Finance Bill

James Wild Excerpts

Report stage
Monday 3rd March 2025 Commons Chamber

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

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker]

With this it will be convenient to discuss the following:

New clause 2—Energy (oil and gas) profits levy: impact assessment of increase in rate—

“(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, commission and publish an assessment of the expected impact of Sections 15 to 17 of this Act on—

(a) domestic energy production and investment;

(b) the UK’s energy security;

(c) energy prices, and;

(d) the UK economy.

(2) The assessment must examine the impact of provisions in this Act in comparison with what could have been expected had the energy (oil and gas) profits levy remained unchanged.”

This new clause would require the Chancellor to commission and publish an assessment of the expected impact of changes to the energy (oil and gas) profits levy on domestic energy production, the UK’s energy security, energy prices and the UK economy.

New clause 3—Review of impact of tax changes in this Act on households—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes in this Act on household finances.

(2) The assessment in subsection (1) must consider how households at a range of different income levels are affected by these changes.”

This new clause requires the Chancellor to publish an assessment of the changes in this Act on the finances of households at a range of different income levels

New clause 4—Review of impact of Act on small and medium sized enterprises—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a report setting out the impact of the measures contained within this Act on small and medium sized enterprises.

(2) The report must include an assessment of the impact of the Act on the following matters—

(a) the number of people employed across the UK by small and medium enterprises;

(b) the number of small and medium sized enterprises ceasing to trade; and

(c) the number of new small and medium sized enterprises established.”

This new clause would require the Chancellor to conduct an impact assessment of the Act on small and medium enterprises.

New clause 5—Review of the Impact of Tax Changes on Household Finances—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the tax changes introduced by this Act on household finances.

(2) The assessment must evaluate how households across different income levels are affected by these changes.”

This new clause requires the Chancellor to assess and publish a report on how the tax changes in this Act impact households at various income levels.

New clause 6—Report on fiscal effects: relief for investment expenditure—

“The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a report setting out the impact of the measures contained in clause 16 of this Act on tax revenue.”

This new clause would require the Government to produce a report setting out the fiscal impact of the Bill’s changes to the Energy Profits Levy investment expenditure relief.

New clause 7—Pupils with SEND without an Education Health and Care Plan: review of VAT provisions—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act and every six months thereafter, lay before Parliament a review of the impact of the measures contained in sections 47 to 49 of this Act on pupils with special educational needs and disabilities.

(2) The review must consider in particular the impact of those measures on—

(a) children with special needs who do not have an education health and care plan (EHCP); and

(b) the number of children whose families have applied for an EHCP.”

This new clause would require the Government to produce an impact assessment of the effect of the VAT provisions in the Act on pupils who have special educational needs but do not have an Education Health and Care Plan.

New clause 8—Review of sections 63 and 64—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act and every six months thereafter, review the impact of the measures contained in sections 63 and 64 of this Act.

(2) Each review must consider the impact of the measures on—

(a) Scotch whisky distilleries,

(b) small spirit distilleries,

(c) wine producers and wholesalers,

(d) the hospitality industry, and

(e) those operating in the night-time economy.

(3) Each review must include an estimate of administrative and operational costs for the preceding 12-month period for each of the sectors listed in subsection (2).

(4) Each review must consider the impact of the measures on the retail price for consumers of products subject to alcohol duty.

(5) Each review must also examine the expected effect of the measures on the domestic wine trade.

(6) A report setting out the findings of each review must be published and laid before both Houses of Parliament.”

This new clause would require the Government to produce an impact assessment of the measures on the Act on distilleries, wine producers and the hospitality industry.

Government amendments 1 to 17.

Amendment 67, page 53, line 30, leave out clause 47.

This amendment removes Clause 47, which removes the VAT exemption for private school fees.

Amendment 68, page 56, line 13, leave out clause 48.

This amendment removes Clause 48, which introduces anti-forestalling provisions.

Amendment 69, page 56, line 13, leave out clause 49.

This amendment removes Clause 49, which sets out the commencement date.

Government amendments 18 to 66.

[James Wild]

I will speak to new clauses 1 to 3, and amendments 67 to 69, tabled in my name. It is 124 days since the Chancellor delivered the first Labour Budget in 14 years—the so-called growth Budget—but it feels like longer. Inflation is up, taxes are up, borrowing is up, unemployment is up and energy bills are up. I could go on, but most tellingly of all, growth is down. The Bank of England has just cut its growth forecast for this year in half, to just 0.75%. Little wonder that business confidence has plummeted, with firms warning of fewer jobs, lower wages and higher prices. Instead of backing risk takers and supporting wealth creators, as the Conservatives do, this Finance Bill and the Budget attack enterprise and deliver lower growth, higher borrowing and higher taxes.

