Finance Bill

Jerome Mayhew Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[James Murray]

I will make some progress.

As the Chancellor set out in the Budget, we believe that before making any changes to the tax rates that people pay, it is vital that we do everything we can to close the tax gap. That is why, in the Budget, the Chancellor announced a step change in our ambition to do so, with a package raising £6.5 billion of additional tax revenue by 2029-30. This package will ensure that more of the tax that is owed is paid, and that taxpayers are supported to pay the right tax first time. Our plan involves boosting the capacity of His Majesty’s Revenue and Customs to ensure compliance and reduce debt, alongside changes to legislation, some of which this Finance Bill delivers, to remove loopholes used to reduce tax liabilities.

That is why this Bill includes measures such as introducing capital gains on the liquidation of a limited liability partnership, closing a route increasingly used to avoid paying tax. The Bill reforms rules for overseas pension transfers, closing a gap that allows individuals to transfer significant pension savings overseas tax-free. And the Bill implements the cryptoasset reporting framework, tackling complex compliance cases where a significant proportion of offshore risk sits.

In our manifesto, we said that we would take on the tax gap, and that is what we are doing in government.

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

The Minister recognises the importance of reducing the tax gap, so will he commend the previous Conservative Government for halving the tax gap they inherited from Labour in 2010?

[James Murray]

As we all know, efforts to close the tax gap thoroughly stalled under the previous Government, and we have brought renewed focus to this effort. It is one of our top priorities. Before increasing any tax rates, we must ensure that people pay the tax that is owed. Frankly, if the previous Government had been doing such a great job, how is it that our Government have been able to find an extra £6.5 billion to close the tax gap in our first Budget alone? That was in our manifesto, and that is what we are delivering.

In our manifesto, we made other specific commitments on tax, and I will set out now how the Bill seeks to implement them. First, let me turn to non-doms in the tax system. As right hon. and hon. Members will know, this Government believe that everyone who is a long-term resident in the UK should pay their taxes here. That is why this Government are removing the outdated concept of domicile status from the tax system, and why we are implementing a new residence-based regime from 6 April 2025. We have long argued for such a change to be made. Although the previous Government ended up being forced towards our position, they never implemented any changes. Under this Government, we will finally make the reforms necessary to make the system fit for the 21st century.

Our new regime will be internationally competitive and focused on attracting the best talent and investment to the UK. Our reforms will scrap the planned 50% reduction in foreign income subject to tax in the first year of the new regime; introduce a new residence-based regime for inheritance tax; retain and reform overseas workday relief, encouraging employees to spend more of their earnings in the UK; and extend the previously announced temporary repatriation facility to three years, from April 2025.

The new rules mean that, from April 2025, anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains, as is the case for other UK residents. That is a much simpler and clearer test than exists under the current regime. The Office for Budget Responsibility confirmed that these reforms will raise £12.7 billion in revenue over the five year forecast period. That funding is crucial for meeting our commitments to fixing the public finances.

Secondly, in government we have decided to go further than our manifesto commitment to increase the non-resident stamp duty surcharge, and we will instead increase the higher rate of stamp duty on additional dwellings, from three percentage points to five percentage points above the standard residential rate. That increase to the higher rate of stamp duty will raise more money than set out in the manifesto—a total of £310 million by 2029-30—and will go further to rebalance the housing market.

The OBR’s certified costing assumes that an increase in the higher rate of stamp duty by two percentage points is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence. We estimate that approximately half those who paid a non-resident stamp duty surcharge also pay the higher rates of stamp duty, so the change will improve the comparative advantage of UK resident home movers, while ensuring that no additional barriers are faced by those coming to the UK and buying their main home.

