Non-Domestic Rating Bill

James Murray Excerpts

2nd reading
Monday 24th April 2023 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

As we have heard today, this Bill makes a number of changes to the system of business rates, with most of these changes arising from the Government’s business rates review, which was first announced in March 2020. My colleagues and I will not oppose the Bill today, as any support it offers to businesses is welcome. However, as we know, some business organisations are concerned that the Bill will increase the overall administrative burden on businesses, and I will address that point in a moment.

First, it is worth putting this package of measures in the context of Government promises on businesses rates in recent years. The review that led to many of these measures was first launched by the Prime Minister when he was Chancellor at the Budget of March 2020. He called this project a

“fundamental review…of the long-term future of business rates.”—[Official Report, 11 March 2020; Vol. 673, c. 281.]

When the final report was published alongside the autumn Budget of October 2021, however, the verdict was clear. As the British Retail Consortium concluded at the time, it

“falls far short of the truly fundamental reform that is needed and was promised in the government’s 2019 manifesto.”

The truth is that the changes before us, now more than three years in the making, miss the opportunity to begin replacing the current system of business rates with one that understands the needs of British businesses and that is fit for the modern day.

What is more, right now, we know that many smaller businesses, particularly those on high streets, that are already struggling after the pandemic and a difficult winter of high energy bills are worried about the impact of the current revaluation, which is why we called for an immediate cut in business rates for small firms this year by raising the threshold for small business rates relief in 2023-24. This would be funded by an increase in the rate of the digital services tax that is charged on the global revenues of global tech giants. We were disappointed that the Government failed to adopt our plans, although we welcome their having heeded our call to ensure that firms are immediately given any discount they are owed through the current revaluation, thanks to the Bill’s changes to transitional relief.

It is clear, however, that businesses need a Government who are ready to go further. In the Government’s own press release on the Bill, a quote from the British Retail Consortium’s chief executive makes it clear that

“the job is not done.”

That is, of course, right, and members of the Government may well accept that the job is not done but, after 13 years in power, how much longer can Conservative Members get away with the excuse that they have not yet got round to the urgent and fundamental reforms our country needs?

We know that fundamental reform is needed, which is why Labour has said that if we win the next general election, we will replace the business rates system with one that shifts the burden of tax away from the high street and on to online giants, that moves towards annual revaluations and that truly supports entrepreneurship. Businesses across the country want the Government to transform the system of business rates to meet the needs of the modern economy, which is what Labour will do in power.

There are measures in the Bill that we hope will give at least some support to struggling businesses. As I mentioned, we have been calling on the Government to remove downward caps on transitional relief, so we welcome the measures in the Bill to make that so. We are also glad to see the revaluation cycle being moved to every three years, rather than every five years, although we are concerned that the Government have kicked the prospect of annual revaluations far into the long grass.

The importance of annual revaluations was, again, made clear in the Government’s own press release on the Bill, in a quote from the chief executive of the British Property Federation, who made it clear that her organisation

“would like to see Government continuing to strive towards even more frequent revaluations in due course.”

We are therefore concerned that, in the final report of the business rates review, the Government said only that they will

“consider the case for…annual revaluations…in the longer-term.”

We do not have to read between the lines very hard to conclude that annual revaluations are off the table under this Government.

Furthermore, alongside the reservations that many businesses and their representative bodies hold about how the Government’s reforms do not go far enough, we know that others, such as the Shopkeepers’ Campaign, have raised important concerns that the Bill will increase the overall administrative burden on businesses. As we have heard, the Bill introduces a new legal duty on business rate payers to provide annual confirmation of the information held on their property and to inform the Valuation Office Agency of any changes made to the property within 60 days of the change or face a fine.

The new requirements will have an impact on business rate payers and on the billing authorities—indeed, the impacts are referred to in the information and impact note on the new duty, published by the Treasury and the VOA. I wish to press the Minister on two points in particular on the impact of the new duty. First, the note makes it clear that the average annual cost for each ratepayer will more than double as a result of the new duty and that in the first year the cost for each ratepayer of complying with the new system will be more than three times that of doing so under the current system. Will he confirm whether that is correct? The note goes on to accept that the 309 billing authorities in England with responsibility for business rates will be impacted by the measures too, but it says that the

“costs are yet to be quantified.”

Will the Minister confirm when the Government will publish the detail of what those costs are? I look forward to hearing his response to those points in his closing remarks.

As my hon. Friend the Member for Luton North (Sarah Owen), the shadow local government Minister, and I have made clear, we will not be opposing this Bill today. However, although any support for businesses that are struggling may be welcome, it is clear that promises of fundamental reform of the business rates system under this Government are gone. As businesses and their representative bodies have been making clear, even as we debate the Bill, much more needs to be done. Yet it is also clear that after 13 years of economic failure, and with a party now chronically divided by infighting, the Conservatives are incapable of delivering the reform that businesses need. Our country needs a new Government, who are ready to replace business rates with a system fit for the future, ready to work hand in hand with British businesses to succeed, and ready to get our economy growing in every part of the country, making everyone better off.

Finance (No. 2) Bill

James Murray Excerpts

Committee of the whole House
Wednesday 19th April 2023 Commons Chamber

[Andrew Griffith]

I am sure that the significant number of people—over half a million—who depend on jobs in the financial sector, including in places such as Edinburgh, one of our great financial centres, are listening with consternation to the politics of envy. The hon. Lady singles out individual professions and invites us to set separate tax policies on the basis of a particular profession. That would be entirely wrong. If she had been listening very carefully—I understand that she wanted to get in, because this is a debate and is the opportunity to do so—she would have heard that I was talking about the annual tapered allowance. That is a feature in pensions policy that is there entirely to ensure that it continues to have a progressive nature. A banker who is earning £260,000 a year can get only a reduced amount. They cannot avail themselves of the same annual allowance as the hon. Lady’s friends, colleagues and those she seeks to represent in our public services. I can assure the House that this is not a charter for bankers. In fact, the annual tapered allowance remains unchanged in its operation. We are updating the thresholds here today.

Unless the hon. Lady wishes to withdraw her amendment at this point having heard the strength of our arguments, I will now turn briefly to the remaining clauses that we are debating today, covering collective money purchase pension arrangements and relief relating to net pay arrangements. Collective money purchase is a new type of pension arrangement. Clause 24 will prevent any unintended tax consequences should a collective money purchase scheme wind up. It will ensure that members and their dependants can receive payments and transfer funds without incurring an unauthorised payments tax charge—I do not think that that should be controversial for the House.

Finally, clause 25 relates to the introduction of top-up payments for the lowest earners—another highly progressive measure—who sit within net pay pension schemes. There are two main methods of giving pensions tax relief. Although they provide the same outcomes for most individuals, lower earners can have different levels of take-home pay depending on how their pension scheme is administered for tax purposes, and the Government believe they are right to rectify that.

Clause 25 makes changes to ensure that eligible low-earning individuals whose income sits below their personal allowance receive a taxpayer-funded top-up payment so that they will have broadly similar take-home pay regardless of how their pension scheme is administered for tax purposes. The hon. Member for Ealing North (James Murray) has tabled some amendments in this respect, and I wrote to him yesterday to provide some of the comfort that I think he was looking for. They were well-intentioned amendments, and I hope that the letter I have sent him gives him some of the satisfaction that he seeks. Fundamentally, we do not disagree with what he is trying to achieve, and it has the support of those who have been agitating for low-income earners. That measure could benefit an estimated 1.2 million low earners who save into an occupational pension under net pay arrangements.

In conclusion, as I have set out, we know that there is a problem that needs to be tackled. It is a fact that individuals are choosing to retire early to prevent incurring pension taxes. The changes today, which have been widely welcomed by sectoral representatives across the economy, will ensure that we can retain our most skilled and experienced workers in all sectors while also simplifying and improving the pension arrangements for millions of households. I therefore urge Members to accept that clauses 18 to 25 should stand part of the Bill.

[James Murray (Ealing North) (Lab/Co-op)]

Thank you, Dame Rosie, for the opportunity to respond on behalf of the Opposition. I wish to speak in support of the new clauses in my name and the name of my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare).

In this debate, we get the chance to discuss something rare: a tax cut from this Government. It is rare to see a tax cut from this Government, because we are so used to seeing tax rises from them—24 tax rises in the past few years. We now face a tax burden in this country that has risen to its highest level in 70 years. This month, people across the country are being hit by a double whammy of Tory tax rises. Freezes to income tax thresholds mean stealth tax rises for working people, while, at the same time, families are being hit by the Tories’ council tax bombshell.