I turn to new clause 1, concerning pensioners. Millions of pensioners were left out in the cold this winter when the Government took away their winter fuel payments. Millions of people in receipt of only the state pension now face paying income tax on it.

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

When the Government decided to take away the winter fuel payment, they said that people could apply for pension credit to try to get some support. The problem is that there are huge delays in getting pension credit. When the message was first put out, the delay was 84 days. Five hundred new staff have been brought in, but it is still 56 days, which is above the 50-day limit. Does my hon. Friend share my concern that people have now passed through winter and still do not have the funds to which they are entitled under this Government, and which are not there?

[James Wild]

I absolutely agree with my hon. Friend, who has done stellar work in drawing out of the Department the data on delays and waiting times. If everyone who is entitled to pension credit took it up, it would wipe out the savings that the Chancellor wanted, so the idea that she wanted all those people to take up pension credit is for the birds.

New clause 1 would require the Government to review how many people receiving the new state pension at the full rate will be liable to pay income tax in the coming years. At the general election, we were very clear that people in receipt of only the state pension should not pay income tax on it. However, recent forecasts suggest that an estimated 9 million pensioners will pay income tax on their state pension from April 2026. Pensioners cannot easily alter their financial situation, yet they were given just six months’ notice that they would lose their winter fuel allowance. They cannot be blindsided for a second time by the taxman.

In Committee, the Minister said that the relevant data was available, but I do not think that is correct, because the figures to which he referred do not break down the group we are talking about—recipients of the full rate of the new state pension. Will he commit to publishing data on how many people receiving the new state pension will pay income tax on it? This potential hit could not come at a worse time for pensioners, who have lost their winter fuel payments, because we learned last week that energy bills are going up yet again—a far cry from the £300 cut that they were all promised at the last election by the Labour party.

At the Budget, the Chancellor made much of her announcement that she would uprate the personal tax thresholds in line with inflation from 2028, but that is not legislated for in this Bill. The public are being asked to take the Government at face value, yet recent reports suggest that this promise may be dropped due to the impact of the Budget on growth and higher borrowing. Given the number of broken promises since the election, can the Minister reconfirm from the Dispatch Box the Government’s commitment to unfreezing those thresholds in 2028?

As well as pensioners, working people cannot afford the costs of this Labour Government. The Prime Minister promised at the election that he would not hit working people with higher taxes, and he then broke that promise with the £25 billion-a-year jobs tax.

[Tristan Osborne (Chatham and Aylesford) (Lab)]

Can the hon. Member confirm which Government left taxes at a 70-year high? Can he also confirm which Government led to interest rates and inflation being at record highs, which has stung so many mortgage holders?

[James Wild]

Well, the last Government had to deal with a global pandemic and an energy price shock. I am happy to enlighten the hon. Gentleman, who has obviously not read the Red Book: taxes are going up—they are going up to record high levels—under the Budget and the Finance Bill that he is supporting. If he is worried about the tax burden, he should not be voting for this Finance Bill today.

Households are facing financial challenges, and the measures in the Bill will only make things worse. The Office for Budget Responsibility predicts that real household disposable income will fall by 1.25% by the start of 2029, largely due to the measures in the Budget. New clause 3 would require the Chancellor to publish an assessment of the impact of the changes on household finances. The choices that this Chancellor and this Government have made mean that borrowing is increasing, so interest rates will be higher for longer and people’s mortgages will be higher, and hard-working families will be paying billions of pounds to pay off the debt interest. The Government inherited inflation at target, but since then inflation has gone up, meaning less money in people’s pockets.

While it is the Chancellor’s wider mishandling of the economy that is attracting the headlines, the measures in this Bill will have a direct role in squeezing households. Whether it is higher stamp duty, increased alcohol duty, air passenger duty, capital gains increases, vehicle excise duty, changes to the tax treatment of hybrid vehicles or many other measures, the costs of the Bill will be felt directly by households across the UK. When households are stretched, it is essential that we have transparency about what the Government’s actions are doing to incomes.

