Business and the Economy

Jerome Mayhew Excerpts

Wednesday 21st May 2025 Commons Chamber

[Andrew Griffith]

My hon. Friend makes an incredibly important point. I believe that all of us come to this House to try to do our best and to grow the economy, but any Government faced with that terrible metric about the failure rate and formation rate of businesses would be acting immediately, with haste, and reversing so many of the measures. The choices this Government have made have delivered precisely the outcome my hon. Friend describes.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

Pubs are the lifeblood of communities, particularly in rural constituencies such as mine in Broadland and Fakenham. People could perhaps make an argument for individual tax rises, but it is the combination of three in particular that are hitting pubs so badly. It is the increase in the minimum wage—the Government are very good at increasing prices for everyone else, but not themselves—as well as the removal of business rates relief for hospitality and leisure, and the rise in national insurance contributions for employers. The latter point is not so much about the overall percentage rise, but the reduction in the threshold from £9,200 to £5,000, which particularly impacts those who employ part-time staff and those on low wages. It is a triple whammy on pubs. Is that why so many are closing across the country?

[Andrew Griffith]

My hon. Friend makes exactly the right point about that triple whammy, and about the cumulative effect of changes and the consequences—potentially unintended—that manifest themselves most acutely in industries such as UK hospitality and retail, which have the great virtue, among many others, of contributing to the character of the places in which we live and giving so many young people their first step on the ladder of opportunity and their first experience of work. Without those businesses, it will be inexorably harder for young people. That is one reason that it is of such great concern that the number of people employed on payrolls under this Government has already fallen by 100,000, with a faster rate of decline in the first quarter of this year. This Government are perfectly positioned to achieve the unbroken track record of every Labour Government in modern history of leaving office with unemployment higher than when they started.

[Andrew Griffith]

My right hon. Friend is exactly right. He will correct me if I am wrong, but as I understand it, one millionaire is leaving our wonderful country every 45 minutes. That is to say nothing of a generation of young people who are yet to have their opportunity. How tragic it would be to think that young people see greater opportunity—notwithstanding their birthright of being born in this wonderful country—in other parts of the world than is present on their doorstep, in their communities and in the heart of their families.

It has to be said that this Government’s combination of actions are sending a clear and regrettable message to those who seek to create wealth: “Don’t bother. Don’t even try.” This socialist Government do not want people to succeed. There could be no better example of that than the vindictive family business and family farm death tax, which will carve up successful businesses as and when they are handed down to the next generation.

Why do we think this vindictive policy exists? One of the more benign interpretations, to be charitable, is simply the dearth of business experience in the Labour Cabinet. It has to be said, though, that the Cabinet members are world-class in their understanding of, and potential avarice in relation to, trade unions. Perhaps that is why the Secretary of State, who has not deigned to be here with us today, is currently undertaking the most expensive work experience placement in history at taxpayers’ expense at British Steel in Scunthorpe.

It is not just that this Government do not understand the mechanics of business; they do not understand and value the principle of business. Running or investing in a business at its core is a profound act of human courage—the triumph of optimism over inertia, and a mindset of someone solving problems themselves rather than waiting for permission from others. It is about embracing risk knowing that there are no guarantees, no bail-outs and that no one is coming to the rescue. When enterprise succeeds, such people create the wealth that funds our public services.

Every time a Minister dispenses money and largesse in Whitehall, as this Government are doing at record velocity, they can do so only because a founder, an entrepreneur, or a businessman or businesswoman, took that leap. It should be the Government’s job to get out of their way and to help the business builders, not the blockers, but this Labour Government understand none of that. Instead of leaving business to get on and flourish, they have erected a blockade of bureaucracy and taxes that they promised would never come. They have declared war on employers across this land from the ramparts of Westminster.

[Jerome Mayhew]

My hon. Friend will know that business confidence has plummeted since Labour came to power. Does he agree that one of the reasons it has plummeted is the loss of faith in this Government? Businesses were promised that their plans were fully costed and fully funded in advance and there would be no increased business taxes, but within 90 days the Government went back on that. How can business ever trust this Government again?

[Andrew Griffith]

My hon. Friend, who is himself a very distinguished and successful businessman, knows exactly the importance of that intangible quality of confidence that the Government have your back and you will not wake up in the morning and be hit with a £25 billion jobs tax—on which subject there was not one word, not one syllable, in the Labour party manifesto. We toured the studios jousting with Labour Members and issuing warnings, but we were met with a repeated barrage of denials in respect of their £25 billion jobs tax. [Interruption.] The Ministers are chuntering, and there is probably a fair amount of chuntering to do if they have to explain an inability to balance the public finances along with an attempt to do so by means of a set of vindictive and arithmetically incorrect taxes on business.

We can move on from tax. That is just one of the many barrages faced by businesses that are sapping confidence and producing some of the very worrying statistics that we are seeing. We could, for instance, move on to the “Unemployment Rights Bill”, which is an egregious example of red tape and state intervention and overreach. At this point Labour Members are normally uncharacteristically quiet, because they are aided and abetted to the tune of £31 million by the trade unions.

