Finance Bill (First sitting)

James Wild Excerpts

Committee stage
Tuesday 28th January 2025 Public Bill Committees

In conclusion, clause 19 and schedule 4 introduce the important undertaxed profits rule backstop to pillar two and make technical amendments to existing legislation. I therefore commend them, and Government amendments 1 to 14 and 21 to 37, to the Committee.

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

It is a great pleasure to serve on the Committee under your chairmanship, Mr Mundell. As we heard from the Minister, clause 19 and schedule 4 amend the parts and schedules of the Finance (No. 2) Act 2023 that implement the multinational top-up tax and domestic top-up tax. Part 2 of schedule 4 introduces the undertaxed profits rule into UK legislation, and part 3 makes amendments to the multinational top-up tax and domestic top-up tax. These taxes represent the UK’s adoption of the OECD pillar two global minimum tax rules, and we are supportive of the measures before us.

In October 2021, under an OECD inclusive framework, more than 130 countries agreed to enact a two-pillar solution to address the challenges arising from the digitalisation of the economy. Pillar one involves a partial reallocation of taxing rights over the profits of multinationals to the jurisdictions where consumers are located. The detailed rules that will deliver pillar one are still under development by the inclusive framework. As the Minister said, pillar two introduces a global effective tax rate, whereby multinational groups with revenue of more than €750 million are subject to a minimum effective rate of 15% on income arising in low-tax jurisdictions.

The multinational and domestic tax top-ups were introduced in the Finance Act 2023, as the first tranche of the UK’s implementation of the agreed pillar two framework. Measures in the Bill extend the top-up taxes to give effect to the undertaxed profits rule. That brings a share of top-up taxes that are not paid under another jurisdiction’s income inclusion rule or domestic top-up tax rule into charge in the UK. The undertaxed profits rule will be effective for accounting periods beginning on or after 31 December 2024.

Following discussions with the Chartered Institute of Taxation, I have a number of points to raise with the Minister. First, as the institute points out, there is an open point around the application of the transitional safe-harbour anti-arbitrage rules. The OECD’s anti-arbitrage rules for the transitional safe harbours are drafted very broadly, and may therefore go further than originally anticipated. Will the Minister clarify HMRC’s view of the scope of those rules?

There are also questions about taxpayers’ ability to qualify for the transitional safe harbours. A transitional safe harbour is a temporary measure that reduces the compliance burden for multinationals and tax authorities. There has been some uncertainty as to whether a single error in a country-by-country report could disqualify all jurisdictions from applying the transitional safe harbours. HMRC has recently indicated that it would be open to permitting re-filings of country-by-country reports where errors are spotted. Can the Minister provide further clarity on HMRC’s proposed approach?

The UK’s legislation will need to be updated regularly to stay in line with the OECD’s evolving guidance. What steps is the Minister taking to ensure that clear guidance is provided in a timely manner? The new top-up taxes and undertaxed profits rule are complicated. Schedule 4 runs to over 40 pages and includes an eight-step method to determine the proportion of an untaxed amount to be allocated to the UK. It is important that the Government minimise the cost of implementation and compliance. How will the Minister ensure that it is kept to a minimum?

While I welcome the work the UK is doing at a global level, there are still significant issues. I was interested, as I am sure the Minister was, to see that one of the first actions of President Trump, just hours after he took office, was to issue a presidential memorandum stating:

“This memorandum recaptures our nation’s sovereignty and economic competitiveness by clarifying that the global tax deal has no force or effect in the United States.”

It states in clear and unambiguous terms:

“The Secretary of the Treasury and the Permanent Representative of the United States to the OECD shall notify the OECD that any commitments made by the prior administration on behalf of the United States with respect to the global tax deal have no force or effect within the United States absent an act by the Congress adopting the relevant provisions of the global tax deal.”

The OBR estimates that pillar two is expected to generate £2.8 billion by the end of this Parliament. What impact could the US position have on the future operation of pillar two and the UK’s ability to levy top-up taxes on multinationals as planned? The same memorandum issued by President Trump notes that

“a list of options for protective measures”

will be drawn up within 60 days. What action are the Government taking to engage with the US Treasury and to prepare for such actions? Has the Chancellor raised this with her opposite number?

The Minister referred to the more than 30 Government amendments that have been tabled to schedule 4, which correct errors in the calculation of the multinational top-up tax payable under the UTPR provisions that would have resulted in an excessive liability; secure that eligible payroll costs and eligible asset amounts are allocated from flow-through entities in a manner that is consistent with pillar two model rules; and ensure that multinational top-up tax and domestic top-up tax apply properly in cases involving joint ventures. They are all perfectly sensible, but the number of amendments tabled underlines the complexity of the issue.

As I mentioned, this is a two-pillar system. The corporate tax road map confirmed the Government’s support for the international agreement on a multilateral solution under pillar one and the intention to repeal the UK’s digital sales tax when that solution is in place. The digital sales tax raised £380 million in 2021-22, £567 million in 2022-23 and £678 million in 2023-24. I would welcome an update from the Minister on pillar one and the future of the digital sales tax.

The Opposition will not be opposing the clause, but I look forward to the Minister’s response to the specific points I have raised, including those on developments under the new Trump Administration and on implementation.

[James Murray]

I thank the shadow Minister for his support for the provisions before us and our general approach.

First, it is the case that we are amending the Bill in Committee, but that is because, as his colleagues may remember from their time in government, these are complex rules and it is important that pillar two rules work as intended. This is a complex international agreement and it represents one of the most significant reforms of international taxation for a century. It is to a degree inevitable that revisions would be needed as countries and businesses introduce pillar two and set it in progress. It is complex, but we should not forget that pillar two applies only to large multinational businesses, and the reason it is being introduced is to stop those businesses shifting their profits to low-tax jurisdictions and not paying their fair share here in the UK. The rules need to respond to that, and we need to make sure that they work for all sectors and all types of businesses.

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[James Wild]

As we heard from the Minister, clause 20 repeals the ORIP rules, which are about ensuring that profits derived from UK consumers are taxed fairly and consistently, regardless of where the underlying intangible property is held. The previous Government announced in the 2023 autumn statement that they would abolish ORIP, so we support the clause.

The ORIP rules were a short-term, unilateral measure introduced in the Finance Act 2019 to disincentivise large multinational enterprises from holding intangible property—assets such as patents, trademarks and copyrights—in low-tax jurisdictions if it was used to generate income in the UK. Such multinationals could thereby gain an unfair competitive advantage over others that hold intangible property in the UK, as well as eroding the UK tax base. However, the legislation is no longer required, because the OECD/G20 inclusive framework pillar two global minimum tax rules will comprehensively discourage the multinational tax planning arrangements that ORIP sought to counter.

As the Minister said, the repeal will happen alongside the introduction of the pillar two undertaxed profits rule from 31 December 2024. Has he assessed how successful the ORIP rules have been since their introduction? HMRC’s tax information and impact notes state that this measure will have a negligible impact on around 30 large multinational groups and a negative impact on the Exchequer, peaking at £40 million in 2026-27. Can the Minister clarify why the repeal of the ORIP rules is having a negative impact on revenues to the Exchequer? I note that the Chartered Institute of Taxation has welcomed the measure and specifically said that

“any reduction in the legislative code to minimise overlap and unnecessary measures is welcome.”

We say amen to that.

As I have set out, we will not oppose the clause, but I look forward to the Minister’s response to my specific points about ORIP.

[James Murray]

I thank the shadow Minister for his support for the clause. I think his question was about the impact of repealing ORIP. A fundamental point here is that pillar two, which we debated previously, will now tax the profits that were the target of ORIP. Pillar two is expected to raise more than £15 billion over the next six years, so ORIP is simply no longer needed. The Government believe that simplifying and rationalising the UK’s rules for taxing cross-border activities is important, and as such it is right that we use this opportunity to repeal ORIP.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21

Application of PAYE in relation to internationally mobile employees etc.

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[James Murray]

I will briefly address clause 21 before explaining what the amendment seeks to achieve.

The clause makes changes to simplify the process for operating pay-as-you-earn where an employee is eligible for overseas workday relief. It relates to some of the reforms we are making around non-UK domiciled individuals, which we will return to later in Committee, because those clauses are in a different part of the Bill. More broadly, the context of this measure is that the Government are removing the outdated concept of domicile status from the tax system, and replacing it with a new, internationally competitive, residence-based regime from 6 April 2025.

Currently, where an employer makes an application to treat only a portion of the income that they pay to an employee as PAYE income, they are required to wait for HMRC to approve an application, which can result in delays. The changes made by clause 21 will mean that from 6 April 2025, an employer will be able to operate PAYE only on income relating to work done in the UK once they have received an acknowledgment from HMRC of their completed application, rather than having to wait for HMRC to approve it. That approach will simplify the operation of overseas workday relief for employers, while still allowing HMRC to direct employers to amend the proportion of income on which PAYE is operated, should it be necessary to do so.

Amendments 15 to 19 are needed in order to ensure that the legislation regarding the correct operation of PAYE works as intended. The Government are committed to making the tax system fairer so that everyone who is a long-term resident in the UK pays their taxes here. The new regime ensures this, while also being more attractive than the current approach, as individuals will be able to bring income and gains into the UK without attracting an additional tax charge. That will encourage them to spend and invest those funds in the UK.