Let me be clear about what these tax rises mean: the Government’s six-year freeze in the personal allowance will take its real value in 2027-28 back down to its 2013-14 level, while this year, council tax for the typical band D property will breach £2,000 for the first time. In the middle of a cost of living crisis, made worse by the Conservatives’ tax rises, one permanent tax cut was announced by the Chancellor in his Budget last month. That tax cut, introduced by the clauses we are debating today, sees £l billion of public money spent to benefit only the 1% with the biggest pension pots. It is an extraordinary way to spend £l billion in the middle of a cost of living crisis, which is still hitting people across this country hard. Ministers may claim that their decision was driven by a desire to get doctors back in work, but it is clear that they could have found a fair, targeted fix for doctors’ pensions at a fraction of the cost. The British Medical Association has said that a targeted doctors’ scheme could cost as little as £32 million to implement. The Conservative Chair of the Treasury Committee has said that even she was surprised that the Government did a blanket cut, rather than a bespoke policy for doctors. That is why we oppose the Government’s plans to abolish the lifetime allowance charge in clause 18 as part of their package of changes covered by clauses 18 to 23.

I wish to spend a few moments addressing clause 25, which covers a separate pensions matter, unrelated to the package of measures that we have concerns about. Clause 25 introduces, as the Minister has said, a scheme of “top-up payments” for low earners contributing to net pay pension schemes who currently miss out on a Government pension savings incentive. We know that tax relief on pension contributions can be given to individual scheme members in two ways: relief at source and net pay arrangements. In the case of the former, even non-taxpayers are given basic rate tax relief, but in the case of the latter they are not. As the Minister said, this is particularly unfair as individual people have no control over which form of scheme their employer chooses. We commend the efforts of the Low Incomes Tax Reform Group, along with pension providers, Age UK, the TUC, and others, to campaign for a change to the law, which is culminating in clause 25 before us today.

There are, however, a number of points of detail that we would like to raise with the Minister. To help draw these out, we have tabled amendments, three of which— amendments 27, 28 and 29—have been selected for debate today. I wish to put on record my thanks to the Low Incomes Tax Reform Group for its help in drafting these amendments.



We recognise that, under the measures proposed in clause 25, there is an onus on His Majesty’s Revenue and Customs to make payments to eligible individuals. While we hope, of course, that HMRC would always do the right thing, we think individuals should be able to challenge the amount paid if they think it is incorrect. With that in mind, amendment 27 would require HMRC to provide recipients of the relief with a calculation of the payment so that it can be checked. I therefore welcome confirmation from the Economic Secretary to the Treasury in a letter sent to me this morning that

“HMRC are already planning to provide customers with details of the payment and how it was calculated.”

I would welcome any further detail on that commitment that the Economic Secretary is able to give in his closing remarks.

--- Later in debate ---

[Anthony Browne]

The hon. Gentleman is making the case for a special NHS-only or doctors-only regime. Does he accept that senior workers in other parts of the public sector are affected by the lifetime pensions allowance? There was already a separate scheme for judges, and we know about the former Director of Public Prosecutions having his own individual scheme, but does the hon. Gentleman accept that there are senior police officers, senior local authority civil servants, senior Government scientists, air traffic controllers—as we have heard—and other workers across the public sector who are disincentivised from continuing to work by the current regime?

[James Murray]

I thank the hon. Gentleman for his intervention, but the argument we were hearing from hon. Members on both sides of the House was about NHS doctors and keeping them in work. The Chancellor himself, when he was Chair of the Select Committee, said that we needed targeted intervention to help NHS doctors. No one was talking about a wider scheme to affect everyone with the largest pension pots until the Chancellor stood up and made his announcement on Budget day. I respectfully suggest the hon. Gentleman focuses on our amendments in hand and on new clause 5, which suggests that, rather than proceed with a blanket scheme affecting everyone with a pension pot, we should do what I thought there was an emerging consensus around and develop a targeted scheme for NHS doctors.

Otherwise, the Government’s approach fails the critical test for any Government spending—whether they are spending public money wisely. Yet Ministers refuse to entertain the prospect of a targeted scheme for NHS doctors instead. That is why we have tabled new clause 5, which would require the Chancellor to make recommendations on what a scheme targeted at NHS doctors would look like. We believe that is a crucial question to be answered. I hope that any Conservative Members, including the hon. Gentleman, who are concerned about spending public money wisely, getting value for money and supporting our NHS, will vote for new clause 5 in the Division Lobby later.

[Anthony Browne]

Will the hon. Gentleman give way?

[James Murray]

No; I am going to make some progress. The hon. Gentleman has intervened quite a lot and I am looking forward to his speech, as I am sure everyone in the Committee is.

When the Economic Secretary responds, I would be grateful if he could address the points set out by new clause 4, in particular by giving some much-needed clarity on the scale of the impact the Government expect their changes to pension allowances to have. Can he tell us how many people are expected to stay in work or return to work as a result of these policies? What sectors do they work in? How many of them are NHS doctors? Those are important questions, yet it has been hard to get exact answers from Ministers. The Office of Budget Responsibility has said the changes to pension contribution allowances will increase employment by around 15,000, but Paul Johnson of the Institute for Fiscal Studies has said that figure is “optimistic”.

When the Financial Secretary to the Treasury was asked on Second Reading of this Bill how many doctors would stay in the NHS because of these measures, she confidently quoted Department of Health and Social Care statistics that around 22,000 senior NHS clinicians would have been expected to exceed the £40,000 annual allowance this year. However, she may not have known that, at the very same time, the permanent secretary who oversees Government spending was appearing before the Treasury Committee, where the hon. Member for South Cambridgeshire (Anthony Browne) was asking her questions. When asked about the evidence on how many of those 22,000 NHS clinicians would have been discouraged from working by the cap, she said the evidence was “mixed” and that they would need to do further evaluation.

It seems clear that the Government simply do not know how many people will be brought back into work as a result of their changes to pension tax-free allowances. They certainly do not know how many NHS doctors will come back into work, and they have clearly failed to do the thinking on how a bespoke approach for NHS doctors could operate.

That is why we oppose the Conservatives’ pension changes and why we will be voting for a fair fix for doctors’ pensions to get them back into work. We will be voting to spend public money wisely. We will be voting against a Government who choose to cut tax for the richest 1%, while pushing up stealth taxes and council tax on working people across the country.

[Sir Robert Syms (Poole) (Con)]

I declare an interest, as I am in the parliamentary pension scheme and I think I am one of the older people in the Chamber today. Indeed, I am old enough to remember when the shadow Health and Social Care Secretary, the hon. Member for Ilford North (Wes Streeting), was musing about getting rid of the lifetime allowance—a matter of a few weeks ago, before the Government did it.

Doctors in Poole have said to me clearly over a number of years that at a certain stage of their career they have all the skills, but when they work they get annual bills, and when they look at their lifetime allowance it makes sense for them to retire. The tax policy of the lifetime allowance and the annual allowance have been improving the golfing skills of GPs and hospital doctors, because they get to a point where, if they do the extra work, they are penalised by the tax system and they say, “Why should I do this?” Many still do it, but it is totally wrong that we have a tax policy that discriminates against people who want to work and want to use their skills.

One key thing that the Government have done is put billions into the national health service to catch up with the backlog. If we are putting billions in and want productivity in our hospitals to improve, it is totally inconsistent to have a tax system in which the key people leading teams and doing tests find that it is a disadvantage for them to work. We will never get the lists down if people feel that they are penalised for working hard, and many want to work hard. I have talked to doctors since the changes, and the evidence in my constituency is that some have decided to delay their retirements, which they had already put in for, while others who had retired are now coming back to work part-time. The main improvements will be higher productivity and more patients being seen. I do not know whether there will be a massive advantage for doctors, but there will be for patients, because at the end of the day, there are people waiting to have tests and operations, and this will make the national health service rather more productive that it would otherwise be.

Also, because many early-retirement doctors will now stay working, they will continue to receive salaries and pay tax at the normal rate. I am somewhat sceptical about the £1 billion cost because, if significant numbers of people stay in our hospitals, they will ultimately continue to pay taxes and many of them are higher-rate taxpayers. The key point is that we have to focus on the patients, not on the providers of services. If the providers of services can work and have incentives to work, we will get through more patients, which is what people in this House want.

It is difficult to focus on the national health service alone. There are the anomalies not only of general practitioners—I come across general practitioners well into their 50s and nearing retirement who work only three days a week because of the tax system, and this measure will help them—but of dentists. We all get people writing to us about a shortage of dentists—particularly NHS dentists—and unless we fix these problems, which are pushing experienced dentists into early retirement, our constituents will not get the services that they need.

As my hon. Friend the Member for South Cambridgeshire (Anthony Browne) pointed out, many other high-skilled, high-paid public sector jobs are impossible for managers to manage because the people undertaking those tasks are penalised either by a big tax bill each year, or by the difficulty of seeing their lifetime allowances used, so there is no great incentive for them to continue working. If we have a problem in this country, it is one of productivity. This tax change improves productivity. If we improve productivity in people-facing services, such as those provided by dentists and doctors, the people waiting for those services will clearly be more and better looked after by the system.

When the Conservative party came into office, the lifetime allowance was £1.8 million, which was a significant sum 14 years ago. The reason it was reduced was that there was a suspicion that City slickers were putting millions into pension funds and not paying any tax. In reality, it has come down too far and is hitting people who we need to provide the skills that they have trained for over years. Doctors spend years training and decades getting experience, but at the time when they are needed most—to deal with the waiting list—they find that the pension system is forcing them into retirement or to play golf. What the Government have done is sensible.