The Bill shackles the hands of employers in pubs, bars, garden centres, grocery stores, butchers, hairdressers —businesses rooted deep in our communities—with little clarity and no lead-in time. Seasonal work could be made impossible by the Bill. It is certain that compliance costs will rocket. There will be long delays for employment tribunal hearings; in some parts of the country, the wait for a hearing is already approaching 18 months. Even according to the Government’s own estimate, on top of every other measure, there will be a headwind cost for business of an unwanted £5 billion a year.

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[Andrew Griffith]

I hesitate to stray into the matter of fishing, which I suspect we will debate many times in the future, but I note that those on the other Government Benches next to us tabled an amendment, which has not been selected for debate but which seeks to shackle our small businesses further by having us reverse across a much broader range of topics than the pass that the Government already sold earlier this week, so that we become a taker of rules from Brussels, and our small businesses, entrepreneurs and founders are crushed by the red tape that would originate there.

[Jerome Mayhew]

Fishing is one sector, but there is a clause in the Employment Rights Bill that affects all businesses. At this point I should draw attention to my entry in the Register of Members’ Financial Interests, as a former entrepreneur who has employed well over 1,000 people in my time. The problem is that if day one employment rights are imposed for any hire, it will be a massive disincentive for businesses to take a chance and take on people who are more vulnerable: the young and the less well qualified. Why would a business take that chance if it risked being hauled up over day one employment rights?

[Andrew Griffith]

Once again, my hon. Friend has demonstrated his deep and real knowledge of business, having himself, in a past life, employed more than 1,000 people. One rather suspects that taking that risk, having that responsibility and shouldering that burden, moral and financial, is greater than the entire aggregate responsibility of Labour Members for hiring anyone. My hon. Friend has made the right point about who will end up on the receiving end of the higher unemployment. It will be the young, looking for their first opportunities, and it will be excluded and vulnerable groups on whom a benign employer would today take a chance—but not if that chance is likely to lead immediately to being at the back of an 18-month-long queue for an employment tribunal hearing.

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[Andrew Griffith]

I do indeed agree. We ought to confront how we have got here—I acknowledge that it has happened over a period of time—with so many young people unable to work, get an education or be in productive training. That is a headwind on the economy, and a moral failure of us all. The question that we should confront ourselves with is this: what are we doing each and every day in this place to give opportunities to 1 million young people and the 9 million others of working age who remain stubbornly on welfare, while improving our public finances and making the maximum use of the wonderful resources, education and skills of the British people, so that we can grow our economy and be the prosperous nation that we once again deserve to be?

[Jerome Mayhew]

My hon. Friend talks about the message of this Government, and just last week I spoke to a first-generation immigrant, who talked about the message for entrepreneurs in this country. She said, “If you can’t hand on more to the next generation through your own hard work, what’s the point?” She is right, isn’t she?

[Andrew Griffith]

She is right, and that is one of the chilling headwinds that anyone who wants to grow the economy, and anyone who serves in the wonderful Department for Business and Trade or our Treasury, should confront. We should be going back to officials and challenging exactly that. How can we achieve a culture vibe shift on growth and entrepreneurship? That is the best contribution that we could all make.

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[Andrew Griffith]

I am enormously glad, and we should be balanced, that we have found something that goes the other way. I am not sure if one can subsist entirely on a seed potato—it may have been tried historically, and not with enormous success—but I congratulate the hon. Member on the success of his seed potato industry.

To be charitable, we have found a rare example of the Government actually having the back of a business and supporting it, but would it not be wonderful if they could extend that to much larger sectors of the economy, such as financial and professional services, retail and hospitality industries and even our manufacturing industries, as they wrestle under the cosh of uncompetitive energy costs, so that a business in Birmingham, west midlands, will face an industrial energy cost four times higher than that of a competitor in Birmingham, Alabama?

[Jerome Mayhew]

Will my hon. Friend give way?

[Andrew Griffith]

My hon. Friend has made so many good points that I will of course give way again.

[Jerome Mayhew]

My hon. Friend is being enormously generous in giving way, and I am genuinely grateful. Labour parroted during Prime Minister’s questions that there has been growth of 0.7% in the first quarter of this year. Does my hon. Friend agree that, if we look into the figures, we see that a chunk of that is production rising by 1.1%? That is actually due to electricity, gas and water prices being raised, and the Government count that as economic growth.

[Andrew Griffith]

Most of us would put higher energy costs into the liability rather than the asset column of our economy. We are debating business, unemployment and the economy, and I hope the Minister will devote an ample proportion of his response to the measures this Government will take to remove the yoke of uncompetitively high energy costs, which is simply crushing so many British manufacturing businesses.

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[Gareth Thomas]

Those assessments were published in the Red Book at the time of the Budget. The right hon. Gentleman can do his own research and look those figures up.