[James Wild]

As we have heard from the Minister, clause 21 amends the process by which employers can operate PAYE on a proportion of payments of employment income made to an employee during the tax year. It is a welcome change. We will be supporting the clause and the simplification that it introduces.

By way of background, the clause amends section 690 of the Income Tax (Earnings and Pensions) Act 2003. Section 690 provides a mechanism for an individual or employer to seek a decision from HMRC regarding the tax treatment of certain earnings. The resulting determination under section 690 is an agreement between HMRC and a UK employer on the estimated percentage of duties that an internationally mobile employee expects to carry out in a tax year. Once that determination is provided, the employer can operate PAYE on only that percentage of the employee’s salary.

Unfortunately, that is easier said than done. According to the Institute of Chartered Accountants in England and Wales, historically HMRC has missed its four-month target to agree employers’ applications, and in some cases it has taken up to a year to obtain HMRC’s approval. This is just one example of the difficulty that taxpayers have in engaging with HMRC. I welcome the comments that the Minister made at Treasury questions last week about the work that he is doing—he chairs the board of HMRC, I believe—to ensure that HMRC delivers a better service for customers. We all wish him well on that.

Perhaps this is an opportune time to remind the 3.4 million people who have to submit self-assessment tax returns to do so before the 31 January deadline. Colleagues may wish to ensure that they have submitted theirs.

In the absence of an agreement, PAYE must be operated on the whole salary, meaning that the employee would be overtaxed and must claim relief after the year end. That is not a satisfactory outcome for anyone. These changes will allow employers to immediately operate PAYE on only the proportion of earnings that they believe relates to UK duties, rather than having to wait for HMRC to approve the application. This new process is a welcome step forward in dealing with an issue that HMRC has had in meeting its legal obligations under the current tax system.

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[James Wild]

As we heard from the Minister, clause 22 makes amendments to parts 4 and 5 of the Taxation (International and Other Provisions) Act 2010 concerning the meaning of indirect participation in relation to advance pricing agreements. Once again, we welcome these changes. An APA is a procedural agreement between one or more taxpayers or one or more tax authorities on the future application of transfer pricing policies. Advance pricing agreements can help to provide certainty and avoid transfer pricing disputes.

HMRC recently became aware that there is a technical gap in the circumstances in which an advance pricing agreement may be entered into. Clause 22 aims to rectify that gap and provide clarity on what constitutes indirect participation in the context of APAs. The clause amends both the transfer pricing and APA legislation to ensure the validity of advance pricing agreements in cases where the parties to the provision are connected only by virtue of acting together in relation to the financing arrangements.

The clause will ensure the validity of advance pricing agreements with businesses in such circumstances and is intended to ensure that HMRC can provide businesses with tax certainty in relation to the application of transfer pricing legislation. We have spoken a lot during this Committee about the importance of certainty for business, so that is a welcome step.

By providing clarification on what indirect participation means, the Government are confirming the scope of advance pricing agreements, which should improve certainty and dispute resolution. The Chartered Institute of Taxation notes that

“this measure will be helpful for taxpayers that have applied to or want to apply to HMRC for APAs in relation to financing arrangements (such as Advance Thin Capitalisation Agreements) in circumstances where the UK’s transfer pricing rules are only in scope due to persons acting together in relation to those financing arrangements.”

The clause will likely improve the process both for businesses and HMRC. It is, however, a little hard to understand the real-world impact from the tax information and impact notes. Now that indirect participation has been defined and the scope of advance pricing agreements effectively broadened, will there be any extra enforcement cost? I would be grateful if the Minister could confirm how many businesses the change is likely to impact. It would also be useful to know whether the Government have calculated the economic benefits of advance pricing agreements and, subsequently, how the change will impact the Exchequer. As I have set out, we welcome this technical change, but I would welcome the Minister’s comments on the issues I have raised.

[James Murray]

I thank the hon. Gentleman for his support for the clause. We are on a roll of him supporting clause after clause—may this continue throughout the rest of the Bill.

The hon. Gentleman rightly recognises that this is a simplification measure on which all Members can agree. As it is a simplification measure, it is non-scoring, so it does not have an Exchequer impact—it simply provides certainty on how the rules as intended will apply. It does not change how the rules apply or make a policy change to the Government’s approach; it makes sure that there is total certainty and clarity about how they will apply. Only a limited number of taxpayers will be affected, and we expect them to welcome the change because of this certainty.

I welcome the Opposition’s support for this clause, because I think we can all agree on giving as much certainty to taxpayers and businesses as possible.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Clause 23

Expenditure on zero-emission cars

Question proposed, That the clause stand part of the Bill.

Oral Answers to Questions

James Wild Excerpts

Tuesday 21st January 2025 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

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

Farming’s vital role in growing our rural economy, growing our food and protecting the countryside is threatened by Labour’s family farm tax. The self-proclaimed “iron Chancellor” is proving herself to be the tin-eared Chancellor, ignoring evidence from the National Farmers Union and others showing that the tax is based on flawed assumptions. Ahead of Saturday’s farming day of unity, rather than threatening family farms, will she speak to farmers, think again and withdraw those damaging proposals?

[Rachel Reeves]

The problem with the Conservatives is that they support increased spending in vital areas but they have not supported any of the tax increases necessary to pay for them, which, frankly, is why we are in the situation we are in today, having inherited a £22 billion black hole in the public finances. The hon. Gentleman will know that in the Budget we announced £5 billion for the farming budget over two years— including the largest funding directed at sustainable food production and nature recovery in this country’s history—and £60 million to support farmers affected by flooding.

Crown Estate Bill [Lords]

James Wild Excerpts

2nd reading
Tuesday 7th January 2025 Commons Chamber

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

The work on reforming the Crown Estate was developed by the previous Government. I am pleased to be debating the Bill today, and I thank my noble Friends for the scrutiny they have already provided.

We support the objective to increase the Crown Estate’s ability to compete and invest, so that it maintains and enhances the value of the estate and the income derived from it. Assets managed by the Crown Estate are not the property of the Government, nor are they part of the sovereign’s private estate. Since George III, the assets have been held in right of the Crown, which encompasses the interests of the sovereign and the Government. That is why appropriate scrutiny of the Crown Estate and its £15.5 billion in total assets is important. It has a rural portfolio of 185,000 acres, manages roughly 7,400 miles of coastline, has one of the largest property portfolios in the west end and returns all its profits to the Treasury. Last year, there was a record profit of £1.1 billion, up more than £600 million largely due to fees from round 4, and it has generated £4.1 billion for the nation’s finances over the past decade. There is, however, the potential to do more. In the business case prepared under the last Government, the Crown Estate estimated that changes in the Bill would enable it to generate £100 million a year in additional revenues by 2030. It is right, therefore, that we help to modernise the Crown Estate as it aims to create lasting prosperity for the nation.

Although we support the Bill’s aims, further scrutiny is obviously needed in some areas, including a limit on the level of borrowing, governance, the relationship with Great British Energy and safeguards in relation to the disposal of assets. I will come to each in turn.

As we have heard, the kernel of the Bill is clause 1, which confers on the Crown Estate a broader power to borrow, subject to Treasury consent. While I note the need for Treasury approval, a lack of parliamentary oversight on borrowing levels is a concern. When pushed by Baroness Vere of Norbiton and other noble Lords, the Government stated that a limit on borrowing

“is better placed outside of legislation”—[Official Report, House of Lords, 5 November 2024; Vol. 840, c. 1400.]

and instead should be placed in the memorandum of understanding between the Crown Estate and the Treasury.

The MOU sets out that the Crown Estate can borrow up to 25% of the worth of its total assets, but an MOU is easily altered. Public borrowing levels should be transparent. If Parliament is being asked to remove restrictions on borrowing, why should there not be a cap in legislation with the ability to swiftly amend it through a statutory instrument, if necessary, to protect against unconstrained borrowing and the concerns that my right hon. Friend the Member for The Wrekin raised?

[Mark Pritchard]

I agree with my hon. Friend that the Crown Estate and Treasury’s framework agreement was ineffective, or that at least it could have been strengthened. The memorandum of understanding is in a similar vein. I therefore support him.

Will he comment on this? I have concerns about the Bill. I agree with the general principle but there are potential fiscal and reputational hazards ahead for the Crown—not just the Crown Estate—if some of the investments go south. Also, at the moment there is a link between the Crown Estate and the sovereign grant. I think it is around 12%, as not all the income to the sovereign grant is derived from the Crown Estate. However, if the investments were to go wrong, who would be liable? If we have a weak MOU with no statutory oversight, it is more likely to go wrong.

[James Wild]

My right hon. Friend is absolutely right to highlight the potential risk. There is no one-way bet in life, and there is no guarantee that the Crown Estate will successfully invest in projects that go well. I will come on to the point about the energy side of things later in my speech.

It is perfectly reasonable, as we proposed in the other place, to have that 25% cap in legislation, which could be amended. I am sure we will consider the issue further in Committee.

The Bill alters the governance of the Crown Estate and provides for the number of commissioners to be increased to 12. Given the extension of the powers and the decrease in parliamentary oversight, pre-appointment scrutiny is of great importance. Again, I thank Baroness Vere for seeking and securing assurances from the Government that the chairman of the Crown Estate commissioners could be added to the Cabinet Office pre-appointment scrutiny list. Just before Christmas, Ric Lewis was announced as the preferred candidate for the role and I am pleased that the appointment will now be considered by the Treasury Committee. Will the Minister confirm in his winding-up speech whether other commissioners will be subject to any pre-appointment scrutiny?