I do not accept the figures from the shadow Minister, the hon. Member for Ealing North (James Murray). The main benefit of the changes will be for those in the health service, but we cannot differentiate between one person providing one skill and somebody else providing some other skill. From that point of view, the tax system has to be neutral. If we get into a position in which the more worthy people pay less tax, we may as well be saying, “Why should anybody in the NHS pay tax? Why not just give them a free ride?” That is an argument without a great deal of thought behind it. We have to have a neutral tax system without the Government trying to second guess about the public or private sector, or whether doctors are more worthy than others.

I think that the Government have done quite a brave thing, and it was the right thing to do. Government is about taking the right decisions, even if they are not always the most popular. They are the right decisions to provide better medical care for our constituents and to get the NHS backlog down. Of course, one of the Prime Minister’s key pledges is to do just that. This is one measure that will enable that by letting people work longer, harder and more productively.

Finance (No. 2) Bill

James Murray Excerpts

Committee of the whole House
Tuesday 18th April 2023 Commons Chamber

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I call the shadow Minister.

[James Murray (Ealing North) (Lab/Co-op)]

Thank you, Dame Rosie, for the opportunity to respond on behalf of the Opposition. I would like to speak to the amendments and new clauses in my name and that of my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare).

When we debated this Bill’s Second Reading at end of last month, we made it clear that what we needed was a plan to get us out of what the previous Chancellor rightly called a “vicious cycle of stagnation”. We need a plan for growth—a plan to raise the living standards of everyone in every part of the country—but this Government have failed to offer us one. That much was clear from the data published alongside the Budget, which showed that ours is the only G7 economy forecast to shrink this year and that our long-term growth forecasts were downgraded in the Office for Budget Responsibility report.

Since we last debated this Bill, further data has been published confirming our fears. Earlier this month, a report from the International Monetary Fund put the UK’s growth prospects this year at the bottom of those of the G20 biggest economies—a group that includes sanctions-hit Russia. After 13 years of economic failure, people and businesses across the UK deserve so much better than that. They deserve a plan for the economy that offers more than managed decline. So today, we begin by looking at some of the measures the Government are seeking to introduce in this Bill and explaining why their approach is letting Britain down.

First, let me speak to clauses 5 to 15, which address the rate of corporation tax, capital allowances and other reliefs relating to businesses. On those, one thing prized above all else is the need for certainty and stability. Businesses across the country want stability, certainty and a long-term plan, yet under the Conservatives corporation tax has changed almost every year since 2010. Furthermore, as the Resolution Foundation has pointed out, the introduction of the latest temporary regime for corporation tax represents the fifth major change in just two years. It seems that the Conservatives are simply incapable of offering stability.

Let us start by looking at the main rate of corporation tax, which clause 5 sets at 25% for the financial year beginning in April 2024. The clause will mean that corporation tax will continue to be charged at the rate to which it rose at the start of this month. That rate, 25%, was first announced by the Prime Minister, when he was Chancellor, in his spring Budget 2021. One might think that sounds like a rare example of certainty, but, sadly, that is not the case. As we know, last September, the then Chancellor, the one who said our economy was trapped in a “vicious cycle of stagnation”, announced that the rise to 25% would be cancelled, leaving the rate at 19%. That was of course reversed just a month later, when the current Chancellor moved into No. 11, and confirmed that the rise to 25% was back on. So much for stability! But we are where we are, and if we are to assume that the current Chancellor’s plans will indeed go ahead—a bold assumption, I admit—the rise to 25% will now continue from April 2024.

With the rate of corporation tax being increased, it is particularly important to get capital allowances right. The Government should be focused on giving businesses certainty that will help them to plan and increase their investment in the UK economy. We need that certainty and greater investment—the UK currently has the lowest investment as a percentage of GDP in the G7—yet the approach in clause 7 is to introduce temporary full expensing for expenditure on plant and machinery for three years only. By making that change temporary, it only brings forward investment, rather than increasing its level overall. The Government’s own policy paper on this measure, published on the day of the Budget, makes that clear. It says:

“This measure will incentivise businesses to bring forward investment to benefit from the tax relief.”

As the Office for Budget Responsibility has made clear, the Government’s approach will mean that business investment between 2022 and 2028 is essentially unchanged as a result of these measures. If anything, there is a very slight fall. Britain deserves better than this. As Paul Johnson of the Institute for Fiscal Studies said in response to this temporary tweak to the tax regime for businesses:

“There’s no stability, no certainty, and no sense of a wider plan.”

That is why we have tabled new clause 3, which would require the Chancellor to follow Labour’s lead by developing a wider plan for business taxes, which we believe is needed. As my right hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor has set out—

[Kit Malthouse]

I wish to challenge the hon. Gentleman’s assertion about the notion of a window. We know that where taxation is concerned the creation of a window can often create an incentive to move quickly. For example, when there was a stamp duty window, we saw a significant number of transactions brought forward and take place. The Government are saying that they want to see very significant investment taking place. We know that British industry has accumulated a large amount of cash on its balance sheets. Why would the Government not create a particular incentive by saying, “Look, there is a deadline. If you get in now, we will give you this very generous tax break and then who knows what may happen in the future”? We must not forget that although the investment may absorb all of the profit for small businesses, it will, in effect, create a tax loss that is able to be carried forward beyond the window. So I do not understand his criticism of our having a window if, as the Government say, they want action now rather than in three years’ time.

[James Murray]

I thank the right hon. Gentleman for his intervention but I feel he rather misses the point. Surely having a temporary change merely moves investment around, rather than increasing its overall level, as the OBR has set out. We have the lowest investment as a percentage of GDP in the G7, so the importance of increasing investment should be agreed by Members in all parts of this House. We need a wider plan that will give that stability and certainty, which is exactly what my right hon. Friend the shadow Chancellor has set out. She has set out Labour’s mission to secure the highest sustained growth in the G7, which means that in government we would review the business tax system and set out a clear road map to provide that certainty and boost investment.

New clause 3 speaks to that, and perhaps the right hon. Gentleman would like to join us by voting for it later this evening. It would require the Government to follow our lead by initiating that review of business taxes that we want to see now. Such a review would make recommendations on how to give businesses more certainty about the taxes they need to pay, and how to make sure that the system of capital allowances operates effectively to incentivise investment. The new clause would require the review to be conducted, and recommendations on how to increase certainty and investment to be published, within six months of the current Finance Bill becoming law. I urge Ministers and, indeed, Back Benchers to accept and support new clause 3. If they do not, I at least encourage Ministers to give as much certainty as possible by making it clear what their plans for capital allowances are beyond the three-year period covered by clause 7.

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

As well as the economic cost of the way that the windfall tax has been designed, does the shadow Minister agree that it has a massive climate cost, in the sense that we are incentivising oil and gas at exactly the time when we need to make the transition to green energy technologies?

[James Murray]

The hon. Member is right to point that out that, in addition to the points that I have made, the Government’s decision has a climate change impact. It shows, I think, in the design of the windfall tax that investment allowances really should have no place in a proper windfall tax on oil and gas giants’ profits. We want to scrap those investment allowances and to make sure that that money is spent helping people through the cost of living crisis that we face right now. I would very much welcome the hon. Member and any Member on the Conservative Benches joining us in voting for new clause 6, which will force the Government to come clean about how much money they would raise by strengthening the windfall tax—money that could go towards freezing council tax this year.

I have spoken so far about the clauses of the Bill that relate to the main rates of corporation tax, capital allowances and reliefs. I now turn my attention to another important way that the Bill impacts on corporation tax through parts 3 and 4, which relate to the new multinational top-up tax and the related domestic top-up tax. As I set out earlier, we desperately need greater stability and certainty in business taxes and allowances to help the economy grow in the future. We also need greater fairness to help people with the cost of living crisis right now.

That principle of fairness is crucial in making sure that British businesses that pay their fair share of tax face a level playing field when competing with large multinationals that may not do so. That is why we have, for so long, pressed the Government to back an ambitious global minimum tax rate for large multinationals. We have long needed an international deal on a global minimum corporate tax rate to stop the international race to the bottom and to help raise revenue to support British public services. We welcome the international agreement, fostered by the OECD, that makes sure that large multinationals pay a minimum level of 15% tax in each jurisdiction in which they operate.

As I set out on Second Reading, it has been a long and winding path to get to this point. The Prime Minister, when he was Chancellor, was often lukewarm in his support of such an approach. However, the deal now faces a new front of challenges, as Conservative Back Benchers have begun to be open in their hostility towards the implementation of the deal, as we have seen in this place today. We believe that it is crucial to get this legislation in place, so I hope the Minister can reassure us today that those parts of the Bill that introduce a multinational top-up tax will not be bargained away in the face of opposition from Conservative Back Benchers.

On Second Reading, we heard from the right hon. Member for Witham (Priti Patel) and others as they rallied their colleagues against the global minimum rate of tax for large multinationals. We therefore want to press the Government to make sure that, in the face of opposition from their Back Benchers, they do not back away from implementing this landmark deal.