Turning back to the international investment coming into our country and the support from business leaders for our measures, Iberdrola’s executive chairman said at the time of our international investment summit that

“the clear policy direction, stable regulatory frameworks and overall attractiveness of the UK”

have led the company to double its investments over the next few years, reaching up to £24 billion. We have seen more ringing endorsements of this Government’s approach since the summit. In April, the CEO of BlackRock, Larry Fink, praised our pro-growth agenda and said that investment in Britain is “undervalued”. He said that he has more confidence in the UK economy than he did a year ago. Meanwhile, the chief executive of JP Morgan, Jamie Dimon, has told the Financial Times that he backs this Government’s economic reforms, noting that there is much to like about the new Government’s pro-growth agenda. Our forthcoming industrial and trade strategies are further steps to support businesses and accelerate growth in the sectors of our economy with the most potential.

There has not been a strategy to help small businesses for more than a decade. The Conservatives cut support to small businesses to get into new markets. They cut support to help businesses to adopt new technologies and they failed to tackle the scandal of late payments from big businesses.

[Jerome Mayhew]

The Minister talks about growth and his pro-growth policy. In quarter 1, he had the unexpected growth of 0.7%. The UK Treasury’s April 2025 survey of independent forecasts assesses that the entire growth for the year is 0.8%. Does that mean that he is looking forward to 0.1% growth for the whole of the rest of the year? His policy is not working, is it?

[Gareth Thomas]

With due respect, the hon. Member is wrong. The OECD says that we will have the second fastest growing economy in the G7.

Let me come back to small businesses. Since taking office, we have sought to hardwire the views of small businesses into everything that we do. Together with the Federation of Small Businesses, we have announced robust measures to tackle late payments. Large companies will soon have to include their payment performance in their annual reports—a massive incentive to pay their suppliers more quickly. We have also launched our new fair payment code, overseen by the Small Business Commissioner. We intend to go even further, developing a strong package on late payments, including stricter maximum payment terms and strengthened powers for the Small Business Commissioner.

[Jerome Mayhew]

Will the Minister give way?

[Gareth Thomas]

Oh, go on then.

[Jerome Mayhew]

The Minister said that I was wrong. And, yes, it was the Treasury’s own survey, so perhaps it was wrong, but is the Bank of England wrong as well? It has a forecast of 0.75% growth for this year, and even the OBR has a forecast of just 1% growth. His growth policies are simply not working, are they?

[Gareth Thomas]

With due respect to the hon. Gentleman, he needs to track these things over a period of time. The Bank of England has revised the growth numbers up for this year, as a result of the measures that we have been taking.

As I said earlier, we have had to take some difficult decisions in the Budget to fill the £22 billion black hole left to us by the previous Government to tackle record NHS waiting lists, to invest in schools and to invest in our police. But we have been making headway to deliver on our manifesto pledge to reform business rates. One reason the Conservatives lost the confidence of the business community is that, time after time, they promised to reform business rates and never actually did. We are delivering lower tax rates for retail, hospitality and leisure properties from 2026-27. We are also scrapping the Conservative party’s policy of immunity for low-value shoplifting, and providing additional funding to crack down on the organised gangs who target retailers. We know that this has plagued businesses for years, with both staff and store owners feeling powerless. That changes now.

At the same time, we are reforming the British Business Bank to free up precious capital for businesses to expand. This includes our start-up loans and the growth guarantee scheme, so that, if people want to set up a new shop or business, the support is there to help them. It is why my Department launched a call for evidence on access to finance for SMEs last month, as part of our work on our upcoming small business strategy. All of this work is having a positive, tangible impact: the newest ONS statistics revealed that the number of businesses set up in this first quarter is up 2.8%, compared with quarter 1 last year.

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[Damian Hinds]

The hon. Lady makes a good point about small businesses, particularly rural small businesses, and I will talk about national insurance contributions and business rates, but let me come back to how taxes on businesses are ultimately taxes on people.

Some Labour Members might say that they do not mind a tax on business owners, because they are the capitalists and they can afford it, but we need to remember that the owners of businesses are a mixture of institutional owners—which, by the way, includes your mum’s pension fund—small business owners, who are quite often sole traders, and family businesses. If the owners are not affected, either the customers or the employees will be affected, and I am afraid the effect of the national insurance contributions rise will ultimately be felt by those two groups of people, and particularly by employees, through a mixture of wage suppression over time and possibly some job losses. The bigger effect will not be about job losses; it will be about jobs that are never created in the first place, particularly among the youngest people and those furthest from the labour market.

[Jerome Mayhew]

My right hon. Friend is making a good point. When the Government brought in the increased national insurance contribution for employers, they used sleight of hand, saying that it was not a tax on working people, but does he agree that the Office for Budget Responsibility’s assessment of the impact concluded that the overwhelming majority of that cost will be borne by the employees and not by this notional employer?

[Damian Hinds]

It will, and I repeat that it can only be one of those three groups. There will be some price increases, and those costs will be felt by customers and consumers, but all the indications are that the big effects will be felt in wage suppression and in employment, which will ultimately mean slower economic growth.