Turning to salaries, which I do not believe the Chief Secretary referred to, under clause 2, Parliament will no longer be responsible for approving them through the estimates. Instead, they will be paid out of the income of the Crown Estate. Currently, the framework document sets out that remuneration of the chief executive should be in line with or below that of an appropriate benchmark group approved by the Treasury and that a clear majority of the chief executive’s total reward should be conditional upon performance. We support rewarding success, but with the loss of parliamentary oversight, will the Minister confirm whether any changes are proposed to the remuneration framework and, specifically, for the chief executive? Will he undertake to report to the House on any such change in future?

Turning to Great British Energy, on the day the Bill was introduced, the Government announced a partnership between the Crown Estate and GB Energy, which they claimed will

“unleash billions of investment in clean power.”

Indeed, the press release went on to say it

“will lead to up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030”.

However, there is a lack of transparency over how the partnership will work, the difference it will make, and its impact on the Estate’s primary duties. Given the supposed significance, I would have expected to have seen a partnership agreement by now, as without one, we do not know what has been agreed. Will the Minister confirm if there is a partnership agreement yet? Will he commit to publishing it before the Committee stage? Has the Crown Estate agreed to invest a certain amount with GB Energy? What process is there to ensure the Crown Estate continues to deliver on its duty to maintain and enhance the value of the estate? How will the Crown Estate decide between projects GB Energy backs and other projects that may have a higher rate of return?

The GB Energy founding statement adds to the confusion, adding that the Crown Estate

“will establish a new division ‘Great British Energy: The Crown Estate’.”

That raises several questions. Will new staff be required, or will it simply be a restructuring of the existing group? The statement also says it will sit

“under both Great British Energy and The Crown Estate, with strategy and investment agreed by Great British Energy.”

Will decisions be made jointly on investments, or will the Crown Estate retain its independence? Given the Government voted down our amendments to the Great British Energy Bill to introduce more accountability, it simply fuels some suspicion that the partnership has been created for political rather than economic reasons. The reporting requirements that were secured and added to the Bill in clause 4, which the Chief Secretary referred to, will at least help to bring some transparency to this, but there is a need for a lot more.

Under the previous Government, the UK became the first to more than halve emissions while growing the economy and became a leader in offshore wind. However, we must acknowledge that renewables are not cheap in all scenarios. There is clearly a risk that the Government will push up the cost of wind by rushing ahead to meet their political target and increase prices for consumers as a result. That is a far cry from the £300 cut in energy bills that Labour promised during the general election. As we scrutinise the Bill, Parliament has an important role to play to ensure the Government do not seek to use the Crown Estate to try and deliver the Energy Secretary’s damaging policies and undermine returns to the taxpayer.

As I set out earlier, the Crown Estate owns some vital assets, so it is surprising that there are so few safeguards to prevent commissioners from selling off such important assets. In the business case for the changes, the Crown Estate was planning £1.4 billion of disposals to fund investments, representing nearly 10% of its portfolio. When I asked Crown Estate representatives what that covered, they said they were unable to disclose plans for disposals because it is commercially sensitive information. Again, that raises concerns about transparency. In response to questions in the other place, the Government said they were working with legal experts

“to establish the extent to which the Crown Estate can currently sell the seabed”

for example. On Report, Lord Livermore confirmed that if the Government establish that

“further legislation is required to restrict the ability of the Crown Estate to sell the seabed,”—[Official Report, House of Lords, 5 November 2024; Vol. 840, c. 1412.]

they would bring forward an amendment.

I would be grateful if, in his winding up, the Minister could update the House on the process of those discussions and the need for such an amendment. The disposal of assets should be properly scrutinised. The Government rejected attempts in the other place to bring more scrutiny here and said that a statutory limit on disposals would undermine the flexibility of the Crown Estate to operate commercially. Given that the assets are held for the benefit of the nation, we should ensure some form of transparency if they are to be disposed of, whether that is reporting to Parliament, or seeking HMT approval for disposal of specific assets, or those over a set value.

Finally, let me turn to salmon. Clause 5 would require the commissioners to assess the environmental impact and animal welfare standards on salmon farms on the Crown Estate. If a salmon farm is causing damage or animal welfare issues, its licence would have to be refused. I commend my noble Friend Lord Forsyth of Drumlean for his tireless work on this matter and for highlighting that salmon farming can cause detrimental impacts in the event of escapes in terms of disease, breeding and other issues. Given that wild Atlantic salmon are now on the international union for conservation of nature’s red list, these are perfectly reasonable obligations which he said might influence how the Crown Estate of Scotland is to operate. The amendment was sponsored by Lord Forsyth, but also by Green and Labour party Members, so it is disappointing to hear the Chief Secretary to the Treasury talking about reversing that measure, and we look forward to that debate in the Committee stage.

[Mr Carmichael]

Salmon farming is enormously important in my community and in many other communities around the highlands and islands. Those communities will not be affected by this apparently, although we might hear conformation on that at a later stage, but is it the hon. Gentleman’s position that this is the only way of regulating salmon farmers? Is he not aware that there is a massive amount of regulation affecting salmon farming already? Does he really think that the Crown Estate commissioners are the people to be doing this job?

[James Wild]

Like me, the right hon. Gentleman will have read the Hansard reports of the debates in the other place where this issue was covered at some great length, so I defer to the points made by Lord Forsyth there. Regulation is obviously in place, but this addition would simply raise awareness of the issues in the Bill. The Government said that they supported the objective of the amendment when it was discussed in the other House, but did not think it was necessary. They did not think that it would do any damage, so I suggest that it remains part of the Bill.

To conclude, the Crown Estate Bill will help deliver the modernisation that is needed, but the purpose must be supporting the estate’s duty to maintain and enhance its value for maximised return to taxpayers, rather than becoming an extension of GB Energy’s cheque book. We will be pursuing the concerns that I have raised about checks on borrowing governance, the relationship with GB Energy and the safeguards in response to the disposal of assets to ensure that that remains the case.

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[James Wild]

With the leave of the House, it is a pleasure to respond briefly on behalf of His Majesty’s loyal Opposition. [Interruption.] I do not know whether there is a party going on to which I have not been invited, but I am personally very happy to be here to take part in the debate.

This has been a good debate, with more than 10 Members contributing, and not only from coastal areas such as my Norfolk constituency; we have also heard from the hon. Member for Lichfield (Dave Robertson), which underlines the importance of the Crown Estate to all our constituencies.

The hon. Members for Truro and Falmouth (Jayne Kirkham) and for Camborne and Redruth (Perran Moon) spoke about the potential benefits of investment in their constituencies and their part of the world, including the funding of college courses, which are important, as well as investment in energy production.

The hon. Member for Mid and South Pembrokeshire (Henry Tufnell) may want to get some tips from the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn) about how to get on with the Crown Estate, how to get it to do what he actually wants it to do, and how to secure the benefits for his constituency. Perhaps he can have a reset with the Crown Estate.

A number of Members spoke about community benefits, which are very important to securing public support for new infrastructure, be that energy or other issues. Labour Members spoke quite a bit about cutting energy bills. I distinctly remember the pledge they all made during the election campaign to cut energy bills by £300, but energy bills are going up and there is no date for when they will come down. Voters and constituents will remember the pledge and, at the moment, all they can see is their costs going up. The concern is that the pace at which the Energy Secretary wants to drive forward will actually drive up costs for all of our constituents.

I began my remarks by emphasising that the Crown Estate is neither the property of the Government nor part of the sovereign’s private estate. That is key. Its core purpose is to maintain and enhance the value of the estate and the income derived from it. That is why greater transparency is needed about the partnership with GB Energy. The Minister will have heard and, I am sure, noted down all the questions from my opening speech, so I will not repeat them all, but I will repeat this: will he commit to publishing the partnership agreement before we head into the Committee stage?

I am afraid that some of the contributions we have heard have only fuelled my suspicions of the Government’s intention to use the Crown Estate as a vehicle for its energy policy and as a provisional part of the GB Energy body, whatever that may turn out to be. That raises issues about how investments will be determined and the returns that are generated for the taxpayer, as well as the risk surrounding investments, whether crowding in, as hon. Members have referred to, actually happens, whether investment in ports will drive a return, and why commercial providers are not seeking to make similar investments. That conflict and risk was one of the concerns of my right hon. Friend the Member for The Wrekin (Mark Pritchard), who is sadly not in his place. I hope that the Treasury Committee will engage with that point when it examines the nominated new chairman of the Crown Estate commissioners.

That is also why it is important that Parliament has oversight of borrowing limits, rather than that just being in an MOU that can be changed at the Treasury’s whim. That is an important protection that we have in place, and I know that the Minister will also respond to that point in his remarks. Will he also get back to the specific point I raised about disposals and the seabed, and the commitment that Lord Livermore made on Report in the other place about protections and whether an amendment is needed and will be forthcoming?

To conclude, there is wide support for the Bill from across the House, but the short-term interests of the Government should not come at the long-term expense of the Crown Estate and the nation. I look forward to continuing the scrutiny of the Bill in Committee.