That is why we have tabled new clause 1, which would require the Chancellor to report every three months for a year on the Government’s progress in supporting the implementation of OECD pillar two rules. The quarterly reports mandated by the new clause would update the House on the Government’s progress towards implementation. Those updates must include details of what efforts the Government have undertaken to make the rules as effective as possible. They must explain what the Government have done to encourage more countries to implement the pillar two rules—a point made by the right hon. Member for Chelmsford (Vicky Ford), who is no longer in her place. This is important because we know that the rules will be more effective the more widely they are implemented. I hope that the Government will support our new clause, which commits them to giving these updates. Surely that is a matter on which we broadly agree. Even if Ministers do not support the new clause, I hope that many Conservative Back Benchers do.

On Second Reading, the right hon. Member for Witham expressed her concern that the implementation of the OECD rules had so far progressed with “very limited scrutiny”.

Although I know that she and I, and others on the Conservative Benches, may have very different views on these rules and on what they will achieve, surely she and her fellow Back Benchers will not vote against transparency and will not try to block our new clause that simply requires updates to Parliament every three months.

[Richard Fuller]

The hon. Gentleman is very kind to give way. Personally, I do not have much concern about transparency in the United Kingdom—we do a fantastic job in that regard. I also have no problem with this country implementing regulations. We tend to have a reputation for gold-plating all our regulations. My concern is that other countries will not do what they say they will do. By enacting this legislation, my concern is that other countries will not do so. The hon. Gentleman has been extolling the virtues of supporting British enterprise, but Labour’s approach runs the risk of putting British companies at a disadvantage, because the United States and other countries may not move forward as we introduce these restrictions. He has talked about transparency, but can he specifically say today that, if the United States does not enact this legislation, the Labour party, whether in Government or not, would support efforts for us to renew or review pressing ahead with our own legislation?

[James Murray]

I thank the hon. Gentleman for his comments. At one point, I thought he was starting to speak in favour of our new clause; I got my hopes up momentarily because he referred to the importance of making sure that more countries implement the pillar two rules, and we agree that that is important to make them as effective as possible. Indeed, new clause 1 says that the statements to the House, every three months of the following year, must include details of efforts by the UK Government to encourage more countries to implement the pillar two rules. On that basis, I hope that he will join us in the Lobby to vote for the new clause later this evening.

[Richard Fuller]

rose—

[James Murray]

I am going to make some progress.

Finally, our new clause 2 would require the Government to set out their approach to pillar one of the OECD agreement and the digital services tax. We know that, unlike pillar two, the implementation of which is proceeding both here in the UK and in many countries overseas, the prospects of pillar one being implemented in the near future look less positive. That is likely to have an impact on the Government’s approach to the digital services tax, so I urge the Government to support our new clause, which requires the Chancellor to make a statement to the House on the matter. While new clause 2 has not been selected today, I none the less encourage the Minister to set out the Government’s approach to pillar one and the digital services tax in her closing remarks.

Through today’s debate on the Bill’s clauses and our amendments, we have seen the state that the Government are in. We have seen how they are failing to provide our economy with the stability and certainty that is needed for growth—growth that we need in every part of the country to make everyone, rather than just a few, better off. We have seen how the Government’s Back Benchers risk putting their party before our country at every turn, and how they are unable to provide the long-term plan that people and businesses need. We have seen clearly how this Government are refusing to take fair decisions on taxes—putting up council tax for families across the country, rather than strengthening the windfall tax on oil and gas giants.

When we come to vote at the end of this debate, I urge all hon. Members to support Labour’s new clauses and expose the unfair choices that this Prime Minister and this Conservative Government are making, which are leaving our economy on a path of managed decline.

[Priti Patel (Witham) (Con)]

I rise to speak to the topic at hand, but I want to begin by thanking the Minister for the way in which she has tackled this Committee sitting and her familiarisation with the points made on Second Reading.

I am on the record as having concerns about not just the implementation but the purpose of all this. No one would disagree that multinational companies need to pay their fair share of tax, but I question the way we are going about achieving that. I put it on the record that I was semi-humoured by the comments of the Opposition spokesperson just now. Even when the Labour party is taking a break from its efforts to heap extra burdens on businesses, which is obviously what it stands for, it is raising concerns about implementation timetables.

Labour has missed the opportunity to speak up for British businesses, so it falls to those on the Conservative side of the House to do that. We believe in competition, business growth and business investment. My right hon. Friend the Member for Chelmsford (Vicky Ford) is not in her place right now, but sectors such as insurance employ my constituents, probably the constituents of the hon. Member for Ealing North (James Murray) and hundreds of thousands of constituents up and down the country. Those are the types of jobs we should try to safeguard in the United Kingdom.

The hon. Gentleman was partisan, so I will make a point now as well: the response of the Labour party is always to build up even more red tape, regulations and reporting. I think we all know how we adopt regulations in this country. My own personal view, which I attested to on Second Reading, is that I would like to have a delay to implementation until we see a critical mass of other countries, including very significant competitors, moving some way towards implementing the tax, as has been said by colleagues this afternoon.

As my hon. Friend the Minister already knows from interventions today and from Second Reading, I feel that this new tax risks placing significant compliance costs on British businesses, which are already paying well above the minimum 15% tax rate. We must recognise that there are current pressures and that these inevitable costs will be fed on to consumers. I have touched on the insurance sector, but at the end of the day it is consumers who will end up picking up the costs through higher premiums and other impacts on them. On top of consumer prices, which bear the brunt of that and are also inflationary, there is no way, given the delays that we are seeing elsewhere, that implementing this tax will not have an impact on our competitiveness. By pressing ahead, we risk capital flight and jeopardising future investment income.

Finance (No. 2) Bill

James Murray Excerpts

2nd reading
Wednesday 29th March 2023 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

I beg to move,

That this House declines to give the Finance (No. 2) Bill a second reading because, notwithstanding the introduction of the multinational top-up tax and electricity generator levy, it fails to introduce a targeted scheme to address pension issues affecting NHS doctors, instead making blanket changes to tax-free pensions allowances which, as they will cost around £1 billion a year and benefit only those with the biggest pension pots, should not be the priority, and because it derives from a Budget which failed to set out an ambitious plan for growing the economy.

Six months ago the previous Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), described our economy as being stuck in a “vicious cycle of stagnation”, and on that one point he was absolutely right. To his credit, unlike many of his colleagues, he at least took responsibility, on behalf of the Conservative party, for more than a decade of economic failure.

However, although the previous Chancellor was right to point to our country’s economic stagnation, the prescription that he and the previous Prime Minister offered was nothing short of disastrous. They set the UK economy on fire, and people are still paying the price as a Tory mortgage penalty does lasting damage to the living standards of working people; yet the current Prime Minister and Chancellor expect praise for being better than the arsonists who preceded them. Could the bar seriously be any lower? British families and businesses deserve so much better than that. After 13 years of economic failure, people and businesses across the UK deserve a plan for the economy that offers more than managed decline.

[Anthony Browne (South Cambridgeshire) (Con)]

I fear that the hon. Gentleman may know what I am about to say. Is he aware that, according to the International Monetary Fund, economic growth in the UK—GDP, either per capita or in terms of constant prices—has grown faster than economic growth in France, Germany, Italy and Japan, faster than the G7 average, faster than the EU average and faster than the euro area average? That is quite a record, and one to be proud of, so it is not a case of 13 years of economic failure. I invite the hon. Gentleman to pay tribute to the Government’s success in ensuring that our economy grows faster than the economies of all those other countries that have faced similar international challenges.

[James Murray]

Just two weeks ago, we were promised a Budget for growth. Let us now look at the data that was published alongside that Budget. It shows that ours is the only G7 economy that is forecast to shrink this year. Our long-term growth forecasts were downgraded in the Office for Budget Responsibility report.

[Anthony Browne]

Will the hon. Gentleman give way?

[James Murray]

No, I am going to finish what I am saying before I give way again.

That data confirms that we are suffering the worst falls in household incomes in a century. The hon. Gentleman need look no further than the OBR report alongside the Budget, which make it very clear that this Government have little or nothing to be proud of when it comes to our economy. Across the UK, people and businesses want to get on with making our country better off, but we are being held back by a Government who are out of energy and out of ideas. That much is clear from the Bill that is before us today, which seeks to implement some of what the Government have promised.

Of course, consideration of any Bill on Second Reading must include what it omits as much as what it contains. Let us start with the fact that this Bill contains no mention of introducing stealth tax rises for working people, although we know that that is exactly what the Government are doing. We know that in the Budget of March 2021 and in the Finance Act that followed it, the then Chancellor, now the Prime Minister, froze the basic rate limit and personal allowance for income tax for four years. In the recent autumn statement of 2022 and in the Finance Act that followed that, the current Chancellor extended those freezes by a further two years. Now, following this month’s Budget, the OBR has made it clear that the Government’s six-year freeze in the personal allowance will take its real value in 2027-28 back down to its level in 2013-14. What is more, in a double whammy, families across the country will be hit next month by the Tories’ council tax bombshell, a move that will take the bill for a typical band D property above £2,000 for the first time. Look beyond the rhetoric from the Conservatives, and the reality is clear: their stealth taxes are hitting working people hard.