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

Of course, the big tax-raising measure in the Budget, as my hon. Friend says, was the national insurance contributions rise, with its £25 billion impact on the economy, yet once we have taken off compensation for public services and the negative impact on activity, it nets only about £10 billion. It is a peculiarly ridiculous policy that nets only £10 billion or £11 billion, yet, according to the Office for Budget Responsibility’s numbers, will take £19 billion out of people’s pay packets. Does my hon. Friend agree that there has surely never been a more ridiculous measure that costs so much and delivers so little?

[James Wild]

My right hon. Friend makes the point that this measure may have been introduced by a Chancellor who did not actually understand the impact it was going to have. The Government should have stuck to the promise they made at the election not to increase national insurance at all.

New clause 2 concerns the Government’s plan to undermine our energy security by increasing the energy profits levy to 38%, bringing the headline rate on oil and gas activities to 78%, extending the tax by a year and removing investment allowances. The consequences are fairly predictable. Offshore Energies UK has said that the hike will choke off billions of pounds of investment in the North sea, putting 35,000 jobs at risk.

[Noah Law (St Austell and Newquay) (Lab)]

Does the hon. Member not agree that if such a rate is good enough for Norway, a clean energy superpower, it is good enough for the United Kingdom?

[James Wild]

In short, no, I do not, which is why we voted against that previously. We should be maximising our home-grown energy, not undermining domestic production and choosing to rely instead on importers with higher carbon emissions.

[Dr Luke Evans]

I agree entirely with the shadow Minister. Only today, the Prime Minister said at the Dispatch Box that our economy is security, and security starts with our defence and looking after ourselves—and that includes energy security. Is it not ridiculous not to use North sea oil—our own reserves—to ensure that security? It is the cleaner side of oil and gas. Using our own reserves also comes with jobs, and prevents us importing oil and gas in a volatile world.

[James Wild]

Absolutely. I wonder if, when the Prime Minister was in Washington last week, he had the opportunity to talk to President Trump about home-grown energy and the importance of supporting the domestic sector. That is what we on the Conservative Benches certainly support. This is a sector with 200,000 high-skilled jobs, so it is important that we have an up-to-date assessment of the impact of what the Government are doing on our domestic energy production, energy security, energy prices and the UK economy. Unfortunately, we already see some of that impact: the US firm Apache has said that it will end its operations in the North sea by the end of 2029, blaming the extension of the profits levy for making it uneconomic to stay beyond then.

[Graham Stuart]

This measure is vying with the national insurance contribution change to be the most absurd measure. I think that it wins by a head. The Prime Minister says that we must have energy security, and the Climate Change Committee that says we will still need oil and gas for 25% of our energy needs if we meet net zero in 2050, but the Government will have no more licences. We will lose tens of thousands of jobs, tens of billions of pounds in tax, and the engineering capability that we need for the transition. It is absurd on every single possible front.

[James Wild]

My hon. Friend is 100% correct. I think we all know that the architect of much of this is the Secretary of State for Energy Security and Net Zero, who takes a rather fundamentalist approach. He wants to cover farmland with solar farms, and wants to undermine our oil and gas sector. We on the Opposition Benches disagree. It was the previous Government who introduced the levy, but that was to tackle extraordinary profits at an extraordinary time. The revenue helped to keep energy bills lower for all our constituents, but now the Government are ratcheting up the levy and seem to want to tax North sea exploration out of existence. This is just a further example of the Government’s ill-conceived energy policy. GB Energy is a net zero vanity project that will not generate any energy or be an energy supplier. It certainly will not deliver £300 off bills.

Amendments 67 to 69, tabled in my name, would remove clause 47 and abolish Labour’s education tax. Since 1 January, independent school fees for education and vocational training have been subject to VAT at 20%. It is the first time education has been subject to VAT. Why is that? Because education is a public good, so we do not tax it. Putting VAT on independent schools particularly hurts those on the most modest incomes who have chosen to save and make sacrifices to send their children to a school that they think will serve them best.

[Jim Shannon (Strangford) (DUP)]

In Northern Ireland, we have a number of faith schools that will be impacted greatly by the measure. They have contacted me even at this late stage to ask whether the Government would reconsider. Does the shadow Minister agree that faith schools will be impacted, perhaps more than others, and that the impact on parents, and children in particular, will be gross?

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[James Wild]

I agree with the hon. Gentleman. Everyone will have an opportunity, if the amendment is moved and selected for a Division, to vote to strip the measure out of the Bill. None of those parents on modest incomes are getting a tax break. They are also contributing to funding places in the state sector, whether or not their children take them up. Ultimately, this is a tax on aspiration, and we oppose it. In Committee, we raised concerns about the impact on certain groups, including children with special educational needs, small schools, faith schools and military families.

