of the capital city has. He eloquently set out the combination of heritage and diversity, past and present, that makes his constituency such a lively and wonderful place to represent. I make him an offer: when he is jumping on the Elizabeth line to visit the hon. Member for Maidenhead, he can stop off at West Ealing to say hello to me.

The hon. Member for Ynys Môn (Llinos Medi) spoke honestly about the importance of keeping people in this place on their toes. That is right; the electorate do keep us on our toes, and one of the great benefits of our system is the way in which we are brought down to earth every time we go back to our constituencies on Thursdays or Fridays. However great and important the debates in this place are, when we knock on that door or sit down in our surgery, we are brought right back down to earth. It is a great feature of our political system, and she was right to draw attention to it.

My hon. Friend the Member for Kettering (Rosie Wrighting) spoke about how proud she was of the history of the place that she now represents and where she grew up. I was very moved to hear her speak about her mum’s role as a local youth worker, and how that inspired her to do what she is doing in life. I wish her well as one of the youngest MPs in this place.

My hon. Friend the Member for Wirral West (Matthew Patrick) spoke about the natural beauty of his constituency—he was not the first Member to do so today—and the passion of the people there. His comments about politics being as much about listening as speaking were particularly thoughtful. We should all bear that in mind in this place. He made an important point about learning from those with whom we disagree, or maybe only appear to disagree, and about breaking down barriers through listening and having conversations.

My hon. Friend the Member for York Outer (Mr Charters) spoke about businesses and voluntary projects in his constituency. He underscored how important it is that taxpayers’ money is treated with respect. I know that the residents of York Outer will be very well served by the excellent new MP we heard from today.

My hon. Friend the Member for Earley and Woodley (Yuan Yang), whom I enjoyed campaigning with during the general election, managed to inject some humour into economics, which is quite an achievement for a maiden speech. I am not even going to begin to try to replicate that in my comments just now, but she spoke passionately about the importance to those in her constituency of having access to nature and affordable housing. I know from what she said, particularly about her personal experience, that she will be a true champion for breaking down barriers to opportunity.

Finally, we heard from my hon. Friend the Member for Falkirk (Euan Stainbank), and it was worth the wait to hear his wonderful speech. He gave a fantastic whistle-stop tour of his constituency, and made many excellent recommendations of where to eat and drink next time we are in the area. What really came across is how connected he is to the community he represents, through his neighbours, his friends and his family. He used a phrase that sums up well what I and other Government Members want to do: unite and serve.

Those were all the maiden speeches we had today. It was a truly excellent tour of not just the country, but the talent we have in this place following the general election. I wish all hon. Members very well for however many years they spend in this place.

We heard from other Members about the substance of the Bill, including the shadow Ministers. They both seemed a bit confused about whether they support the OBR and the Bill. I am glad that they confirmed that they support the Bill and will not vote against it, but at one point the hon. Member for Grantham and Bourne (Gareth Davies) seemed to defend Liz Truss over her handling of the economy. He must be pretty much the last person in the country willing to do so; it was certainly brave of him. We Government Members are clear on why the OBR is so important and what its role should be. The Bill sets out to strengthen that.

The hon. Gentleman asked what the purpose of the fiscal lock might be. The fiscal lock will prevent the sidelining of the OBR by giving it the power to start an assessment if the Government announce fiscally significant policies without one. I remind him that the current shadow Chancellor said, at the time of the disastrous mini-Budget, that some of the difficulties were caused by the lack of a forecast, so this is something that the Opposition agree with.

The shadow Minister also asked about the definition of an emergency. We are very clear that in emergencies—for instance, during the pandemic—it may be necessary for the Government to take rapid action. In those cases, it would not be appropriate to hold back the response to the emergency until a forecast could be produced. Finally, he asked whether the OBR reports triggered by the fiscal lock will be published. I can answer him simply: they will. That is set out in section 8 of the original Budget Responsibility and National Audit Act 2011.