However, while the tax burden for working people is up, important measures that we have been calling for to make the tax system fairer are nowhere to be found in the Bill.

There is nothing in it to close the loopholes in the windfall tax on oil and gas giants, which we have been urging the Government to do for so long. Of course, we have been pressing for an extension of the energy price freeze for many months, and we were glad that the Government followed our lead in the Budget, but it is wrong that they are still leaving billions of pounds of windfall profits for oil and gas giants on the table when those windfalls of war should be helping to support families through the cost of living crisis.

[Matt Rodda]

My hon. Friend is making an excellent point. Does he agree that the pressures that are, as he rightly said, felt by many families are also felt by our hard-working small businesses, which face extreme pressures on their costs, suppliers and energy costs? Does he agree that the Government seem to have forgotten about them?

[James Murray]

My hon. Friend is a real champion for small businesses in his constituency and beyond. We meet small business owners all the time, and they tell us that what they want are stability, certainty and a long-term plan from the Government, but none of that is evident in the Bill.

Something else that is missing is any legislation to tackle non-dom tax status. Non-doms are getting another reprieve from the Government. Labour believes that those who make Britain their home should pay their taxes here, but while families across the UK face higher taxes year on year, the Government are helping a few at the top to avoid paying their fair share of tax when they keep their money overseas. The non-dom rules that allow this to happen cost us more than £3 billion every year, and ending that outdated, unfair loophole could fund the biggest expansion of the NHS workforce in a generation.

For most people, ending non-dom status is a no-brainer, although we know that some opinions to the contrary do exist. Last week, for instance, we learnt of a blog published by Evelyn Partners, a wealth management firm which supplies accountancy services to the Prime Minister. In that blog, the firm makes it clear that it

“would prefer not to see further tinkering with the system”,

and feels that non-doms

“will welcome some continuing stability.”

I am tempted to paraphrase Mrs Merton’s legendary quip by asking, “Prime Minister, what first attracted you to this non-dom-supporting firm of accountants?”

The Prime Minister’s accountants have not only welcomed Government inaction over non-doms; they have welcomed the changes to tax-free pension allowances in part 1 of the Bill. As the shadow Health Secretary, my hon. Friend the Member for Ilford North (Wes Streeting) has made clear, we have long been calling for a targeted scheme to deal with the pension issue facing doctors, which is forcing some of them to retire early. We had thought that a sensible, targeted approach might even gather cross-party support. Indeed, the Health and Social Care Committee made the same call last year, when the current Chancellor was its Chair. In its report published last July, it said:

“The government must act swiftly to reform the NHS pension scheme to prevent senior staff from reducing their hours and retiring early”.

However, now that he has moved into No. 11 Downing Street, the right hon. Member for South West Surrey (Jeremy Hunt) has failed in one of the most important responsibilities of being Chancellor, which is to spend taxpayers’ money wisely.

The Conservatives could have included in the Bill a targeted scheme to encourage doctors to work overtime and not to retire early, but instead they have introduced an expensive blanket change that will benefit all those with the biggest pension pots. This approach fails the test of providing value for money. In the middle of a cost of living crisis, a blanket giveaway for some of the most well-off is the wrong way to spend more than £1 billion of public money a year. As the British Medical Association has said, a scheme targeted at doctors could be introduced at a fraction of the cost. The policy is ostensibly about keeping people in work, yet as Paul Johnson, the director of the Institute for Fiscal Studies says, it will cost in the region of £100,000 per job retained. We voted against the policy last week, and as our amendment today explains, the Government’s approach is a key reason for our declining to give this Finance Bill a Second Reading.

[Hywel Williams (Arfon) (PC)]

Does the hon. Gentleman agree that the Government’s proposal will have a differential effect geographically, when comparing economies with low wages such as my own in Wales with London and the south-east, for example, and that that is hardly conducive to levelling up?

[James Murray]

I thank the hon. Gentleman for his comment. The geographical impact of policies should always be considered, but we should also ensure that the Government consider targeting sectors. Rather than having a scheme that applies to everyone with a large pension pot, let us have a targeted scheme for NHS doctors, which is something we can all agree on.

Alongside the changes to the taxation of individuals’ pensions, this Finance Bill includes measures that will affect the taxation of businesses. Disappointingly, but unsurprisingly, there is no sign of the fundamental reform of business rates once promised by the Conservatives. The Bill does, however, include changes to corporation tax and allowances. In fact, making changes to corporation tax and allowances is something the Government have become quite experienced in. Under the Conservatives, corporation tax has changed almost every year since 2010, and as the Resolution Foundation has pointed out, the introduction of the latest temporary regime for corporation tax represents the fifth major change in just two years. Businesses deserve better than this. When I meet businesses across the country, they are clear that they want stability, certainty and a long-term plan, yet after 13 years in office, this Government are incapable of providing those crucial foundations for success.

The truth is that Conservative MPs have become deeply inward-looking and riven by division, and their default when faced with difficult choices is to put party before country. No matter what they say, this means that Conservative Ministers are simply incapable of providing stability and certainty in government. We can see that reality in the policies they announce. As Paul Johnson of the IFS said in response to the latest temporary tweak to the tax regime for businesses:

“There’s no stability, no certainty, and no sense of a wider plan.”

Indeed, we can see that by looking at the Government’s decision to allow temporary full expensing for expenditure on plant and machinery. We know how important it is to get capital allowances right as the rate of corporation tax is being increased, yet, as the Office for Budget Responsibility reveals, the Government’s approach will make no difference whatever to medium-term levels of business investment. Rather than a long-term permanent change, this change is for only three years. As a result, it only brings forward investment rather than increasing its overall level.

[Craig Mackinlay (South Thanet) (Con)]

The hon. Gentleman has talked about certainty and stability, and they are qualities that I would have some sympathy with, but can he rule out, here and now on the Floor of the House, that it is not going to be Labour’s plan under any circumstances to harmonise capital gains tax with income tax?

[James Murray]

As we have said several times, we will set out our plans in our own time. But let us be clear, if the hon. Member has concerns over capital gains tax, he might want to talk to those on his own Front Bench, because they raised it in the last Finance Bill by cutting the annual exempt amount. I suggest he talks to his colleagues before he raises questions with us.

[Richard Fuller]

Will the hon. Gentleman give way?

[Richard Fuller]

The hon. Member is a very thoughtful man. I think one of the reasons that he might be hearing some questions from Conservative Back Benchers is that he has just positioned himself as the advocate for the policy that our Front Benchers are now implementing. I have a question of substance for him on his research. He has just mentioned the original position of 21%, and has been clear in saying that what business wants is clarity, so can he give us some clarity? Is it the intention, if there is a future Labour Government, that they will press OECD countries for an increase in that 15% to achieve the 21% that he has been advocating?

[James Murray]

It is always nice to have an intervention from the hon. Gentleman. We very much miss his being in his position on the Government Front Bench. The debate over the OECD agreement has been going on for several years. President Biden wanted 21%, but there was lukewarm support for that from this Government and we ended up with 15%. Our challenge now, frankly, is to make sure that the likes of the hon. Gentleman do not get in the way of its implementation, because we want to see this global deal in place and Britain playing its part.

The hon. Gentleman’s intervention was timely as a reminder of the opposition coming from Conservative Back Benchers. In fact, this is an issue that I have raised with the Treasury Minister before. She might remember that on 7 February I asked her if the Government would keep their promise to implement the multinational top-up tax in the UK this year. We wanted reassurance that the Prime Minister’s weakness in the face of his Back Benchers would not leave us missing out on this landmark global deal. The Minister might recall that she brushed aside concerns that her Back Benchers might oppose these plans, only for concerns to be raised moments later by the right hon. Member for Witham (Priti Patel). The former Home Secretary, who was here earlier, went on to write a piece in The Daily Telegraph on 24 February arguing against the Government’s approach. In that piece, she claimed:

“In the House of Commons, those now turning their attention to all this are beginning to bridle.”

We believe it is crucial to get this legislation in place, so I hope the Minister can reassure us today that those parts of the Bill that introduce a multinational top-up tax will not be bargained away in the face of opposition from Conservative Back Benchers.

A fairer and more certain tax system, underpinned by a long-term economic plan, is crucial to helping businesses invest and grow, but an ambitious plan for growing our economy must go much further, and we have made it clear that this would be Labour’s first mission in government. At the heart of our plan to grow the economy, to create jobs and wealth, and to make everyone in our country better off is the partnership we would build between Government and business. We understand, as do businesses, that growth comes from the Government supporting private enterprises to succeed in the industries of the economy of the future.

That is why our green prosperity plan is so important, as it would provide catalytic public investment to crowd in private sector investment and to grow our clean energy capacity and green industries across the country. We would support growth in the digital economy and the life sciences, we would update our planning system to remove barriers to investment, and we would improve access to capital for new and growing businesses. We would make sure that, under Labour, the Government and business work together and invest together, for the good of everyone in every region and nation of the UK.

This task is urgent, because the world economy is changing and other countries are pulling ahead. According to the CBI, we are investing five times less than Germany, and roughly half of France and the US, in green industries. The Institute of Directors has said that, on its present path

“the UK will find itself left behind in the accelerating race to lead the green economy.”