[Madam Deputy Speaker]

I call the shadow Minister to wind up.

Finance Bill

James Wild Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

I call the Opposition spokesperson.

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

I rise to speak on behalf of the Opposition, and particularly to new clause 8. Let me start by briefly considering the context in which we are debating the Bill. It comes after a Budget in which the Chancellor said that we must have

“an economy that is growing, creating wealth and opportunity for all”—[Official Report, 30 October 2024; Vol. 755, c. 811.]

But that is not what this Finance Bill delivers. Instead, the Budget is forecast to deliver lower growth, higher borrowing and higher inflation.

The Minister referred to choices, and the Government have indeed made choices. They have chosen to tax enterprise, to tax the wealth creators and to tax the farmers who are, again, outside Parliament protesting against the family farm tax—I wonder whether, on one of his rare jaunts to this country, the Prime Minister has gone out to speak to them. Rather than promote opportunity, it was the Government’s choice to bring in a new tax on aspiration.

[Dr Luke Evans]

My hon. Friend talks about choices, and one of the choices that independent schools are now going to have to make is how to use their own resources, such as their sports pitches, bursaries and scholarships. The kinds of things that benefited the wider local community may now have to be turned into fundraising and revenue-making machines to be able to deal with this change, which in turn means that other schools will not be able to use their community facilities, such as their football pitches. Those may all have to be charged more for, or indeed cut completely, as the independent schools have to make those difficult choices. That is not good for community cohesion at all.

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[James Wild]

My hon. Friend makes an important point. Over our 14 years in government, one of the things that consecutive Education Secretaries did was to work with the independent sector precisely to open up those facilities, in recognition of the public good and benefit to their communities that they were delivering.

[Sir Oliver Dowden]

Further to the excellent intervention from my hon. Friend the Member for Hinckley and Bosworth (Dr Evans), that is exactly what happens with schools in my constituency. Haberdashers’ school partners with 1,400 state school pupils every single week. When the Minister talks about finding efficiencies, these are exactly the sorts of programmes that will suffer. There is no other place for those students to go if they leave private schools in my constituency, so on both counts everyone is worse off. That is one of the inequities of the policy.

[James Wild]

My right hon. Friend makes a powerful point, which reflects the rash nature of the policy and the inadequacy of the impact assessment, which does not address those issues.

[Baggy Shanker (Derby South) (Lab/Co-op)]

The shadow Minister speaks about a tax on aspiration, but what is his problem with having aspiration for all children in all our schools?

[James Wild]

We are about the 100% of pupils. We are not trying to divide and rule like the Labour party.

[Josh Fenton-Glynn]

rose—

[James Wild]

I will make a little progress, if the hon. Gentleman does not mind.

Sadly, this cruel tax, which is being imposed midway through the academic year, will damage the education of thousands of pupils. It is sadly typical of the ideological approach that we have seen the new Government take on education, where they are trashing the record of schools, pupils, teachers and governors over the past 14 years when we rose up the international league tables.

[Simon Hoare]

Given that there are many on the Government Benches who had almost as their life’s work the destruction of the private school system, is my hon. Friend as shocked as I am that for this flagship policy, which the red flag has so often demanded, the Government Benches are so underpopulated? I thought that they would be there to cheer the Minister on.

[James Wild]

My hon. Friend makes an important point. He will have been here throughout many of the debates on the Finance Bill, the national insurance and jobs tax Bill, where very few Labour Members have made contributions to defend their first Budget for 14 years. I think we all know why.

Clause 47 removes the exemption for private school fees and spells out what Labour’s education tax will mean from 1 January. As my right hon. Friend the Member for Hertsmere (Sir Oliver Dowden) said, doing that mid-year is a cruel measure.

[Graham Stuart]

Further to that point, I think one of the reasons there may be so few colleagues on the Labour Benches is because they stood on a manifesto that was all about economic growth, protecting farmers and holding down tax. That is what they stood on, but it turns out that they have a leftist Front Bench which has introduced this pernicious tax midway through the year, and we have an Education Secretary so filled with malice and spite that she cannot even bring herself to congratulate the state school that has been No. 1 in the country three years in a row.

[James Wild]

My right hon. Friend makes a typically salient point. I agree, in particular about the lack of congratulations. The Education Secretary was not prepared to congratulate the head of Michaela school, which is the best performing school in the country.

Putting VAT on independent schools will particularly hurt those parents on modest incomes who are saving to send their children to a school that they think will best serve their needs. None of those parents is getting a tax break. They are also contributing to funding places in the state system, whether or not their child takes one up. The clause excludes the teaching of English as a foreign language, education at nursery and higher education courses from the new tax, but the Government have already crossed the line. They are taxing education and learning for the first time. Will the Minister rule out widening the scope of the education tax to include university fees, for example?

The Opposition are deeply concerned about the impact the tax will have on pupils with special educational needs, small rural schools, faith schools and schools taking part in the music and dance scheme. We have consistently warned of the damage it will do to young people’s education, and we voted against the measures in the Budget resolutions. New clause 8, in the name of my right hon. Friend the Member for Central Devon (Mel Stride), the shadow Chancellor, would require the Chancellor, within six months of the Act being passed, to make a statement to Parliament on the impact of the changes on those groups in particular, as well as the music and dance scheme. That is needed because there is such a wide gap between what the Minister is telling us and what the limited impact assessment is saying, and what all hon. Members who are actually talking to schools and parents know will be the case.

[Josh Fenton-Glynn]

The shadow Minister talks about talking to schools. I have spoken to schools in my constituency for many years, and I am sure he has spoken to the schools in his. The “School Cuts” website tells us that North West Norfolk has seen a £2.2 million cut in its state schools since 2010. Perhaps he could point to the record where he spoke out against those cuts.

[James Wild]

I am grateful to the hon. Gentleman. If he checks the record, he will see that the level of per pupil funding actually increased over the last 14 years. I congratulate the schools in my constituency that have just received good ratings from Ofsted—a number of them have done so.

--- Later in debate ---

[James Wild]

No, I won’t at this stage.

There are more than 100,000 pupils with special educational needs and disabilities in independent schools who do not have education, health and care plans, so they will be subject to this tax. That could make it unaffordable for the parents of those children to send them to the school that they think is best placed to look after them. There will be demand in places where there is not capacity as a result. A number of local authorities have pointed that out. That will just make the problems that councils face with their SEND budgets worse, despite the record amounts we have put into high needs.

[Sir Ashley Fox (Bridgwater) (Con)]

Does my hon. Friend agree that this disastrous education tax risks having a severe impact on those children and pupils with SEND in independent schools? It will force children with SEND out of independent schools as fees become unaffordable for their parents and it risks overwhelming the state provision, as there is not sufficient state provision at the moment.

[James Wild]

Absolutely. My hon. Friend makes the point very well. The knock-on impact and the damage to those children’s education will be considerable.

More than 40% of independent schools are small schools. They are at the heart of their local communities. They do not have big endowments. They operate on wafer-thin margins and simply cannot absorb changes of this magnitude, so it is likely that those schools will cut bursary places that exist due to this new tax that puts their viability at risk.

[Charlie Dewhirst (Bridlington and The Wolds) (Con)]

On SEND funding, the East Riding of Yorkshire is the lowest funded local authority for SEND per pupil. Children in the Prime Minister’s constituency get three times more funding than children in mine, which is a travesty in itself. This policy will put even more strain on my local authority and the children who desperately need support from it.

[James Wild]

Absolutely; I completely agree with my hon. Friend. The Government hide behind the cloak of saying, “If you have an EHCP, everything is okay,” but 100,000 children in schools across our country will be impacted.

The next area we are concerned about is faith schools, which tend to be smaller and charge lower fees. The Independent Schools Council has warned that

“Low-cost faith schools will be faced with deficit and closure, communities will lose vital assets”.

There are small religious groups that do not have any state sector provision that can meet their needs as a denomination. Religious groups are mounting legal challenges as a result, battling for the right to educate their children and battling for the right to choose, which we on the Conservative Benches certainly support.

New clause 8(3) refers to the music and dance scheme, which provides grants to talented young people who could not otherwise attend world-class institutions such as the Royal Ballet school. We welcome the Government’s decision, under pressure, to delay taxing schools in this scheme until September next year, but that exemption should be made permanent.

To return to one of the points that has been made, in the Budget statement the Chancellor said:

“94% of children in the UK attend state schools. To provide the highest-quality support and teaching that they deserve, we will introduce VAT on private school fees”.—[Official Report, 30 October 2024; Vol. 755, c. 821.]

That is a deliberately divisive approach. The Opposition support 100% of pupils. We care about all children. We simply believe that parents should be able to choose.

We have consistently raised the situation of military families, to which the Minister referred, and argued that they should be exempt from this tax. The Government did not agree to that, but in response to our campaign they said:

“We will uprate the continuity of education allowance to reflect the increase in school fees from January.”—[Official Report, 18 November 2024; Vol. 757, c. 3.]

Well, the new continuity of education allowances have been announced and, as my hon. Friend the Member for Solihull West and Shirley (Dr Shastri-Hurst) pointed out, they fall short of protecting service families from the changes. That will have a direct impact on the retention and recruitment of our armed forces. There are 4,200 children who benefit. The allowance is in place to meet the needs of the armed forces when they have to move around the country or serve overseas and boarding schools or other provision is the only available option. Given the importance of this allowance for the retention of military personnel, why have the Government not met the commitment that they made to our armed forces?