In the same way that taxes on business ultimately land on people, taxes that look like they are on people can sometimes have an effect on business. I want to talk briefly about two examples. The first is the family farm tax. This is clearly a desperately ill-conceived measure, although, to be fair to Labour Ministers, they probably did not realise at the time quite what they were doing. However, their Members of Parliament representing rural seats found out very quickly exactly what they were doing and the effect it would have.

There is an alternative proposal on the table, which we know has been put to the Treasury by representatives of the sector. As this brilliant Treasury Minister the Parliamentary Secretary to the Treasury, the hon. Member for Swansea West (Torsten Bell) will be winding up, I am sure—at least I hope—he will find it possible to share with the House the Treasury’s critique of that alternative proposal, the so-called clawback proposal, which would be much fairer, and tell us why the Government are rejecting it.

There has been quite a lot of debate in the House on the family farm tax, but somewhat less on the business property relief situation, which is not quite as acute in some ways, but there are a number of parallels and similarities. Business property relief was put in place to level the playing field for family-owned businesses and others, so that people could invest in their family-owned businesses, confident that they could pass it on, within the family, without incurring a tax that applies to no other business ownership model.

Typically, these businesses will not have large amounts of net cash or liquid assets that will allow them to settle the tax bill upon the demise of the owner, and there are no listed shares, so there is typically no market for those. There has to be a theoretical valuation, because the shares cannot be valued, and that figure is likely to be considerably higher than the amount that could be realised in the event of a sale. The relief was created specifically to stop family firms having to be broken up; however, the net effect of the changes is that a substantial number of firms in this situation will be bought up, either in whole or in part, by foreign owners or private equity. Is that really what a new Labour Government had in mind?

[Jerome Mayhew]

Labour used to agree with the point that my right hon. Friend makes. Am I right in saying that it was a Labour Government in 1976 that generated the policy of having a relief in the first place?

[Damian Hinds]

Forgive me, but I do not have the history at my fingertips. The relief has been recognised over the years, and has been looked at in the past by Treasury officials. I have been a Treasury Minister, and I know that they get presented with various things that could be done, but generally speaking, when many Ministers before you have found good reasons to keep a measure, it is a good idea to wonder what those reasons might be.

Overall, this Government’s changes to the business taxation regime will affect many sectors, but particularly those that are labour intensive. We can all name hospitality, retail and care as the three really big-volume employers in the country. In my constituency, I would also mention nurseries, pubs and hair and beauty businesses. Of course, there are sector-specific pressures. For nurseries, for example, the issue is whether the unit rate per child per hour is sufficient. Many of my nurseries say that it is simply not sufficient to cover their costs, at a time when entitlement to nursery care is increasing. In the hair sector, there has long been an issue about those who have created a business that has employees, and their ability to compete with others who are below the VAT threshold.

The confluence of four things that the new Government have done is creating a big headache. First of all, the national living wage going up to £12.21 is a good thing in and of itself. We absolutely support a rise in wages for people on lower wages; it is the fact that it is happening at the same time as all the other things that is causing the problem. I will not talk in detail about the national insurance contributions increase, because others have done so, but that will have an effect, particularly on part-time employees, and the Government ought also to acknowledge the gender differential effect of that, which we have heard little about.

Today I have heard two Labour MPs say that business rates have gone down for retail and hospitality businesses. One was the Minister. Try telling that to those businesses—

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[Damian Hinds]

I shall suitably dampen. At a time when the Government are changing the relief from 75% to 40%, try telling those businesses already facing the national insurance contributions increase and all the other cost increases that their bill is being reduced. Clearly, it is going up.

[Jerome Mayhew]

Will my right hon. Friend give way?

[Damian Hinds]

I am conscious that I have gone on for quite a while, and I want to wind up.

Fourthly, there is the Employment Rights Bill. On the face of it, who would not like something with that name? It sounds like a positive thing, but the point is the effect that it will have, particularly on seasonal businesses, which might otherwise take somebody on at Christmas or in the summer. Hospitality, travel and events businesses rely on doing that. The Bill will affect the national health service, which will have to deal for the first time with some of those considerations. It turns out that the national health service is a considerable user of zero-hour contracts—by the way, not for someone’s first job, but usually for their second—so that staffing can vary according to the demands of a hospital or clinic. The Minister is a labour—and a Labour—economist, so I would be interested to hear his comments on the shift that we are likely to see from permanent to temporary contracts, and the shift that we are already starting to see in companies that are moving from relying on contracted, salaried employees to relying on agency workers.

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[Dave Doogan]

I do agree; I would rather not agree, but I do agree. That is why I implore the Treasury Minister, who is in his place, to have whatever private conversations Ministers have in their Departments about things that they may have got wrong. They cannot U-turn or row back on everything, but honestly, agricultural property relief and business property relief is an absolute landmine for businesses to be pulled across by this Government. He does not even have to address it in his summing up; he can just go back and quietly look at it again and have a review—kick it into the long grass at least.