The Society of Motor Manufacturers and Traders said, following the Budget:

“There is little…that enables the UK to compete with the massive packages of support to power a green transition that are available elsewhere.”

From President Biden’s Inflation Reduction Act in the US to the programmes coming out of Europe, Asia and Australia, the rest of the world is chasing the opportunities of the future. We need to be in that race too. Once we are, the opportunities will be ours for the taking. Our British businesses already excel in so many sectors and, with the right support, we could be a world leader in the new and growing industries of the future, making full use of our geography, our advantage in high-tech sectors and our world-leading universities.

What British businesses and families need now is a credible, ambitious plan from the Government to grow the economy and to make everyone in every part of our country better off. The failure to do that is perhaps the greatest failure of this Finance Bill and this month’s Budget. The Conservatives have had 13 years, and they have failed. As long as they stay in power, the vicious cycle of stagnation stays too. It is time for a new Government who will get us off this path of managed decline and make sure that people and businesses in Britain succeed.

Draft Major Sporting Events (Income Tax Exemption) (Women’s Finalissima Football Match) Regulations 2023

James Murray Excerpts

Wednesday 22nd March 2023 General Committees

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Mrs Murray. As we have heard from the Minister, the regulations seek to remove the income tax liability for accredited persons who are non-resident in the UK for performance of their duties or services in the UK in connection with the women’s—I cannot say this very well—

[Victoria Atkins]

Finalissima!

[James Murray]

Yes—hopefully Hansard will correct that for me. The Finalissima 2023 will be held here on 6 April. As the statutory instrument sets out, the tax exemption will be available from the period of 2 to 7 April. As well as being non-resident, beneficiaries of the tax relief must work for or be contracted by one of the sporting bodies, teams or clubs competing in the competition. The Opposition will not oppose the statutory instrument, as it is standard practice with world-class sporting events for the host nation to provide certain tax exemptions, not least to avoid the risk of double taxation in the UK and the home nation of the accredited person. We believe it is important that the UK is seen as an attractive place to host major cultural and sporting occasions, as it has done successfully so many times in the past.

If you will allow me, Mrs Murray, I would like to place on record how pleased I am that the competition will be hosted only a stone’s throw from my constituency. As it is only a short journey from Ealing North to Wembley stadium, I am sure that many of my constituents will be eager to attend the match. I would be grateful if the Minister could outline what measures will be taken to ensure that communities local to the competition will have a fair opportunity to purchase tickets. My constituency has another close connection with our women’s national football team: one of its players, the brilliant Chloe Kelly, was raised in Hanwell. I am so glad to be able to quote the excellent deputy leader of Ealing Council, Councillor Deirdre Costigan, who announced that Ealing Council would like to offer Chloe

“Freedom of the Borough for her amazing achievements…we want to see many more young people achieve sporting greatness like Chloe.”

I wholeheartedly echo her comments.

The Opposition will not oppose the statutory instrument, and I am sure that the Minister will join me in wishing the Lionesses every success in the upcoming match.

[The Chair]

In my enthusiasm to progress this instrument, I omitted to say, “The Question is that the Committee has considered the draft Major Sporting Events (Income Tax Exemption) (Women’s Finalissima Football Match) Regulations 2023.” I hope that I have now corrected the procedure, and I call Kirsty Blackman.

Co-operatives, Mutuals and Friendly Societies Bill

James Murray Excerpts

3rd reading
Friday 24th February 2023 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

I begin by warmly congratulating my hon. Friend the Member for Preston (Sir Mark Hendrick) on his important Bill, which receives its Third Reading today. My hon. Friend has worked tirelessly to build cross-party support for the Bill, the success of which has been evident today. I also congratulate him on securing Government backing for this legislation, and for that support I extend my thanks to the Minister.

As we have heard during debates on the Bill, including today, Members across the House see the huge value of co-operatives, mutuals and friendly societies. There are now over 7,000 co-operatives operating in the UK, with a combined turnover of almost £40 billion, and almost 235,000 people earn their livelihoods directly through co-operatives trading in a range of different sectors.

Co-operatives have proven resilient in the face of hardship. Despite the covid-19 pandemic and the economic challenges resulting from the national lockdowns, the co-operative and mutual sector grew by an impressive £1.1 billion in 2020. The resilience of co-operatives is also evident in the higher levels of productivity that can result from employee ownership. In the United States, for instance, the National Centre for Employee Ownership tracked the performance of more than 57,000 firms and reached the conclusion that employee ownership can greatly improve a business’s productivity and its chance of success. However, despite the fantastic contribution that co-operatives and mutual societies make to society and the economy, outdated legislation has prevented the sector from reaching its full potential in the UK.

Given their unique structure, co-operatives, mutuals and friendly societies are often excluded from traditional investment methods. Today, less than 1% of businesses in the UK are co-operatives. By comparison, as another hon. Member mentioned, Germany’s co-operative economy is four times the size of that of the UK. In Emilia-Romagna, Italy, co-operative enterprises generate close to 40% of GDP, and the province has the lowest socioeconomic inequality of any region in Europe.

Sadly, as we know, the sector is under threat from demutualisation. There was celebration across the co-operative movement last year when members voted to reject the controversial takeover of the insurer Liverpool Victoria by the private equity firm Bain Capital. I want to take this opportunity to recognise the work of my hon. Friend the Member for Harrow West (Gareth Thomas) and other in this House in protecting the mutual status of that historic firm.

[Matt Western]

My hon. Friend just cited statistics about Germany and Italy, but does he agree that one of the interesting things is the culture of mutuals and co-operatives? Their thinking on financial investment and return is much longer term, and that is surely to the benefit of investors.

[James Murray]

My hon. Friend is absolutely right to point out some of the wider benefits of employee ownership and involvement, including longer-term thinking, greater investment and greater productivity. It is a real showcase for the value of co-operatives, friendlies and mutual societies, which Members from across the House have come together today to recognise.

Demutualisation remains a real and present threat to the sector. The provisions in the Bill are crucial as they will help to ensure that mutual capital is maintained for the purpose for which it is intended. Beyond this Bill, we believe that further support, such as giving co-operatives more freedom to issue perpetual capital to fund investment, would help to secure the future of the sector. We recognise that today is a significant, important step forward, and we are very pleased to give this Bill our full support.

Sunscreen Products: VAT

James Murray Excerpts

Thursday 9th February 2023 Westminster Hall

[James Murray (Ealing North) (Lab/Co-op)]

It is a particular pleasure to serve in this debate with you, Mr Sharma, my parliamentary neighbour, as Chair. I congratulate the hon. Member for East Dunbartonshire (Amy Callaghan) on securing the debate and raising this important health issue. I am pleased to be here on behalf of the Opposition and I thank all hon. Members for their contributions. People have spoken powerfully about the impact that skin cancer can have on people’s lives, and on friends and family.

There is consensus among hon. Members present about the importance of sunscreen products and their growing importance in our lives. While these products have perhaps historically been associated more with travel to warmer climates, the past year has demonstrated how susceptible we are to heatwaves and the intense periods of direct sunlight they can bring to the UK.

I echo what other hon. Members have said today. Organisations including Cancer Research UK have long made clear that the amount of UV exposure over someone’s entire lifetime is one factor that contributes significantly to the risk of skin cancer. According to the research, melanoma is the fifth most common cancer in the UK, with 16,000 cases a year, of which almost nine in 10 cases are preventable. It is vital that people can access sunscreen products when they need them.

As we heard earlier, high factor sunscreen products are already available on the NHS prescription list for a few specific conditions, and are exempt from VAT when dispensed through pharmacies. However, we are only too aware of the crisis facing our NHS and the difficulties people can encounter trying to secure an appointment with an NHS GP. That may restrict access to prescriptions, especially in cases where a repeat prescription is not available.

In her response, it would be very helpful if the Minister could share with us any information she has on the number of people receiving sunscreen products as a prescription on the NHS, and how many receive their prescription free of charge. It would also be helpful if she could update us on the average waiting time to obtain an NHS GP appointment.  I am sure that the Minister will also set out the Government’s position in response to the call from the hon. Member for East Dunbartonshire. The Opposition appreciate that expanding the scope of VAT release is a complex consideration that can add pressures to public finances.

There is a wider point about the affordability of sunscreen and other products that consumers may need to buy, as my hon. Friend the Member for Reading East (Matt Rodda) said. As the cost of living crisis has deepened, costs for ordinary households have risen to record highs. The Office for Budget Responsibility has predicted that living standards will be worse at the end of this Parliament than they were at its start. It has also outlined that real post-tax household income is expected to fall by 4.3% in 2022-23—the biggest fall since comparable records began nearly 70 years ago.

Finally, I would be interested to hear from the Minister what discussions the Government have had with sunscreen product manufacturers and retailers to determine what steps can be taken to ensure that such products are affordable for consumers. I would be grateful if she could also set out what support those manufacturers have said they may want or need from the Government to help make sure this can be achieved.