[Dr Luke Evans]

Does my hon. Friend agree that the veterans’ commissioner that will be introduced by the new Government will be perfectly primed to look at this kind of problem to ensure that both Departments—the Ministry of Defence and the Department for Education—get the best? Is that not the purpose of the commissioner?

[James Wild]

I very much hope so. I know from my years as an adviser in the Ministry of Defence just how important the allowance is for retention. That is why it is so disappointing that the Government have broken their promise.

I am grateful to the many organisations that have shared concerns about the implementation of these clauses, especially as the measure is rushed and is taking place in the middle of the school year. The Chartered Institute of Taxation has called for a delay, saying that it is

“concerned that neither HMRC nor the private schools will be ready to implement the change in VAT liability effectively”.

In order to meet the mid-term deadline, HMRC has to register the schools in just five working weeks—an issue that new clause 8 could address.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

Let me start by saying how deeply and genuinely grateful I am to the Secretary of State for Education for providing the money to rebuild Tiverton high school following a 20-year campaign. I also want to disassociate myself from some of the comments made by Conservative colleagues. Some of them were personalised and vituperative, and I do not wish to be associated with them. That said—

--- Later in debate ---

[Rachel Gilmour]

Blundell’s school is also in Tiverton. Would the hon. Member be surprised to hear that when canvassing in Tiverton, in areas that might be considered relatively poor, I met numerous grandparents who were saving money every month to help their children to pay for a better future for their own children at Blundell’s school, through bursaries?

[James Wild]

I entirely agree with that point. Families come together to help out, perhaps to fund a place for grandchildren to give them the best chance in life. We are not going to criticise people who make that choice, but unfortunately the Government are singling them out with their vindictive measure.

This change also represents a significant complication of the tax system. Even HMRC seems confused. The guidance on VAT registration for private schools has undergone seven technical updates since its publication, and there is confusion—as has been mentioned—about the meaning of “closely related supply”.

[Graham Stuart]

On the subject of confusion, my hon. Friend will have observed that the hon. Member for Calder Valley (Josh Fenton-Glynn) appears not to have noticed that VAT was removed from tampons on 1 January 2021 by the Conservative Government. Is my hon. Friend, like me, hopeful that the hon. Member—however ignorant he may be of changes in our tax law—may join us in the Lobby tonight to oppose this pernicious policy? That would be consistent with the views that he tried to espouse a little earlier.

[James Wild]

We can but hope that the hon. Member will join us in the Lobby tonight, and also that he will one day develop the attuned knowledge that my right hon. Friend has of the tax system and the changes that were introduced in the last Parliament.

Let me add that the Association of School and College Leaders has said that there is

“increased anxiety among school leaders”

who are having to deal with the change in the middle of the academic year.

This is the first time an education tax has been introduced, which is why we need to oppose it and review its impact. The Government’s very limited impact assessment estimates that 37,000 more pupils will come into the state sector, at a cost of £270 million a year. It also concedes that there will be a loss of places equivalent to the closure of 100 more independent schools over the next three years than would otherwise be predicted. That assessment is thin, and the Government’s consultation was flawed.

[Sir Oliver Dowden]

My hon. Friend is making an excellent speech. The Government’s impact assessment also assumes that the loss of places will be spread uniformly across the country, which will not be the case. In many constituencies, particularly those represented by Conservatives, a large number of students are at private schools, and the loss of those places will have a significant impact on local schools where there are not the places to absorb them.

--- Later in debate ---

[James Wild]

My right hon. Friend has his finger right on the pulse. The Government claim that there are plenty of places, but they are not in the areas where they will be needed. Members representing constituencies in Hertfordshire, Worcestershire and Buckinghamshire, for example, have already drawn attention to their concern about that.

The new education tax is damaging and unfair. We oppose it, and our new clause would ensure that the true consequences of this tax on aspiration become clear.

[Euan Stainbank (Falkirk) (Lab)]

I will try to confine my remarks to the subject of state education, because the scope of the debate has gone somewhat beyond what I have either the expertise or the time to discuss.

In view of the critical and urgent relevance of state education funding to the parents, pupils and other people of Falkirk, I support the removal of the VAT exemption on private school fees. When Labour entered government in July, we inherited dire public finances and broken public services, which required necessary decisions to be taken to renew the foundations of the country. The guiding principle of the tax decisions taken in the Budget was clear: those with the broadest shoulders should pay their fair share so that we could invest in our public services.

A critical part of investing in the future is investing in state education. I speak from experience as a former local councillor. Through no fault of the brilliant teachers and education officers who deliver state education, local authorities such as SNP-controlled Falkirk council have sought to reduce teacher numbers, close school swimming pools, cut additional support and even reduce valuable initiatives such as music lessons. This broader trend of council underfunding in Scotland, and throughout the United Kingdom, has left schools underfunded, newly qualified teaching posts scarcer and resources overstretched, and has left councils with very little room for manoeuvre. Tomorrow, at a meeting of Falkirk council, there will be a proposal on the table to cut learning hours across the Falkirk district, depriving a child educated in Falkirk of a year of learning time across his or her primary and secondary schooling journey, and leading to the lowest number of school hours anywhere in school. The Falkirk Labour group oppose that proposal, as do I, and they will vote for it to be taken off the table tomorrow.

In stark contrast to this crisis in our state education system, spending per pupil in private schools is nearly 90% higher than in the state sector as of 2022-23, and the gap between private school and state school spending per pupil has more than doubled since 2010. For all the chat about this measure leading to an unworkable hike in fees, its opponents must match their rhetoric with the fact that fees have soared, on average, by 55% in real terms since 2003 for those who choose to pay for their kids’ education. Lifting the VAT exemption on private school fees will raise £1.8 billion annually by 2029-30—funds that will, and should, go directly into state education. This is an essential funding stream that will help to relieve the financial pressures on local authorities’ education budgets, and it is being delivered by this UK Labour Government.

I welcome the Scottish Government’s commitment to spend all the consequential funding that will flow from this UK Labour Government’s decision on education, and I also welcome the tepid and understated support of SNP colleagues. I note that, again, no SNP Members are in the Chamber. It is predictable but disappointing that the Opposition say this measure sacrifices aspiration.

--- Later in debate ---

[Tulip Siddiq]

I have already given way once to the hon. Gentleman.

[James Wild]

We turn to the important issue of taxes on residential property, and another set of tax rises from this tax-raising Labour Government. I will speak to clauses 50 to 53, and new clauses 6 and 7. Over 14 years in government we delivered 2.5 million additional homes. Our manifesto pledge to build 1 million homes in the course of the last Parliament was met, and we delivered on our commitment to build the homes that people need for a more secure future. The Bill introduces measures that dampen the housing market, increase pressure on housing supply, and reduce labour mobility. The Government talk about helping renters, but experts warn that these measures could increase rents, and they do nothing for those who cannot afford to buy their own home.

[Noah Law]

Does the hon. Gentleman agree that reducing the prevalence of second homes is a crucial part of ensuring that people can afford to live and work in the communities they are from?

[James Wild]

Indeed, and representing an area with some of the most attractive coastline in the country, I certainly recognise and share those concerns. There has been warning that the measures could make that issue worse. People also need to be able to rent in those areas, and if local people who need to work where the jobs are have to move from long-term lets to short-term, that does nothing to help.

[Dr Luke Evans]

The point is valid. The Government are trying to get more properties for people to buy, but at the same time they are changing back the threshold for first-time buyers. Those first-time buyers will be stifled when they want to buy a house because they will have to pay more tax. Introducing both measures simultaneously seems to cause a rub. Does my hon. Friend agree?

[James Wild]

I do. This is just another example of the impact of the Bill. The impact assessments, such as they are, are incredibly thin and do not get into the detail of the measures and the complications that arise. They are, I would say, wholly inadequate. Under clauses 50 to 53, taxes on property purchases will, as the Minister said, go up by £310 million. Clauses 50 and 51 increase the rate for additional dwellings, such as buy-to-let and residential properties, from 3% to 5%. Nationwide estimates that that could bring extra costs of £4,000 on the purchase of a typical rental home. At least clause 52 ensures that if transactions have been substantially performed before the increases come in, no additional tax will be charged. Clause 53 amends the single rate on purchases by companies of dwellings for more than £500,000. Let us not forget that the Government have also chosen not to renew the nil-rate stamp duty threshold, which is currently £250,000 but will halve to £125,000—I do not think the Economic Secretary to the Treasury mentioned that.

As I said, experts have warned that the changes could have damaging effects on the rental market, making it less attractive to provide homes for private rent; rents could increase as a result of the limited supply. Every hon. Member will know from their constituency the huge demand for rental properties. According to Zoopla, on average around 21 people are chasing every property that is put up for rent. This tax will do nothing to encourage the supply of new, decent, rented housing.

[Kit Malthouse]

I hope that the shadow Minister shares my surprise at the Minister agreeing to pay the stamp duty retrospectively on her flat. Let us hope that the cheque makes its way to HMRC. When stamp duty reaches penal rates, it not only diverts people away from becoming landlords, but means they may operate differently. Is there not a strong possibility that we might see a large number of properties in places such as London owned by foreign corporations that are domiciled in other jurisdictions? Transfer of those properties could take place by transferring the corporation’s ownership in the Isle of Man or the Caymans or somewhere like that. That would mean that no stamp duty was payable at all on the transfer of the property. If that proliferated, we might find that large numbers of properties in the UK were owned by overseas entities, precisely because of the penal taxation here.