I welcome the support from the Lib Dem spokesperson, the hon. Member for Richmond Park (Sarah Olney), for the Bill. She asked about the definition of “significant”, a point also raised by my hon. Friend the Member for Walthamstow (Ms Creasy). The threshold set out in the draft charter for budget responsibility, which we have on the gov.uk website, is 1% of GDP in any single financial year. The purpose of the legislation is to prevent large irresponsible fiscal announcements that could undermine economic stability, and that requires a threshold targeted at fiscally significant announcements. That is why we have chosen that figure in the draft legislation and the draft text published on gov.uk.

Let me mention two other Members who spoke in the debate. I welcome the support of the hon. Member for Angus and Perthshire Glens (Dave Doogan) for the Bill. I think that his only criticism was one word in the terminology, and we can probably live with that. He said that he was nauseous from hearing us talk about being a Government of service, but he may have to get used to feeling nauseous, because we will proudly be a Government of service every day that we have the honour to serve.

Finally, I am glad that this is not an exceptional debate in which the hon. Member for Strangford (Jim Shannon) does not make an intervention. I welcome his support for the Bill, and for the Government’s wider actions in resolving the junior doctors’ industrial dispute. I reassure him that, like my right hon. Friend the Chief Secretary to the Treasury, I recognise the importance of working with political representatives from all nations in the UK.

As my right hon. Friend said at the beginning of this debate, a crucial first step to achieving sustained economic growth is delivering economic stability. This Bill will help provide that stability and ensure that fiscal responsibility is not only embedded in our approach to government, but locked into how government works from this point on. It will make sure that there is always proper scrutiny of the Government’s fiscal plans, reinforcing credibility and trust, and making sure that no Government can ever again play fast and loose with the public finances. The Bill is a key step in fixing the foundations of our country as we set out to get the economy growing and to make families across Britain more secure and better off.

We now know that the Conservatives called the election to run away from the problems that they had covered up, rather than taking the tough decisions to fix them. While they may have run away from the problems that they created, they cannot run away from their record in office. People in Britain will not forget the last Government’s recklessness in 2022, which showed just how much damage unfunded spending commitments can cause. Budget responsibility will never be optional under Labour, as it was under the Conservatives. We have brought fiscal responsibility back into the heart of government, and we will hardwire it into law through our fiscal lock. That is what this Bill will achieve. This Bill will draw a line under the economic recklessness of recent years and make it clear that it must never be allowed to happen again. Budget responsibility underpins our national mission to make people across Britain more secure and better off. For that reason and others, I commend this Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Budget Responsibility Bill: Programme

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Budget Responsibility Bill:

Committal

(1) The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee, on Consideration and on Third Reading

(2) Proceedings in Committee shall (so far as not previously concluded) be brought to a conclusion four hours after their commencement.

(3) Any proceedings on Consideration and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion five hours after the commencement of proceedings in Committee of the whole House.

(4) Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee of the whole House, to any proceedings on Consideration or to proceedings on Third Reading.—(Jeff Smith.)

Question agreed to.

Budget Responsibility Bill: Money

King’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Budget Responsibility Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred by the Treasury in consequence of the Act.—(Jeff Smith.)

Question agreed to.

Business of the House (Today)

Ordered,

That at today’s sitting, notwithstanding the provisions of Standing Order No. 122B, the Speaker shall put the Questions necessary to dispose of proceedings on the Motion in the name of the Prime Minister, Rishi Sunak and Ed Davey relating to Select Committees not later than one hour after the commencement of proceedings on the Motion for this Order; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings on that Motion may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Lucy Powell.)

Tax Measures: Next Steps

James Murray Excerpts

Monday 29th July 2024 Written Statements

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

The Government are committed to addressing unfairness in the tax system and raising revenue for public services by closing loopholes and tackling tax avoidance.

The Government are setting out next steps on their priority tax commitments to allow for technical consultation and provide taxpayers with certainty ahead of their final confirmation at Budget.

The Government are also publishing draft legislation on certain measures ahead of potential inclusion in the next Finance Bill to seek stakeholder views at this stage.