Oral Answers to Questions

James Murray Excerpts

Tuesday 7th February 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[James Murray]

In October 2021, the right hon. Member for Richmond (Yorks) (Rishi Sunak), as Chancellor, welcomed the OECD global agreement on a global minimum corporation tax rate. The then Chancellor’s press release made it clear that

“The aim is for these historic rules to be implemented and effective from 2023.”

Yet now we hear rumours that some senior Conservatives are agitating against the deal being implemented, and we have all seen the Prime Minister’s weakness when facing resistance from his own party. Can the Minister confirm that pillar two of the OECD deal will be in place, as promised, by the end of this year?

[Victoria Atkins]

Yes.

Non-domicile Tax Status

James Murray Excerpts

Tuesday 31st January 2023 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

I beg to move,

That there be laid before this House, no later than 28 February 2023, a copy of the Treasury analysis related to the effect of the abolition of the non-domicile tax status on the public revenue referred to by the Chancellor of the Exchequer in evidence to the Treasury Committee on 23 November 2022 together with any other document or analysis relating to that matter prepared for the Chancellor’s consideration since 14 October 2022.

Today, 31 January, is of course the last day for people across the country who pay taxes by self-assessment to file their returns and make any payments. In a very small number of cases, those tax returns will have been submitted by people who are claiming tax benefits because of their non-dom tax status. That loophole is well known to some of the current occupants of Downing Street; indeed, some of them may still have that status and hope to benefit from it again in future.

The loophole allows a small group of high-income people who live in the UK to avoid paying tax on their overseas income for up to 15 years. It is a status that can be passed down through people’s fathers. It costs the public finances £3.2 billion a year and it fails to support economic growth in the UK. It is a 200-year-old loophole that should have no place in our modern tax system.

[Rob Butler (Aylesbury) (Con)]

If it is such a long-standing loophole, as the hon. Gentleman describes it, why have successive Labour Governments not abolished it?

[James Murray]

We are debating the importance of a fair tax system for the future of this country. This Government have sat on non-dom tax status for months and years. We are questioning why this Prime Minister is not heeding Labour’s calls to abolish the non-dom tax status once and for all, and spend the money on the NHS, childcare and a growing economy.

When the Government are making working people pay more tax, it is simply wrong to allow wealthy people with overseas incomes to continue to benefit from an outdated tax break. It is also bad for UK business. The loophole prevents non-doms from being able to invest their foreign income in the UK, as bringing it here means that it becomes liable for UK tax. That is why the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), first set out our party’s position last April—four Conservative Chancellors ago. She confirmed that, in government, Labour would abolish the non-dom status as part of our reforms to create a fairer tax system for working people. We will abolish that indefensible 200-year-old tax loophole and introduce a modern scheme for people who are genuinely living in the UK for short periods.

Labour believes that, if a person makes Britain their home, they should pay their taxes here. That patriotic point should be accepted on all sides of the political divide, yet Ministers in this Government, under this Prime Minister, seem desperate to defend the non-dom loophole. What is it about the current Prime Minister that makes him so reluctant to abolish non-dom tax status? The Government are increasing taxes on working people, businesses are struggling, and our NHS is in crisis. Yet the Conservatives defend a small number of rich people who use non-dom tax status and offshore trusts to wriggle out of paying taxes here in Britain.

We know that the Prime Minister understands how non-dom tax status works—he can hardly claim ignorance on that—so how can he possibly justify it? How do Conservative MPs look their constituents in the eye and tell them that their taxes will keep going up, while the taxes of non-doms must always stay down? It is indefensible, and that is why the next Labour Government will act by abolishing the non-dom tax status.

[Anthony Browne (South Cambridgeshire) (Con)]

The hon. Member asks what makes this current Prime Minister reluctant to change non-dom tax status, but what made Tony Blair and Gordon Brown, the former Labour Prime Ministers, also very reluctant to scrap the non-dom tax status? They both reviewed it and both kept it.

[James Murray]

We were not increasing taxes on working people when we were in government. The hon. Gentleman can start looking at the record 13 years ago, but it is high time that Members on the Government Benches took responsibility for what they have done in government—for the low growth, for the high taxes on working people and for the fact that our public services are crumbling.

[Matt Western (Warwick and Leamington) (Lab)]

On that point, to recall what happened in 2010, one of the first things that the incoming Conservative coalition Government did was to increase VAT from 15% to 20%. Who did that hurt?

[James Murray]

As my hon. Friend reminds us, increasing taxes on working people has long been a hallmark of the Conservatives. That has led us to a situation where we have the highest tax burden on working people in more than 70 years.

[Anthony Browne]

Will the hon. Gentleman give way?

[James Murray]

No, I will make some progress. Our position contrasts with that of the current Government, whose Ministers have been at pains over the past year to protect this unfair loophole. When the Chancellor told the Treasury Committee last November that he wants

“to make sure that wealthy foreigners pay as much tax in this country as possible”,

his words could not have rung more hollow. They rang almost as hollow as the Prime Minister’s promise when he took office that he would run a Government of “integrity, professionalism and accountability.” The truth is that the Prime Minister is running a Government without even basic competence and it is hitting people across this country.

[Anna McMorrin (Cardiff North) (Lab)]

It is reported today that Infosys, the Indian-based IT firm, which holds several contracts with public services here, is in a £20 million dispute with His Majesty’s Revenue and Customs. Whether it is through non-dom status or something else, it costs our country dearly when there are tax avoiders. Does my hon. Friend not agree? I am sure that the Prime Minister knows that company very well.

[James Murray]

I thank my hon. Friend for drawing attention to the impact that tax avoidance has on the public purse and on people across this country and to the fact that the Prime Minister probably understands some of these issues very well indeed.

As my hon. Friend set out, people are feeling the impact on this country’s economic growth as we lag so far behind other countries around the world. People are feeling the impact of so many parts of our public services breaking at the seams, and people are feeling the impact as the big challenges of the future get kicked ever further into the long grass.

We need a Government with a plan to grow the economy, with the drive to get ahead of the challenges of the future and with the determination to reform and strengthen our public services. Nowhere is that clearer than with the NHS, as more than 7 million people wait months and even years for treatment, unable to work or to live their lives to the full. We know that, to make the NHS fit for the future and able to support a healthy society and economy, it desperately needs reform and sustainable funding from a growing economy.

[Harriett Baldwin (West Worcestershire) (Con)]

The hon. Gentleman is making a typical, anti-aspirational socialist rant straight out of the book called “Politics of Envy”, but he is not actually speaking to the motion on the Order Paper. Why has he put “28 February” in that motion when he could just wait for the Budget on 15 March?

[James Murray]

It would only be a Conservative MP who could criticise an Opposition shadow Minister for suggesting that people should pay their fair share of tax.

I was speaking about the NHS, so let us look at the Government record on the NHS and see what can be done. We know that, after 1997, Labour’s reforms and funding from a growing economy meant that our country had an NHS of which we were proud. If we win the next general election, as my hon. Friend the Member for Ilford North (Wes Streeting) the shadow Health Secretary has set out, one of the first steps we will take to get the NHS back on track is to use some of the money raised by scrapping non-dom status to implement a workforce plan that addresses the root cause of the crisis the NHS is in. Under our plan, we would double the number of medical school places to 15,000 a year. We would double the number of district nurses qualifying each year. We would train 5,000 new health visitors a year. We would create 10,000 more nursing and midwifery clinical placements each year.

[Harriett Baldwin]

On a point of order, Mr Deputy Speaker. Is it in order for the Opposition spokesman to be talking in such general terms about a wide range of things, without actually addressing the motion on the Order Paper?

--- Later in debate ---

[James Murray]

Thank you, Mr Deputy Speaker, for the opportunity to set out the details of the kind of long-term workforce plan that we believe the NHS needs.

The NHS is one of the great challenges we face, but we know another challenge that parents and children across the country face: the desperate need for a modern childcare system. We need a system that supports families from the end of parental leave to the end of primary school, as the shadow Education Secretary, my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), has set out. As the first step in this landmark shift, we would use revenue from abolishing non-dom tax status to guarantee breakfast clubs for every primary age child in England. Too many families cannot afford the clubs before school that boost children’s learning and development and help parents to go to work. Labour’s plan would save families money as well as help parents to work the jobs and hours they choose.

Our plan to abolish non-dom status, replace it with a modern system and use the money raised to strengthen the NHS, childcare and the economy should be a no-brainer. Yet the Conservatives refuse to do it. We want to know why. This is not the first time I have asked Ministers to explain their position. In the last few months of last year, I asked Treasury Ministers five times to explain why the Government have been so reluctant to abolish this outdated tax loophole. I asked Ministers five times whether the Chancellor considered abolishing non-dom tax status, whether the Prime Minister was consulted about doing so and whether, when the current Prime Minister was Chancellor, he recused himself from discussions on the matter.

Five times I asked those questions; five times the Ministers refused to answer or even acknowledge them. Instead, Ministers have been determined to defend non-dom status. I suspect we will hear some of those same defences today. If previous debates are any guide, the Minister may well repeat her line that we should be grateful to non-doms for paying £7.9 billion in UK taxes last year.