[James Wild]

My right hon. Friend makes an interesting point, and I bow to his knowledge of the situation in London, which is far greater than mine. Our new clauses are about reviewing the impact of the measure, partly so that if we saw such activity, which would go against the Government’s objectives and weaken the rental market, action could be taken. I hope that the Government will look at the evidence.

The Institute for Fiscal Studies has also criticised the change, stating:

“It again reduces transactions, increases again the bias in favour of owner occupation, and against renting, and at least part of the consequence will be to reduce the supply of rental housing and so increase rents.”

The National Residential Landlords Association has said that the tax changes in the Budget will make it less attractive to provide homes for private rent. It has warned that the measure will exacerbate the shortfall that Members will all be familiar with, and an assessment it commissioned a couple of years ago showed that increasing the rate to 5% could lead to the loss of more than 500,000 private rented homes over 10 years.

[Josh Fenton-Glynn]

Norfolk county council, which covers the area that the shadow Minister represents, has a housing waiting list of 1,341 homes sought. That is up 400 since he was elected in 2019. If the new clauses are about reviewing the impact of actions, perhaps he could take a moment to review the impact of the last Government’s actions, which saw the housing waiting list increase in his constituency?

[James Wild]

I am grateful for the hon. Member’s interest in my constituency. He intervened on me earlier to talk about education in North West Norfolk.

[Josh Fenton-Glynn]

The numbers are from the House of Commons Library.

[James Wild]

I do not doubt the figures. I simply note that King’s Lynn and West Norfolk borough council, which is the council for my constituency, has met the housing need target it was set. Thousands of homes are being built in and around King’s Lynn, which will be a mixture of tenures—to rent and to buy. One of the big blockers is that the Government have not yet approved schemes that the previous Government were committed to—schemes for the roads and infrastructure needed to bring that housing online. I hope that the Minister will take that up with her colleagues, because if the Government are to meet their target of building 1.5 million homes, they need councils to deliver. That means funding the infrastructure. I am grateful to the hon. Member for enabling me to make that point.

We are concerned about the increased cost of private rent and a decreasing supply of rental properties due to this latest tax increase. New clause 6 would require the Chancellor to publish an assessment of the impact of the increased stamp duty rates on the private rental sector within six months of the Bill passing into law.

[Dr Evans]

It is important to have transparency. It is not controversial to say that we need more houses—Members on both sides of the House agree—but take Leicester, where new housing targets have been reduced by 31%. We will now have an exodus of people offering rental residences. Will that not compound the problem acutely? We will not have the number of homes. The target has dropped in Leicester, but we will have more people needing to rent. The homelessness rate could go up, because people are leaving the market. The Government need to think carefully about that. The new clauses would give transparency on whether there is a problem.

[James Wild]

My hon. Friend draws attention to the unintended consequences of the stamp duty measure. I wonder how much involvement the Deputy Prime Minister and her Department had in drawing it up, or whether it was drawn up in the Treasury just to get a line into the Red Book and fill out the Government’s spending plans.

New clause 7 would require the Chancellor to publish an assessment of the impact that increased rates for additional dwellings are having on the housing market as a whole, and in particular on the demand for homes in England and Northern Ireland. Pegasus Insight has reported that nearly 20% of landlords across England and Wales sold homes in the last 12 months, significantly more than the 8% who purchased properties in that period. We see increased rents as a result. The latest figures from the Office for National Statistics show average UK private rents increasing by 8.7% in the 12 months to October. When the cost of living is high and rents are increasing, why are the Government taking steps that could make matters worse for our constituents?

On the point made by the hon. Member for St Austell and Newquay (Noah Law), clauses 50 to 53 may increase the chance of properties switching from long-term to short-term lets, which is a concern in my constituency. We need a balance of properties—some that people can rent and those that people can buy—so that people can live and work in the area where they grew up.

The Government’s stated policy objective for the stamp duty measures is to disincentivise the acquisition of buy-to-let properties and free up housing stock for main and first-time buyers, but nowhere in their impact note is the private rental sector mentioned. My right hon. Friend the Member for North West Hampshire (Kit Malthouse) asked the Minister what impact she thought the changes could have, and what modelling had been done of the effect on the rental market; I am afraid that answer came there none. Hopefully she will have had some inspiration by the time she winds up the debate and can give some answers, because the impact note does not have any information on that point. I find that surprising. Once again, that is why it is essential that we review these measures to see what the real-world impact is on the rental market. Our new clauses would enable us to do just that.

Encouraging home ownership and helping first-time buyers to get on the housing ladder is the right thing to do. However, that should not come at the expense of the private rental sector. As the shadow Chancellor, my right hon. Friend the Member for Central Devon (Mel Stride), put it in the Budget debate, activity in the housing market will be dampened and people will be discouraged from downsizing, which will put pressure on housing supply and labour mobility.

I am proud that while in government, the Conservatives helped more people get on to the housing ladder through schemes such as First Homes, shared ownership, right to buy and the lifetime individual savings account, and doubled the threshold for stamp duty. However, with only one in eight renters able to afford to purchase a home in the area where they live, renting is the only viable option for many. What is the Minister’s response to those who say that increasing stamp duty will reduce the supply of rental housing, and that rents will increase as a result?

I must briefly address the structural tax issues that the clauses create. I am grateful to the Chartered Institute of Taxation for the discussions that we have had. There is now a top residential rate of 19%, compared with a top rate of 5% for purchase of a non-residential or mixed property, so taxpayers may be incentivised to argue that the property that they are buying is non-residential or mixed-use—for example, it may have a paddock that they would use—to take advantage of the lower rate. A number of those cases have come to the first-tier tribunal and higher court. I would be grateful if the Minister addressed the risk that she sees there, and told us what HMRC has advised her and whether increased compliance costs will arise as a result of the divergence.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The hon. Gentleman has made an interesting point about people who may wish to claim that they have a paddock at the back of their house. Does he have any numbers to back that up? If he does, I would be really interested to know them. I am racking my brains, thinking of how many homes in Stoke-on-Trent Central could claim that they had a paddock that allows mixed-use tenure. He may have that information to hand; I do not.

[James Wild]

I am sure that Stoke-on-Trent is a great place, but not everyone lives there. As I said, a number of such cases have gone to the first-tier tribunal, so the hon. Member can probably look that information up or ask the House of Commons Library. The point is that none of that information is in the impact note that the Government have provided on a measure that they are bringing forward. The onus is on the Government to give the information to Parliament, and they have failed to do so in this case.

We share the concerns of experts about the impact that the increases will have on the private rental sector and the wider housing market. The Government have ambitious plans for house building, which we have mentioned, but debates on their proposed changes to the planning system to enable that are for another day. This afternoon, our focus is on whether people looking to rent will find that harder to do as a result of the measures that the Government are introducing, with reduced supply and higher costs. Our new clauses would make the Government publish an assessment so that we can tell.

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

I declare that I am a landlord, and I happily paid the 3% stamp duty that I was required to pay, introduced by the Conservatives when they were in government.

For too long the dream of homeownership has been unachievable for young people in my constituency. Properties are snapped up by landlords, and that is even more acutely felt in our coastal towns, where so many properties are locked up for large parts of the year and used as holiday homes, sometimes for only a few weeks.

Employer National Insurance Contributions

James Wild Excerpts

Wednesday 4th December 2024 Commons Chamber

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

It is a pleasure to close this debate on behalf of His Majesty’s loyal Opposition. I recognise that many Members have not been able to speak because of the level of concern in the earlier debate about Labour’s family farm tax.

In this debate, we have heard talk of difficult decisions, but Labour Members seem to be in denial about the real-world impact of those decisions on the organisations in their constituencies that have to make difficult decisions about wages or jobs. Today, Labour Members have an opportunity to stand with their constituents.

This debate is fundamentally about trust and the promises made by the Labour party. At the election, Labour’s manifesto promised:

“Labour will not increase taxes on working people, which is why we will not increase National Insurance”.

It was clear to everyone what that meant. The IFS said that this measure would be a “straightforward breach” of the Labour manifesto, but Labour then chose to break its promise by introducing this £25 billion a year jobs tax.

Once again, we have heard the tired claims blaming a fantasy £22 billion black hole—claims debunked by the independent OBR, as well as by my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez), who pointed out that the Government’s £1 billion pay deals for their union paymasters created a lot of that hole. The voters are not fooled, and they know what Labour said and did: it broke its promise to the British people.

What has been the impact of this £25 billion jobs tax? Business confidence is plummeting, and output has already reduced for the first time in over a year. The Chief Secretary to the Treasury and Labour Members have again claimed that the impact of this measure is limited, but even in the very limited impact assessment he referred to, HMRC estimates that 940,000 businesses will lose out in net terms, with an average annual tax increase of £800 per employee. The average employer losing out will see its liabilities increase by £26,000 a year, and it is working people who will pay the price with lower wages, higher prices and fewer jobs.