I want to speak briefly on quantitative tightening by the Bank of England; I probably will not have too many supporters in the Chamber on this issue, but no change there. I have raised this matter a couple of times with the Chancellor and she talks about all manner of things in response, none of which are quantitative tightening. The over-zealous nature of the Bank of England’s disposing of Government bonds is hugely costly to the Exchequer. There is no need for the rate of quantitative tightening that the central bank of the UK is undertaking. It is not replicated by other central banks. Even if the Bank was to go to a passive model of quantitative tightening that would have substantial, multibillion-pound savings for the Exchequer, at a time when the Chancellor returning from China was getting excited about £600 million for the whole UK economy over five years; £600 million is not even the annual budget of my local health board in Angus and Perthshire Glens. If those types of numbers are important to the Chancellor, the total quantitative tightening cost of £45 billion since 2022 should really be nearer the top of her red box for her attention.

[Jerome Mayhew]

I was going to point out to the hon. Member the size of the sum involved but he went on to mention it himself. This is translating a theoretical loss into a real one guaranteed by the Treasury with taxpayers’ money, so I think the hon. Member is definitely on to something.

[Dave Doogan]

I thank the hon. Gentleman for his reassurance, particularly as I actively did not anticipate any reassurance.

Total costs for quantitative tightening are predicted to be in the region of £130 billion, all borne by the taxpayer of the United Kingdom. The one relevant thing the Chancellor did say to me when I raised this with her during Treasury questions was that she highly values the operational independence of the Bank of England, and so do I, but that does not mean she cannot chat to them about what is patently unnecessary and extremely expensive to the public purse.

Finally, we see a very unsavoury lurch to the right from a Labour Government on immigration. I will not rake over those coals but it is clear that the Prime Minister regrets some of his more florid language on immigration, and the Chancellor has provided no costings and no analysis of this dangerous policy that has been dreamt up on the back of a fag packet. Scotland has a declining birth rate, as do many other parts of the United Kingdom. We actively need immigration. We need it for our care sector, for our hospitality sector, for our agricultural sector and for our energy sector. It is not just low skilled seasonal work that we require, but all manner of people to come and work in our broad and diverse economy. In Scotland we have no idea why we have been dragged down this route—actually we know fine well why we have been dragged down it—but it is hugely damaging, again, for a Government whose stated ambition is growth, and choking off the labour component from the economy is really not consensual.

This relates to the whole debacle on the EU. I heard the Chancellor say the other day that there is no going back on Brexit and there will be no regulatory alignment and no free movement of people and they will honour the vote of the people—not the vote of the Scottish people, let me add—and Brexit is water under the bridge. Well, it is not water under the bridge, or rather in so far as it is water under the bridge it is a pool of stagnant, rancid water that refuses to shift its acrid whiff from across society in Scotland and elsewhere.

I heard a Lib Dem getting all doe-eyed earlier about seed potatoes; and he was right. Seed potatoes are very important in my economy, but I remember when a Lib Dem would give a full-throated endorsement to membership of the European Union, rather than doffing their cap to a Labour Government for frittering around the edges. This is frittering around the edges, and it has come at a tremendous cost to the Scottish fishing industry. Some 70% of the revenue from aquaculture and fishing in the United Kingdom comes from Scotland, and the Scottish aquaculture and fishing industry is 50 times greater a part of the Scottish economy than it is of the UK economy, yet no discussion was had with the Scottish Government or sector ahead of that, just as no discussion was had in 1970 when the Scottish fishing industry was thrown under a bus at that stage as well.

The Minister might say, “Well, you can’t have it both ways, you SNP type: you can’t say you want to be back in the EU and then lament the loss of your fishing rights to EU boats”—the Minister can score that point out now. Although of course we want to be back in the European Union with all our other European nations, and we would have to take some of that pain on fishing, we would get the gain to go with it. What Labour have foisted on Scotland is all the pain of conceding our fishing grounds to European boats and none of the gain of being in the European Union, and nothing they have agreed this week is remotely like being back in the European Union.

There is an ill wind blowing through the political landscape on these islands, and the actions of this Labour Government are simply making matters worse.

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[Neil O’Brien]

Labour Members who were not in the House at the time—it is before their time—will not remember that the deficit we inherited in 2010 was twice the size of the one that Labour has inherited, and the structural deficit was twice as big. Indeed, we went into the global recession—the financial crisis—with the largest structural deficit in our peacetime history. That is the record of the last Labour Government.

We had had a recession that was the size of the 1980s recession and the 1990s recession put together, and when I say we were cleaning up the mess—I am afraid I am going to use a generation X metaphor—I mean it was like one of those enormous brontosaurus poops in the film “Jurassic Park”. We were cleaning up a big mess, and it took us a long time. We had to make some difficult decisions, particularly during the coalition years, to clean that up. Members have referred to my peroration, but I am afraid I am only getting started. [Interruption.] The House groans at the prospect.

[Jerome Mayhew]

My hon. Friend talks about the mess that the coalition Government, as it then was, inherited in 2010. Does he recall that youth unemployment was running at about 10%? The coalition and then the Conservative Government were successful in rebuilding the nation’s finances. Painful as those decisions were, at the same time that Government created 800 jobs every single day from 2010 to 2024.