[Graham Stuart]

My hon. Friend is being very generous in giving way. He touches on the issue of children with special educational needs. This is not just about scrimping parents making a choice; this is about people with no choice, whose children have been bullied or who have special needs that have not been met in the state sector, and who have made a sacrifice to put their children in the private sector. People with children in particular need will pay the price of this ill-thought-through measure.

[James Wild]

My right hon. Friend is consistently absolutely right. There are more than 100,000 pupils in independent schools with special educational needs and disabilities who do not have an education, health and care plan. They will have to pay VAT on their school places—that is not covered by the Government.

[Tristan Osborne]

Is it not true, though, that special educational needs students are exempt from this proposal? It is not a surprise that while the Opposition are focused on the very small number who go to independent schools, we are focused on ensuring a good education for the large majority of our children in state schools.

[James Wild]

I am afraid that the hon. Gentleman is flat wrong. Children with SEND who go to an independent school but do not have an education, health and care plan will have to pay the 20% VAT—I would hope that people who are voting on this legislation might have understood that fairly fundamental point. That will make those places unaffordable for the parents of many, add pressures to the state system, with demand for places where there is no capacity, and squeeze council budgets. This is just another part of the Education Secretary’s ideological approach, which seeks to divide. We on the Conservative Benches care about all children. We simply believe that parents should be able to choose the school that is best for their child.

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[Dr Luke Evans]

The shadow Minister is absolutely correct. At Davos, the Chancellor said she had listened to that community. Why would she make changes for that community, but not the farming community, the pensioner community, the pupils at private schools or the SEND community, or indeed working businesses such as pubs, restaurants and charities, who are all seeing tax increases? Why was that community listened to, when no others were? Does he have any idea why that could be the case?

[James Wild]

My hon. Friend invites me to get inside the head of the Chancellor, but I am not sure I would be able to do that. All I know is that the other groups that he mentions should also be listened to. The Chancellor has shown herself to be particularly tin-eared on the impact of these changes on family farms and businesses, hence there is, tomorrow, yet another protest. I read over the weekend that another brave Labour MP has come out and said he opposes the changes and wants to see reforms—perhaps some of the other Labour MPs are here to speak to say that they too stand with the farmers in their constituencies.

To conclude, the Prime Minister and Chancellor set growth as the mission for this Government. They inherited an economy growing at the fastest rate in the G7, but the choices they have taken in the Budget and in this Finance Bill have stopped growth stone dead. They have hiked taxes, undermined business confidence, pushed up inflation and hit working people and pensioners. Later this month, we will get the economic and fiscal forecasts, but what we can already see is a Labour Government committed to higher taxes, higher spending and higher borrowing, and we are all paying the price.

[Dr Jeevun Sandher (Loughborough) (Lab)]

Economic growth is the ability to produce more with less. It is the foundation of all human progress. It is why we are not all scratching around in the dirt, desperately hoping something will grow. However, there is no economic law that says that when the economy grows, all must share in it. In decades past, it has not been shared. Growth has gone to high earners over everyone else, to the old rather than the young, to capital over labour and to London over everywhere else. This is tearing our democracy apart, and it is tearing other democracies apart. That is why I am so proud to speak in favour of this Finance Bill, which will help to ensure that economic growth is shared among all people and all places.

I worked as an economist before entering this place. As Members may know, my PhD was on the causes and consequences of inequality and particularly why, since the 1980s, people and places have not shared equally in growth. In my adult life, I have never known a growing economy, and now my beard is turning grey—[Interruption.] I will soon look like Gandalf. I want to see the dotted line on the GDP chart finally go up, but that is not enough. We have to ask whether all are sharing in that growth. Growth for where, and growth for whom? The only way to ensure that all share in growth is for this Government to act. When people do not share in growth, when their incomes do not rise and when life becomes worse, hope turns to cynicism, happiness turns to anger and peace turns to riots.

There are four ways in which growth has not been shared by all, and we are fixing all four in this Budget. First, across high-income nations, top earners have seen their pay rise far faster than the rest. Technological change destroyed manufacturing jobs and led to a divided labour market of high-paid and low-paid jobs. High-paid workers benefited from new technology—computers, Excel and PowerPoint—and they saw their wages increase 50% faster than the average. We are fixing that in this Budget by investing in the skills of non-graduates, with more money for further education colleges and apprenticeships.