Many hon. Members have spoken about the impact on charities and organisations in their constituencies. My thrill-seeking hon. Friend the Member for Hamble Valley (Paul Holmes), who I am glad is still in one piece, spoke about the hit to hospices that provide vital care, which will see higher costs amounting to tens of millions of pounds. Charities will face a bill that is £1.4 billion higher. Marie Curie alone will have a £3 million hit to its costs. The Royal College of General Practitioners has warned that the extra costs could force surgeries to make redundancies or close altogether. Adult social care providers will see a £2.8 billion hit in the next financial year.

Despite the warnings from hospices, care homes, dentists, nurseries, pharmacies and others, there has been cold comfort from the Minister. There has been no clarity on whether support will be provided—no clarity on when support might come, how much it might amount to or if it will come at all. As my hon. Friend the Member for Rutland and Stamford (Alicia Kearns) said, given the impacts on these groups, the Government should rethink their proposals.

Although 800 jobs a day were created under the Conservatives from 2010, Labour’s jobs tax is expected to see jobs lost and fewer jobs created. Bloomberg estimates that as many as 130,000 jobs could be lost, but perhaps most concerning is the impact on the lowest paid. The OBR estimates that 80% of the cost of these measures will be paid by reducing wages. Lowering the level at which employer NICs are levied, from £9,100 a year to £5,000 a year, will hurt part-time, female and younger workers in particular. The OBR expects this measure to raise £17.7 billion a year on average. No wonder the CBI has warned that two thirds of its members are reducing their plans to take on staff. The British Retail Consortium has also warned of a £2.3 billion hit, meaning that job losses are inevitable. Of course, this tax will also push up inflation. Tesco, Lidl and all the major retailers have said so—a more expensive weekly shop is the price of this measure.

We have heard today about the need for investment in public services, on which all Opposition Members agree. I am happy to highlight our record of record investment in the NHS and climbing up the international education league tables. That progress is now under threat from the Government’s proposals.

We would have made different choices from this tax-raising Budget. Our plans would have grown the economy faster—the OBR downgraded growth after the Budget. Our plans would have delivered £12 billion of welfare savings, but those plans were put in the deep freeze by the Labour party. We would have improved productivity in the public sector by getting back to pre-covid levels, saving £20 billion a year. Labour Members asked for our ideas, so there they are.

Some 4 million jobs were created under Conservative Governments from 2010 on. Youth unemployment was cut by 40%, 1 million more disabled people got into work and we had the fastest growing economy in the G7. By contrast, Labour is breaking promises made only a few months ago and choosing to put up taxes, despite the damage to the economy and to working people. The Chancellor’s pledge not to raise further taxes has dropped like a stone; we have seen this movie—they will be back for more. I urge hon. Members to support our motion.

Draft Scottish Rates of Income Tax (Consequential Amendments) Order 2024

James Wild Excerpts

Monday 2nd December 2024 General Committees

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

It is a pleasure to serve under your chairmanship, Sir Roger, and I am grateful to the Minister for her opening remarks and her brevity in setting out what the draft order does.

The new rates introduced by the Scottish Parliament mean that the higher income tax band is 42% and the Scottish advanced income tax rate is 45%. The order will avoid disparity, and we will not seek to divide the Committee—although that was tempting before the reinforcements turned up on the Government Benches. It is worth highlighting that the Scottish Parliament’s changes have made their tax system more complex; there are now six rates compared with three across the rest of the UK.

I will ask the Minister some questions, as we have all gathered here. What is the impact of deficiency relief payments on Exchequer revenues? How many taxpayers in Scotland will benefit—she referred to a small number—and what will the impact be on revenue? Given that the measures relate to changes from the beginning of this tax year in April, will she confirm that she will seek to bring in such provisions in response to changes more rapidly than the six months that this has taken?

In conclusion, although this order is needed due to the increased complexity of the Scottish Government, thankfully, these provisions actually simplify the effect in legislation.

Finance Bill

James Wild Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

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

It is a pleasure to respond to the debate on behalf of His Majesty’s loyal Opposition. It has been a good debate, with more than 20 Members contributing, but I am a little surprised that we did not hear more from Labour Members wanting to defend their first Budget for 14 years. Some have now appeared miraculously in the Chamber, but they were not here for the rest of the debate.

Let me start with the maiden speech from the hon. Member for South Derbyshire (Samantha Niblett). I join others in congratulating her on an excellent maiden speech. I was interested to hear about her tech background and the “Samantha spotting” map. She mentioned the influence of her daughter. Family is important in overcoming the instant loathing that some people can take to MPs, which she talked about. In my experience, it is not as bad as some might fear. [Interruption.] That is just me.

[Mel Stride]

You’re special.

[James Wild]

Thank you. We all appreciated the kind words from the hon. Member for South Derbyshire about Heather Wheeler’s work. I am sure that the hon. Lady will continue that manufacturing event with Rolls-Royce and the other world-class businesses in her constituency. I know from personal experience that she will enjoy taking part in the armed forces parliamentary scheme with the RAF.

There was a familiar theme in the speeches of other Government Members, which the Whips will have been pleased to hear, with lots about fixing the foundations and black holes, although the hon. Member for Macclesfield (Tim Roca)—I cannot see him at the moment—did concede that it was not a perfect Budget. Perhaps he has been taken away by the Whips to reflect.

I turn to Opposition Members’ speeches. I congratulate my hon. Friend the Member for Bognor Regis and Littlehampton (Alison Griffiths), who spoke powerfully about the impact of the Bill and the damaging impact of the Budget on high streets, hospitality and family firms in her constituency. My right hon. Friend the Member for Beverley and Holderness (Graham Stuart), in a masterly contribution, took us back in his time machine to the time when cast-iron promises were made. He focused on what is happening in reality and the importance of enterprise. He also highlighted that economic shocks may come, as they have done in the last few years, for example through covid and energy prices, and that the Chancellor may have already boxed herself in.

My right hon. Friend the Member for East Hampshire (Damian Hinds) displayed his considerable knowledge as a former Education Secretary. He talked about caring for 100% of pupils, and about the damaging impact that the education tax will have. There will be serious consequences for smaller schools, religious schools and parents and pupils involved with them. That theme was also drawn on by my hon. Friend the Member for Solihull West and Shirley (Dr Shastri-Hurst), who talked about his constituents and put us in the footsteps of the pupils who will be affected, as well as their parents.

My hon. Friend the Member for Gordon and Buchan (Harriet Cross) returned to her consistent theme of the real-world consequences for energy firms of the energy profits tax, the lost revenue, and the self-defeating nature of that measure. Finally, my hon. Friend and neighbour the Member for Broadland and Fakenham (Jerome Mayhew) focused on young people’s employment prospects, which will take a hit as a result of the Bill.

There were two very different takes in the debate. Unlike some, I would not claim to be an economist, but the OBR is full of them, and its verdict on the Budget and the Finance Bill is clear: they mean lower growth, higher inflation and higher borrowing. As the Shadow Chancellor, my right hon. Friend the Member for Central Devon (Mel Stride), put it, the British people put their trust in Labour to stay true to its promises. What did they get in response? A Finance Bill that is stuffed full of tax increases and breaks trust with the British people. It has £40 billion of annual tax rises. It is the biggest tax-raising Budget in modern history, and it is working families and businesses who will pay the price.

As we heard, the Government have said that their priority is growth. We will not let them forget that they inherited an economy growing at the fastest rate in the G7. Following the Budget, the OBR has downgraded its growth forecasts for the period by 0.7%. Inflation, which went up to 2.3% last week, is now expected to be higher in every year of the forecast period. The tax burden will increase to the highest level since records began. Borrowing will increase by an additional £140 billion over the Parliament. It is little wonder that business confidence is plummeting. The Labour party has consistently talked our economy down. The consequences are clear. The latest purchasing manager’s index output data shows that private sector activity has shrunk for the first time in more than a year. Businesses are rightly blaming the Chancellor and this anti-aspiration, anti-enterprise Government.

Let me turn to some of the parts of this broken promises Budget that were covered in the debate. First, the Bill deliberately undermines incentives for investors, entrepreneurs and people willing to take a risk and back enterprise. It hikes the main and lower rates of capital gains tax. The Treasury states that this measure alone will hit over a quarter of a million people, who will pay more tax as a result. It puts up tax rates on investor relief. It is little wonder that experts have warned that this Government risk stymieing the very investment that they seek to stimulate.

Secondly, the Bill continues the fundamentalism of the Government’s energy policy, which fails to put our energy security first. It will increase the energy profits levy to 38%, bringing the headline rate on oil and gas activities to 78%. The Exchequer Secretary could not name a country that had a higher rate. I am sure that Denis Healey would approve. It extends the rate by a year and removes investment allowances. On the real-world consequences, Offshore Energies UK has said that the hike will choke off investment and put 35,000 jobs at risk. We should be maximising our home-grown energy, not undermining domestic production and relying on imports that have a higher carbon footprint.

Having highlighted the Government’s broken promises, I turn to a single promise that they are actually keeping, unfortunately—the education tax. For some who do not seem to understand, the Labour party is not ending a relief, but bringing in a new tax. It is a vindictive tax, being imposed partway through the academic year, deliberately designed to disrupt the education of thousands of children. Putting VAT on independent schools will particularly hurt parents on modest incomes who choose to save and send their children to a school that they think is best for them. More than 100,000 children with special needs who are without an education, health and care plan, and are in independent schools, will be hit by this charge—something that Government Members who are not in their place at the moment did not seem to understand, but really should. This is an attack on aspiration, pure and simple, and we oppose it.