Tax announcements and associated documents

VAT and business rates on private schools: The Government are publishing a technical note setting out their plan to introduce 20% VAT on education and boarding services provided for a charge by private schools across the UK, from 1 January 2025. 20% VAT will also apply to prepayments of fees for terms starting on or after 1 January 2025, made on or after 29 July 2024. These changes will not impact pupils with the most acute special educational needs, where their needs can only be met in private schools.

In addition, the technical note confirms that the Government will remove private schools’ eligibility for charitable rates relief under business rates in England. However, the Government will consider how to address the potential impact of these changes in cases where private school provision has been specified for pupils through an education, health and care plan. The Government will engage with schools before setting out a final proposal in due course. This is intended to take effect from April 2025, subject to parliamentary passage.

The Government are also publishing draft VAT legislation. The legislation will be accompanied by an explanatory note (EN). A technical consultation on the legislation and technical note will run from 29 July 2024 until 15 September 2024.

Abolishing the tax regime for non-UK domiciled individuals: The Government are publishing a policy note setting out their plan to remove the concept of domicile status from the tax system, and to implement a new residence-based regime. This reform will end the use of offshore trusts to keep assets outside the scope of inheritance tax and scrap the 50% foreign income discount in the first year of the new regime. Full details of this reform will be provided at the Budget.

Taking action against the carried interest loophole: The Government are publishing a call for evidence confirming their intention to take action against the carried interest loophole, and to form the basis for detailed engagement with expert stakeholders.

Energy Profits Levy reform: The Government are publishing a policy document that confirms their intention to increase the rate of the energy profits levy (EPL) to 38% from 1 November 2024, and extend that levy from March 2029 to March 2030. The energy security investment mechanism will remain, helping to provide operators and their investors with confidence the levy will no longer apply if prices fall to, or below, historically normal levels for a sustained period.

The Government will also remove unjustifiably generous investment allowances from the EPL, including by abolishing the levy’s core investment allowance. Further details on the Government’s approach to all allowances in the EPL will be set out at the Budget.

The Government recognise the importance of providing the oil and gas industry with long-term certainty on taxation after a period of change. The Government will therefore set out a way of working with the industry and others to develop an approach for responding to price shocks after the EPL ceases.

Tackling the tax gap: The Government will take a comprehensive approach to tackling the tax gap and making sure more of the tax revenues that are owed are correctly paid.

The Government will invest in HMRC’s compliance work, hiring around 5,000 additional staff to recover more tax revenues. HMRC has already started the process of recruiting additional staff into compliance roles. The Government will also invest in HMRC’s technology infrastructure, helping to make HMRC more efficient and improve taxpayers’ experience of interacting with HMRC.

The Government will reform the tax system by making policy changes to simplify tax, close loopholes and reduce non-compliance, designing out non-compliance before it happens. At the Budget, the Government will provide an update on the implementation and development of measures that form their plan to close the tax gap.

Abolishing the Furnished Holiday Lettings tax regime: The Government are publishing draft legislation to abolish the furnished holiday lettings tax regime from April 2025. This will remove the tax advantages that landlords offering short-term holiday lets have over those providing standard residential properties. The legislation also contains information about the transitional arrangements that will apply.

OECD Pillar 2: The Government are publishing draft legislation to translate an internationally agreed anti-avoidance rule into UK legislation. The draft legislation stops attempts by multinational enterprises to avoid pillar 2 top-up tax by exploiting a temporary simplification in the rules. The legislation will apply from 14 March 2024 and will prevent multinational enterprises that enter into certain avoidance transactions from accessing the simplification.

In addition, to provide certainty for affected businesses, the Government are confirming that the UK will introduce the undertaxed profits rule (UTPR) of pillar 2 for accounting periods beginning on or after 31 December 2024, and will continue efforts to ensure the UK rules are effective and up to date.

The draft legislation on abolishing the furnished holiday lettings tax regime and OECD pillar 2 legislation is accompanied by a tax information and impact note (TIIN) and an explanatory note.

All publications can be found on the gov.uk website.

https://www.gov.uk/government/collections/finance-bill-2024-25-draft-legislation-and-technical-tax-documents

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