Secondly, older generations have benefited from cheaper homes, while younger renters cannot buy a home because we have failed to build enough houses in this country. Twenty years ago, house prices were three times the average wage. Today, they are more than eight times the average wage.

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[James Murray]

The impacts of the changes to the alcohol duty and the energy profits levy have already been set out in the tax information and impact note that was published alongside the autumn Budget, so that information is already in the public domain. Information on the impact on households was also published alongside the autumn Budget in the “Impact on households” report, which demonstrated that households are on average better off in 2025-26 as a result of these decisions.

Finally, I will address the amendments tabled by the Opposition that deal with VAT on private school fees—several hon. Members have spoken about that matter. Amendments 67 to 69 would collectively remove clauses 47 to 49, which remove the VAT exemption for private schools and set out anti-forestalling provisions and the commencement date.

Ending the VAT tax break for private schools is a tough but necessary decision that will secure the additional funding needed to help deliver on our commitments, including those relating to education and young people. This policy took effect at the beginning of January, and I note that in his speech, the shadow Minister, the hon. Member for North West Norfolk (James Wild), did not say how his party would pay for its decision to reintroduce that tax break for private schools. The policy will raise £1.7 billion by the final year of this Parliament, so it is essential that the Opposition explain what they would cut from the schools budget, from education services, or from any other public services to pay for the reintroduction of that tax break. I will happily give way if the shadow Minister would like to make an intervention to place on record how he will pay for it. I do not see him leaping to his feet, so I will move on.

Finally in the debate we are having about VAT on private schools, the Government set out the expected impacts of this policy in the autumn Budget, so I do not believe that new clause 7—which would require the Government to make a regular statement on the impact of pupils with special educational needs and disabilities—is necessary. However, I take this opportunity to make clear that in developing this policy, the Government carefully considered the impact it would have, including on pupils with special educational needs and disabilities. I am sure that the hon. Member for St Albans (Daisy Cooper) and her colleagues will welcome the extra £1 billion next year for high needs funding that we have been able to announce thanks to our decisions on tax policy, including on private schools.

I hope I have set out why the Opposition amendments are unnecessary, and indeed why reintroducing the VAT tax break for private schools not only runs counter to the manifesto on which the Government were elected, but represents an unfunded tax cut from the Opposition—have they learned nothing? I therefore urge the House to reject those amendments, and I commend our amendments to the House. Again, I extend my thanks to all Members who have contributed to this debate.

[James Wild]

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 2

Energy (oil and gas) profits levy: impact assessment of increase in rate

“(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, commission and publish an assessment of the expected impact of Sections 15 to 17 of this Act on—

(a) domestic energy production and investment;

(b) the UK’s energy security;

(c) energy prices, and;

(d) the UK economy.

(2) The assessment must examine the impact of provisions in this Act in comparison with what could have been expected had the energy (oil and gas) profits levy remained unchanged.”—(James Wild.)

This new clause would require the Chancellor to commission and publish an assessment of the expected impact of changes to the energy (oil and gas) profits levy on domestic energy production, the UK’s energy security, energy prices and the UK economy.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

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[James Wild]

I join the Minister in thanking hon. Members on both sides of the House who participated in the debates we have had so far on the Bill, which I do not intend to extend unduly. I join him in thanking the parliamentary staff and the hon. Members who chaired the Committee.

The driving mission of the Government, according to the Prime Minister, is growth, but despite inheriting the fastest growing economy in the G7, he and the Chancellor chose to talk down our economy. The impact of their words was to weaken confidence. Then, in the October Budget, the Government made choices and put in place a raft of measures in this and other Bills that have stopped growth stone dead: £40 billion a year of extra taxes; higher national insurance; increasing tax on investors; deterring the risk takers and the wealth creators we need; pushing up inflation; and hitting working people and pensioners.

In just the last two days, senior business leaders from the retail and hospitality sectors have warned about the damage the Budget and Labour’s costly employment laws will have. They are just the latest businesses sounding the alarm, but the Chancellor is not listening. For all the talk of growth, we can already see from their actions that we have a Government committed to higher taxes, higher spending, more borrowing and more regulation—the classic Labour approach. It does not work. The Government need to change course, otherwise we will all pay the price. That is why we will not be supporting the Bill this evening.

Question put, That the Bill be now read the Third time.