Other hon. Members have referred to the family farm tax. Next week, every Member will have the opportunity to vote and show whether they stand with their farmers or with Labour’s family farm tax, which will do so much damage to our countryside and food security.

As I mentioned, the consistent theme in this debate from Government Members has been blaming a fantasy black hole for this tax-increasing Bill. Those claims were thoroughly debunked by the OBR, and by the shadow Chancellor in his opening remarks. Before the election, the Chancellor said that she would not pretend to have not known the state of public finances in order to justify tax rises. Then she did just that. Let us hope that she meant what she said to the Treasury Committee on 6 November:

“We have now set the envelope for spending for this Parliament, and we are not going to be coming back with more tax increases or, indeed, with more borrowing.”

There we have it. Read her lips: no more tax increases. That was the commitment, not to the Confederation of British Industry, but to this House; but at Prime Minister’s questions today, the Prime Minister failed to repeat that pledge. He hung the Chancellor out to dry. If the Chancellor breaks that promise, how can she credibly continue in post?

Labour inherited the fastest growing economy in the G7, inflation at target, unemployment halved and the deficit halved. Labour Members may not like it, but it is true. [Interruption.] It is absolutely true. The measures in the Bill do not boost growth but target working people, pupils and parents, small businesses, and the wealth creators we need to grow the economy. Many Government Members have loyally clung to the idea that the Government are fixing the foundations of the economy. Not many would agree—not Tesco, Lidl or the other retailers who have warned that the £25-billion-a-year jobs tax will mean job losses and people’s weekly food shop going up; not the two thirds of firms who say that they will scale back on taking on new people; not the pubs, bars, restaurants and hospitality sector, which is hit by an extra £1 billion of costs.

The Prime Minister has found someone who agrees with him, although he did have to go to Rio to do so. However, while President Xi is so well practised in parroting meaningless slogans that he could be a Labour MP, the British public and British businesses are not buying it. They know that this Government do not back enterprise and do not keep their promises. The difference could not be clearer: we stand with working people, people taking a risk to start businesses and take people on, and people investing in companies. Unlike the Labour party, we are on their side. I urge Members to support our amendment tonight.

Oral Answers to Questions

James Wild Excerpts

Tuesday 29th October 2024 Commons Chamber

[Tulip Siddiq]

As my hon. Friend rightly says, we identified advanced manufacturing as a growth-driving sector in the recently published industrial strategy Green Paper. I know how important manufacturing centres such as the Very Light Rail National Innovation Centre are to Dudley and the UK economy. We are committed to supporting advanced manufacturing through the industrial strategy, which, alongside sector plans, will be developed in partnership with businesses and stakeholders ahead of publication in spring 2025. I hope that she will contribute to that. Jobs will be at the heart of our industrial strategy, backed by employment rights that are fit for a modern economy.

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

Investing in transport infrastructure will boost productivity, so is the Chancellor listening to Members from across the east of England and across the House, and will she back the Ely junction rail upgrade, which delivers benefits of £5 for every £1 invested?

[Tulip Siddiq]

As the hon. Member will know, the Chancellor listens carefully to everything that is said in the Chamber, and I am sure that she has noted what he has said.

HMRC Self-Assessment Helpline

James Wild Excerpts

Wednesday 20th March 2024 Commons Chamber

[Nigel Huddleston]

I give the right hon. Gentleman an assurance on the latter point. As I have outlined several times today, I think we can all recognise that the move to digital, where appropriate, will relieve the burden on the people answering telephone calls and on some other services, allowing them to deliver precisely the end goal that he describes. Simplifying the tax system is a goal of Government policy. I gave an example of people on high incomes with relatively simple tax affairs—those who pay through PAYE, for example—and we are trying to remove as many of those people as possible from self-assessment. I completely understand the right hon. Gentleman’s points.

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

Although decisions on individual tax cases are rightly managed independently by HMRC, political and public pressure saw this ridiculous decision squashed. What steps will Ministers take to improve the accountability and performance of HMRC?

[Nigel Huddleston]

There are a variety of channels and tools, including my ministerial oversight. The Treasury Select Committee and other bodies also play an important part. I am not suggesting in any way, shape or form that I am removing myself from responsibility for HMRC, as I have ministerial oversight. If colleagues have concerns, they can always raise them with me. It is my job to raise those concerns with HMRC.

Budget Resolutions

James Wild Excerpts

Tuesday 12th March 2024 Commons Chamber

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

I think we have probably all learned a bit more about Rochdale, and I am sure that we all at least agree with the comments of the hon. Member for Rochdale (George Galloway) about his predecessor, Tony Lloyd.

When I asked my constituents what they wanted, ahead of the Budget, their answers were very clear: taxes cut, help for small businesses, action to grow the economy, and support for our NHS. This Budget delivered against their priorities, despite the challenge the economy has faced in the last few years from the pandemic and the illegal war in Ukraine.

As a Conservative, I want lower taxes, and I want people to keep more of the money they earn. Now that there is the opportunity to reduce taxes, I welcome the further cut in national insurance, which will benefit 29 million people across the country. It will mean that a nurse’s income rises by over £1,000. A typical teacher will be better off by £1,200, and a self-employed plumber by £846. Importantly, given that we have vacancies in the economy, the measures are predicted to get the equivalent of a further 220,000 people into work; that will give more people the benefits of a job, and help to grow our economy.

Although inflation continues to fall and the target of halving it has been more than met, there is rightly further support with the cost of living. In my rural constituency of North West Norfolk, driving is a necessity, not a luxury. Maintaining the 5p cut to fuel duty and freezing rates for the 14th year in a row will help drivers as they fill up. In April, the national living wage will increase by almost 10%. That comes alongside a boost to support for private rents for those on low incomes. From talking to constituents ahead of the Budget, I know how important the household support fund has been in helping people across Norfolk. I argued for its continuation, and I am delighted that the Chancellor has provided an extra £500 million of targeted support to help with essentials, including food and energy.

In earlier speeches, it has been suggested that pensioners have been forgotten by this Government. Let’s just correct that, shall we? Last year, the state pension was increased by 10.1%. In April, protected by the triple lock introduced by this Government, it will increase by 8.5%. Inflation is set to near its target of 2% in only a few months’ time. That represents a boost of £900 for pensioners. In addition, nearly 12 million fuel payments and pensioner cost of living payments are being made this winter to protect the most vulnerable. There is also pension credit. I have encouraged all my constituents and others to check whether they are eligible for it, and we have seen a big uptake as a result. Pensioners can be reassured that the Government have their back, and we will continue to provide dignity for them in retirement.

Reducing tax is also important. My hon. Friend the Member for Loughborough (Jane Hunt) and I—and a number of other Members, it would appear—wanted an increase in the VAT threshold for small firms. The threshold is a barrier to growth, and having talked to companies in my constituency, I know that they were closing their doors to avoid going over the threshold. That issue is estimated to affect about 44,000 firms bunching just below the threshold, so increasing it to £90,000 a year will help more businesses, and it means that we have the highest threshold in Europe.

On changes to furnished holiday lets, which I am sure hon. Friends from Cornwall will come on to, it is important that we get the detail right, so that we support local people who wish to buy and rent homes, but also continue to support our leisure, hospitality and tourism businesses. Growing such businesses and the economy means investing in places, and the £20 million of additional funding for King’s Lynn is very welcome. It will support projects to boost the high street, improve transport and connectivity, and boost heritage and regeneration. That comes on top of the £50 million of regeneration funding already secured through the town deal and the levelling-up fund. That is a further commitment by this Conservative Government to creating more opportunities in Lynn and across west Norfolk.

As well as reducing taxes, we need to cut regulation. Since 2010, we have had a record of success in removing much of the thicket that was introduced by the Labour party when it used regulation as a proxy for taxation to control businesses. While we are talking about making our economy more productive, there is a need for a renewed focus on regulation to ensure that it promotes growth, competition and innovation. As a member of the Regulatory Reform Group—founded by my hon. Friend the Economic Secretary to the Treasury, who has just left his place—I was pleased to see the focus in the Budget on this agenda. Extending the growth duty to Ofcom, Ofwat and Ofgem, and greater benchmarking to hold regulators to account and improve performance, will benefit us all. Companies and wealth creators should be well aware that the Labour party has plans to go in a different direction. It will put in place many measures that will frustrate them, produce more inflexibility in our labour market, and make it harder for them to grow and take on staff.

Finally, public sector productivity may seem like a very dry topic, but getting back to pre-covid levels would save taxpayers £20 billion a year. With health taking an increasing share of our national wealth, we need to make the NHS far more efficient, and the £3.4 billion being invested in technology and other reforms will help achieve that. By embedding those gains across the wider public sector, we can control the size of the state. Simply spending more and more money—ultimately, that has to be paid for by taxes and borrowing, as the Labour party proposes—is unsustainable, and will not lead to better public services.

To conclude, this Budget delivers tax cuts for working people, helps motorists to keep costs down, boosts small businesses, supports families, and invests in the NHS and in improving public services. It is a Conservative Budget that I am proud to support.

[Several hon. Members rose—]