[Neil O’Brien]

We inherited a situation where unemployment had doubled. One of the great achievements of that Government was to halve it again. This is confidential, but the first time I met Nick Clegg, I was accompanied by a gentleman wearing a chicken suit—this is the kind of serious economic analysis I am famed for—but I have to say that Nick Clegg was not a chicken when it came to making difficult decisions to clean up that huge mess; the Liberal Democrats made some difficult decisions along with us to try to do that.

I have talked about the increase to national insurance contributions, and I will return to that in a little more detail. We have also talked about APR and BPR. One of the most striking developments in my constituency, though, has been the effect of the doubling of business rates for the hospitality, leisure and retail sectors through the ending of the relief that we introduced—an effect that is very visible, particularly in the high streets such as the Parade in Oadby, and in Wigston and South Wigston. The situation is also bad in Market Harborough. The problem is compounded by some local decisions—the council has increased parking charges, which was a big mistake—but it is the ending of those reliefs and the huge increase in national insurance contributions that have been especially bad for our local high streets, and for pubs in particular.

When I was talking to a brilliant pub landlady who owns several pubs in my area, she said, “We hoped so much that this new Government would be a morale-lifter and there would be a boost and a feel-good factor, but now we have a feel-bad factor.” I often drive past a number of pubs that have recently closed because of the confluence of the ending of the reliefs, the higher energy costs, and a number of the tax measures that the Government have introduced. It is desperately sad to see all those closed pubs that used to be huge centres of community life. When people lose their local pub, they lose a piece of their social fabric as well. Pubs are important local businesses, especially in rural areas.

We have had the tax increases, and we have also had the increase in energy costs as a result of everything that the Secretary of State for Energy Security and Net Zero is doing. We were promised a £300 reduction in our energy bills but instead we have seen a £281 increase, and that can only rise as the Government do all sorts of ill-advised things to hit their ill-advised target of fully decarbonising electricity by the end of the Parliament—something that will massively increase the costs of going green in comparison with the counterfactual.

At the same time, we have seen a massive increase in employment red tape. One of the bright spots in the UK economy over the last 30 years has been a relatively liberal labour market, but there has now been an extraordinary moment when all the big five business groups in the country came together for the first time—they have never done this before—to criticise the Employment Rights Bill. A Member on the Government Benches said earlier that it was all right because some Cambridge professor had said it was fine; on the other hand, every single business in the UK is saying it is a disaster. The fact that Members are accepting that kind of donnish approach to managing the economy, rather than listening to the views of the people who actually create jobs and drive our economy, really says something about the contemporary Labour party. This is no joking matter, though; it is a serious issue and a major economic detriment.

At a higher level, the wealth creators have been affected: the non-dom changes, some of which have already been rowed back on and more of which may be rowed back on in future, have driven away people who have a great deal to give to our economy. There are plenty of reasons for this picture of economic underperformance and gloom.

I would not mind so much if all the tax increases, leading to a record tax burden, had been imposed against a backdrop where the Government were bringing our debt and deficit under control. Perhaps the Minister will be able to correct me, as his knowledge of fiscal factors may be greater than mine, but I cannot recall any fiscal event when the Government have presented a Budget and at the end of the forecast period, public sector net debt was still rising. There have been plenty of fiscal events when debt has risen, because of events such as the pandemic or the war in Ukraine, but they have all shown a path towards falling debt. This is the first time I have seen a chart—I think it is chart 7.3 in the Office for Budget Responsibility’s economic and fiscal outlook—that shows debt still ceaselessly rising even at the end of the forecast period. I cannot remember another Budget like that. We are seeing the confluence of a stalling, stagnating economy, rising unemployment, increasing tax and, as a result of all that, debt rising and storing up major problems for the future.

I want to go into a bit more detail about a couple of matters, the first of which is that national insurance increase. Labour in opposition promised that there would be no tax increase for working people, so I was stunned—jaw on the floor—when the biggest tax increase that they introduced fell squarely not just on working people, but on low-income working people. It is like a laser-guided, heat-seeking precision missile, targeting those low-income workers, particularly women, who graft hard and are not paid a lot. I find it incredible that a Labour Government—a Labour Government!—should have chosen, as their big tax increase, to lower the threshold for national insurance while increasing the rate. It hammers those on the lowest incomes. That is amazing.

Why was that option chosen? It was chosen for all the wrong reasons. It was chosen because the Labour party hoped that it could say, “This isn’t a tax on the workers; this is a tax on businesses.” Of course, everyone can see through that. The problem for the Government is that the Office for Budget Responsibility immediately popped up and said, “No, three quarters of this will be passed through to people’s wages.” The OBR says that people on £13,000 a year will lose £500, which is a lot to lose for someone who is on only £13,000. People earning £9,000 a year are the biggest losers proportionately. According to the OBR, they will lose 5% of their income as a result of the huge tax increase being passed through into their wages. It is amazing that Labour Members are not up in arms about the fact that the Government have just implemented one of the biggest tax increases ever and have targeted it at lower-income workers. That is incredible for the Labour party—absolutely unbelievable.