[The Financial Secretary to the Treasury (Victoria Atkins)]

On a point of order, Mr Deputy Speaker. If I am going to be quoted, I expect to be quoted correctly. The hon. Gentleman seems to use words I am not sure he quite understands—I do not know. In my speech, I am going to help him to understand some of the words he has used. But I have only ever sought to set out the facts, which we have to take into account on the issue under discussion, which is that they do pay £7.9 billion in tax. That is the context in which I have cited that figure, not in the way that he has alleged.

[Mr Deputy Speaker]

Shadow Minister, do you want to respond to that? They were your words, not mine.

[James Murray]

I am not sure I want to respond to that. The Minister has made her point. No doubt she will have a further chance in a few moments to set out those points again. She confirmed, in fact, that she is seeking to use as a defence for non-dom tax status the fact that non-doms paid £7.9 billion in UK taxes last year. Of course that argument entirely misses the point. We are talking about the £3.2 billion of tax that non-doms do not pay each year in this country.

Without wanting to forecast what might come in a few minutes, I suspect the Minister might also recycle her line that non-doms have invested £6 billion in investment schemes since 2012. But, of course, that ignores the fact that only 1% of non-doms invest their overseas income in the UK in any given year, and that non-dom status actively discourages people from bringing money into the UK to invest. Finally, the Minister may try to win praise for the Government having stopped non-dom status being permanent, but I suspect she will neglect to mention the fact that the Government have created a brand-new loophole that allows people to use offshore trusts to retain non-dom benefits permanently.

To be fair, while Treasury Ministers have come to the Dispatch Box time and again to defend non-dom tax status, the Chancellor did at least confirm to the House of Commons Treasury Committee on 23 November last year that he had asked the Treasury to look into how much abolishing that loophole would save. When he was questioned at that Committee by the superb interrogator, my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh), the Chancellor claimed:

“I want to make sure that anything you do in terms of the non-dom tax regime does not mean you lose more than you gain.”

We already have clear, well-evidenced work from the London School of Economics and Warwick University—respected academic institutions, using HMRC data—which confirms that non-dom tax status costs the public finances £3.2 billion a year, even after any behavioural effects are taken into account. If the Chancellor is determined to ask his officials to confirm that figure, presumably using the same HMRC data as the LSE and Warwick University, we want to see him doing so as quickly as possible, and we want to see the result. That is why we have tabled today’s Humble Address.

We believe that non-dom tax status should be abolished, but that is not what we will be voting to make happen today. All we are voting for today is to make sure that, by the end of next month, the analysis the Chancellor referred to at the Treasury Committee on 23 November last year is published. Our motion would put that analysis alongside any other document or analysis on non-doms prepared for the Chancellor since he took office into the public domain ahead of the spring Budget.

I would hope that a Government supposedly committed to integrity, professionalism and accountability would feel obliged to accept that request. If not, the question will surely arise, what have they got to hide? What is it they are so keen to keep out of the public domain? What questions or conclusions are they so desperate to avoid? Our motion would simply make sure that any information the Chancellor has been considering in relation to the non-dom tax status would be made public ahead of the spring Budget in March 2023.

We know what happened at the last fiscal event, the autumn statement in November 2022. The decisions taken by the Chancellor at that time hit working people by forcing through a council tax rise and extending freezes in thresholds for income tax and national insurance contributions. Those freezes in tax thresholds will, over time, cost the average household more than £1,000 a year, and yet, at the same time as announcing those tax rises on working people last November, the Chancellor was silent on non-doms. That is what it looks like when working people are forced to pay for this Government’s failure.

Time and again, the Conservatives have chosen to put the burden of tax on to working people, rather than asking those with the broadest shoulders to pay their fair share. If working people are being asked to pay more tax, it is simply wrong to allow well-off people to continue to benefit from an outdated tax break on their overseas income. The truth is that Labour wants lower taxes for people who keep the country moving. The Tories want lower taxes for people who move their tax status overseas. We believe that if a person makes Britain their home, they should pay their taxes here. We believe that abolishing this tax loophole should be common sense and that using that money to invest in the NHS and childcare should make it a no-brainer. We will be voting today to make this Government finally come clean about why they are so reluctant to do the right thing.

Local Government Finance Act 1988 (Non-Domestic Rating Multipliers) (England) Order 2022

James Murray Excerpts

Tuesday 17th January 2023 General Committees

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve in the Committee with you as Chair, Sir Robert.

As we all know, and as we heard from the Minister, national and non-domestic rates are calculated as the product of a hereditament's rateable value, as determined by the independent Valuation Office Agency, and the relevant multiplier. The national non-domestic rating multiplier applies in relation to hereditaments of £51,000 or more, while for hereditaments with rateable values of less than £51,000, the small business non- domestic rating multiplier applies.

As we have heard, the regulations before us effectively maintain the non-domestic rating multiplier rates in the financial year 2023-24 at the same level as they were in 2022-23 in relation to the payment of business rates. We will not oppose these regulations, as they seek to implement the commitment in the autumn statement to freeze the business rates multipliers in 2023-24 at 49.9p and 51.2p, preventing them from increasing to 52.9p and 54.2p. However, I would like to check with the Minister my understanding of the calculations that sit behind those values and which are affected by the content of the order.

The explanatory note at the end of this order explains that the small business non-domestic rating multiplier is calculated using a formula in the Local Government Finance Act 1988. Within those calculations, variable 'B' will be the retail prices index for September of the preceding financial year, unless the Treasury by order specify a lower amount.

This order specifies that for 2023-24 the amount for item B will be 320.2. That is of course an increase from its value in 2022-23 of 294.3, as specified by the Local Government Finance Act 1988 (Non-Domestic Rating Multipliers) (England) (No. 2) Order 2021. I understand that the value of B has to increase to achieve a freeze in the multiplier rates, as a result of the separate formula that is used in revaluation years. I would be grateful if, when the Minister responds, she could confirm how the formula achieves a freeze by way an increase in the value of B.

We in the Opposition have already set out our broader position in relation to business rates. We would scrap the current outdated system and replace it with a fairer, more sustainable system that is fit for the future. As we know, however, the Government have abandoned their 2019 promise to do a fundamental review of the system review business rates. That represents another broken promise by a Government who is out of energy and out of ideas.

In conclusion, the Opposition will not oppose this statutory instrument as any benefit for businesses at this difficult time is welcome, and I look forward to the Minister confirming how the formula to which this order relates achieves the freeze as promised.

[Victoria Atkins]

I thank the hon. Member for Ealing North for his efforts in describing the origins of the SI. It is always very interesting, because when I take a SI, I take the view that of course hon. Members will have read and considered carefully the document. I like to try to bring those SIs to life, but the hon. Gentleman can always be relied upon to go through the minutiae of a SI. We are extremely grateful to him for that.

I must pick the hon. Gentleman up on a point that he also mentioned in a Westminster Hall debate, namely that we have somehow reneged on a promise about a review. We have reviewed, and we have been able to make the package under consideration today precisely because we worked with businesses and the Valuation Office Agency—an independent, arm’s length body though it is—to make sure that when we drew up that package, we were responding to the needs of the retail, hospitality and leisure sector. We were drawn to help the needs of that sector in particular, even though he knows that at the autumn statement we had very, very difficult circumstances with which we had to deal. I for one am very, very pleased that in what was a very difficult period for the economy—and it remains so—we were able to find the headroom to bring about the £9.3 billion tax cut for local businesses up and down our high streets.

I know from my own constituency the help that businesses rely on, particularly those on the high streets in some of my more rural market towns. Very often the properties there get small business rate relief and that can mean the difference between their being able to stay in business and sadly being unable to do so.

In relation to the hon. Gentleman’s specific question, I am assured that no increase is involved and that it is an aggregate RV change and there is an adjustment in the appeals package.

[James Murray]

The Minister may have misunderstood my question. I was asking her to clarify how the formula works. I think I understand it, having read the minutiae on which she commented that I pay great attention to, but I just wanted to check that my understanding is correct, because variable B obviously increases in comparison to last year, although business rates are frozen. Could she just explain how that formula works, just so I have clarity that I have understood it correctly?

[Victoria Atkins]

As I said, we are freezing the multiplier. The Valuation Office Agency conducts the valuations of properties independently, as he will know. We have gone to great trouble since the pandemic to support the VOA in its assessment of properties. In relation to the formula, it is precisely because we are freezing the multiplier that we have the SI.

It is very good of the Opposition to support the SI, and I am confident—

[James Murray]

I understand the Minister’s point about the freezing of business rates, which is the commitment made by the Chancellor in the autumn statement. My question is about variable B increasing as a result of the order. How does the formula work to maintain a freeze in business rates in that context?

[Victoria Atkins]

Again, I am very happy to help the hon. Gentleman. The formula reduces the multiplier to affect the increase in rateable value at the revaluation, and then adjusts by about 4% to account for appeals before protecting from inflation. I hope that that level of detail is reassuring to the hon. Gentleman, and that he understands that the full might of the Treasury has worked this out, with the help of the Valuation Office Agency.

Question put and agreed to.