On the other side of the ledger, what has happened to public services? Of course, they are all hit by the national insurance increase. We were promised in the autumn Budget that they would be looked after, but that is not what has happened in practice. First, we found out that lots of bits of the NHS would not be compensated, including primary care—that GPs, opticians and dentists were all going to have to suck up the increase in tax. We also found out that social care would not be protected and would have to suck it up.

Intriguingly, and as I pointed out at the time, there was a difference between the Budget document and the OBR’s EFO, which I am sure the Minister will remember. The EFO cited a different number for the cost of protection and it mentioned that social care would be included. One of the joys of having the OBR—although it is not a joy for those in the Treasury—is being able to see the Government’s handwriting and the last-minute changes; in this case, we can see that they were thinking very seriously about exempting social care from the big increase in tax, but that they chose not to do so at the last minute. That was the wrong decision.

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[Jerome Mayhew (Broadland and Fakenham) (Con)]

What a great speech to follow. I have an ambition to reach 25 minutes, so here we go. I should start by making reference to my entry in the Register of Members’ Financial Interests. I was challenged by a Labour Member—I am not quite sure which one—and I should declare my background in entrepreneurialism. I ran an SME and then created something called an employee ownership trust, having employed well over 1,000 people. I am also a director of a farming company, which will perhaps have some relevance to my later comments.

This has been a very lively, interesting and well-informed debate—I have certainly enjoyed it so far—and it has been interesting in what it has revealed about Labour Members and Opposition Members. We have had no fewer than three academic economists speaking from the Labour Benches and we have had businesspeople with real-life experience of the economy speaking from the Opposition Benches. One might think, “Well, surely economists know lots about the economy.” You would have thought so, Madam Deputy Speaker, but if we look at how the Government have responded since 4 July, with their obvious surprise at business confidence going through the floor, we begin to see how out of touch academic economists can be when faced with the facts of the real economy.

It is undoubtedly the case that business confidence has collapsed. The BDO optimism index has now sunk—this is the latest figure—to 91.36%. What does that mean? What it really means is that it is the lowest since the entire world economy was shut down by covid. Looking at any one of a number of indices, both business confidence and consumer confidence have gone down massively as a result of Labour’s election. That prompts the question why there has been such surprise on the Government Benches that their actions have been so ill received by the people who drive the economy. One of the reasons is that the country as a whole—and businesses in particular—was actively misled by Labour in the run-up to the general election. We were all told that Labour had no plans for tax rises beyond those that had already been announced. We were all told that Labour’s plans were fully funded and fully costed and that they did not require tax rises above those set out in the manifesto.

[Rosie Wrighting]

As someone with a business background and who worked in a large international business before coming to Parliament, I think the previous Conservative Government misled businesses when they promised them a Brexit that was going to remove red tape, but which actually created barriers. Does the hon. Gentleman agree?

[Jerome Mayhew]

I am grateful for that intervention. I joined this House in 2019, but the original Brexit debate had hyperbole on both sides. We had Project Fear saying we would need an immediate fiscal event as soon as we had the referendum, but that did not take place. Growth has actually continued since the referendum back in 2016. In fact, growth in the United Kingdom has outpaced that of Germany, France and Italy, and, for that matter, Japan. There were a lot of arguments, both one way and the other, over the likely consequences of Brexit. My takeaway is that, overwhelmingly, it has not made that much difference to the world economy or to Britain’s relationship with the world. There have, undoubtedly, been some trade frictions, and those have been particularly acute for SME import/export—I recognise that. But overall, trade has continued, and we have actually outperformed our European big economy neighbours.

[Andy MacNae (Rossendale and Darwen) (Lab)]

The hon. Gentleman suggests that there was no damage done to businesses, yet I have been chairing business roundtables recently with industry representatives—people who run billion-pound businesses; significant businesses—and every single business recognises the impacts of Brexit as a principal drag on their profitability and growth.

[Jerome Mayhew]

As I said, we had a huge change to how our country was governed, which was dictated to us by the people, because we are a democracy. One of the reasons I entered Parliament was that, despite voting remain in 2016, I was outraged as a democrat by the failure of Parliament between 2016 and 2019 to effect the will of the people, as clearly expressed in a referendum. That pushed me from being an activist to being a politician in order to effect the will of the people.

Since then, there have been pros and cons. There are a lot of pros, and over the past five years I have seen for myself how important some of our Brexit freedoms have been. If there were a plebiscite today on whether to leave or rejoin the European Union, I would vote without hesitation to leave, because I have seen some of the benefits. In my area, the common agricultural policy was a disaster, both economically and socially, and had a hugely negative impact on the environment, farms and countryside of Broadland and right across the country. With our Brexit freedoms, we replaced that with the environmental land management scheme, a wholly beneficial policy change—imperfect though it was; it was part of an iterative process to learn from our experience with farmers. That would have been impossible without Brexit.

Similarly, some of the trade deals we have done would have been impossible without Brexit, as would myriad regulations that have been improved just a little in all those Delegated Legislation Committees we have all enjoyed so much over the years. Much of that could not have been achieved without Brexit. None of those regulations will reach the front pages of the newspapers, but iteratively, over the years, they have the opportunity to make our economy and our society stronger.

That is one of the main reasons I was so disappointed by the Government’s capitulation to the European Union on dynamic alignment just a couple of days ago. We have taken on the disadvantages of non-membership of the European Union—we become rule takers—without any of the benefits of dynamic divergence of our regulatory system, which would allow us to bend our rules most accurately to reflect the opportunities of our own economy.

That was an interesting divergence, but I will now come back to the main argument of my speech, which is that Labour misled the people in the run-up to the general election. It said that its policies would be fully funded and fully costed. It said that there would be no taxes on working people, and it expressly said in its manifesto that there would be no increased tax on national insurance contributions. What is reality? Labour chose to use a fig leaf, as the hon. Member for Angus and Perthshire Glens (Dave Doogan) might have said, which is this fabricated £22 billion black hole in the economy—the black hole, by the way, that the OBR failed to find. The former Financial Times journalist, the hon. Member for Earley and Woodley (Yuan Yang), who is no longer in her place, might recall that the Financial Times also failed to find the £22 billion black hole in the economy.

Labour uses that figure as a fig leaf not to raise £22 billion—no, that would be sufficiently unambitious—but to raise £40 billion of tax and another £32 billion of debt. It has done that by focusing the tax on jobs. National insurance contributions are focused on young people, part-time workers, and women in particular. The Employment Rights Bill put another £5 billion on taxation—on the Government’s own impact assessment. The increase in high street business rates is inexplicable in a period of such strain on our businesses, and that is not to mention the effect of agricultural property relief. What is the result? Some 200,000 businesses have closed, which is a 20-year high—a high only beaten by the previous Labour Government.

In January 2025, corporate insolvencies were up 10.7%. That is the highest since the financial crisis when Labour was last in power. Unemployment was up 10% to 4.5%. The Bank of England forecasts that it will go up further to 5%. Youth unemployment was up 11%. This feeds into the well-worn war narrative that Labour always leaves government with unemployment higher than when it arrived. The Government must stop and think again. I know that they were new to government; they had been out of power for 14 years, and they have made some really profound, rookie mistakes, but we must not let our businesses and those employed pay the price for that. The Government should look again and seek to recover their economic reputation.

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[Torsten Bell]

What is great about my hon. Friend is that he has a forecasting ability that is significantly above that of many economic forecasters. He has predicted exactly where I shall be turning shortly.

I want to dwell on a few points about the unequal economy. Three million workers have benefited from the introduction of a higher minimum wage last month. That is worth £1,400 to a full-time worker. Just today, the Trussell Trust provided an update on the painful symbol of modern Britain that is food banks. Far too many food parcels were provided over the last 12 months: 2.9 million. That is up by nearly a half over five years, which is an absolute disgrace, but it is down 8% on the past year and we need to keep it falling.

Several hon. Members have raised the question of tax. The right hon. Member for East Hampshire (Damian Hinds) and the shadow Minister sounded as if they were opposed to all taxes and made it the core of their argument that a higher tax level is a problem that this Government have put in place. Neither of them mentioned that the increase in taxes under the Tories in the last Parliament was significantly higher than any change in taxes under this Government—[Interruption.] It is true.

The hon. Member for South West Hertfordshire (Mr Mohindra) raised the question of non-doms, but also asked whether HMRC was behaving more aggressively. He favoured direct control of HMRC by Government Ministers. The Exchequer Secretary to the Treasury now chairs HMRC, and I am sure he will have heard the hon. Gentleman’s points. On the idea that HMRC has become more aggressive, one of my first jobs in government was being involved in merging what was then the Inland Revenue and the Customs department, and I promise Members that nobody is as aggressive as the Customs department was in the olden days. There were guns involved.

This Government had to take difficult but fair choices on tax in the autumn Budget—

[Jerome Mayhew]

I am grateful to the Minister for giving way. A moment ago he told the House that real household disposable incomes were rising as a result of this Government, but does he not accept that the OBR, when critiquing the Budget last October, found that during the forecast period real household disposable incomes would fall as a result of the Budget proposals?

[Torsten Bell]

What the Office for Budget Responsibility has said is that disposable incomes will grow during this Parliament at twice the rate that they grew during the last Parliament. The hon. Gentleman has just given me another excuse to repeat my favourite fact, which is this: forget what anybody is forecasting, because in the real world, wages have risen more in the first 10 months of this Government than in an entire 10 years under the Conservatives.

We are going to stick to our promise not to raise working people’s rates of income tax, national insurance or VAT, and we are maintaining an internationally competitive tax system with the lowest rate of corporation tax in the G7. Nobody on this side of the House is pretending that these were easy decisions, but they were the right ones and the responsible ones, yet each and every decision has been opposed by the Opposition parties. It is no surprise to hear SNP Members joining with the Conservatives, as they do on almost everything these days.