Thirdly, the Bill delivers our manifesto commitment to introduce the 20% standard rate of VAT on private school fees. That will apply to any charges charged on or after 29 July for terms starting after 1 January 2025, and it sits alongside our changes to private schools business rates relief in the Non-Domestic Rating (Multipliers and Private Schools) Bill. Ending tax breaks for private schools is a tough but necessary decision that will secure additional funding to help the Government deliver their commitments to improve education in state schools across the country, and achieve the aspiration that every parent has for a high-quality education for their children.

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[Nesil Caliskan]

No. I can tell those Members that when additional money is spent on the state sector, it improves the life chances and opportunities of my constituents.

[Jerome Mayhew]

I am grateful to the hon. Lady for giving way. Could she identify which subsidy she is talking about?

[Nesil Caliskan]

I am talking about the VAT relief that existed for private schools. [Interruption.] Yes, it was a subsidy. Politics is full of choices, and a Government’s first responsibility is to ensure that they balance the books. If a Government are responsible, they will invest in decent public services and create conditions for economic stability. I want to concentrate on that final point for a moment. We have heard remarks from Opposition Members on small and medium-sized businesses; I say to those Members that when I speak to local businesses in Barking, they say that the economic instability over the past few years is what has created pressure for them.

I welcome, in particular, the Government’s tax announcements on non-dom loopholes. The Government changing the residential base means they will increase revenue by almost £13 billion. The rate changes on capital gains mean we will maintain our position as having the lowest capital gains tax of any European G7 economy. These measures are a collection of decisions that show we are prioritising investment in public services, alongside an absolute commitment from the Government to create economic stability to achieve the future growth that this country deserves.

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

We are debating the Finance Bill following an election. In usual times, such a Bill would enact what was said in the winning party’s manifesto, but not this time. On the electoral trail, all the Labour Members who are now Ministers repeated what was said in the Labour manifesto time and again: their plans were “fully costed” and “fully funded”. They repeatedly said that they had no plans to raise taxes beyond VAT on private schools or to increase public borrowing. The manifesto said, in bald terms, that

“we will not increase National Insurance”.

There was no qualification to that—it was there in black and white.

It is extraordinary that we are debating a Finance Bill that has no correlation to the manifesto that it comes after. The electorate were profoundly misled. The reality is that the Labour party is increasing spending by more than £70 billion. Labour Members use the argument of their fantasy black hole, which has been thoroughly debunked by the independent Government body, the Office for Budget Responsibility, the independent IFS and the Financial Times. No one believes Labour, because that black hole is not there. It is not a black hole; it is more like a red herring.

The reason for that red herring is that Labour needed it as the excuse to do what it always intended to do—put up taxes and increase spending on public workers. Why did it do that? Because Labour Members—all of them— knew that if they had been honest with the electorate and told them that Labour was going to be a tax and spend party, no one would have voted for them. Even then, only 34% of the public did. It was a big con on the electorate. That is why we have a petition live on the Government website that says:

“I believe the current Labour Government have gone back on the promises they laid out in the lead up to the last election.”

As of this afternoon, 2.75 million people have signed that petition because they feel misled by this Government.

[Tom Hayes (Bournemouth East) (Lab)]

The Budget provided £2.6 billion for education, £1 billion for SEND, £22 billion for the NHS and several billion more for things like councils. Would the hon. Gentleman’s constituents in Broadland and Fakenham welcome the contribution of those funds to the NHS, schools and councils, or would he not like that investment to go into his constituency?

[Jerome Mayhew]

There were a number of points in the hon. Gentleman’s intervention. First, how much money should be spent? Secondly, what should it be spent on? And thirdly, where should we get it from? I will go straight to the heart of where we can get the money from: if we return public service productivity back to 2019 levels, there are tens of billions of pounds to be saved; if we return the size of the civil service to the 2019 level, before the big covid expansion, there are tens of billions of pounds to be saved; and if we return welfare spending on disability back to pre-covid levels, which my right hon. Friend the Member for Central Devon (Mel Stride) was in process of doing before the general election, there are tens of billions of pounds to be saved.

[Kanishka Narayan]

On that point, will the hon. Gentleman give way?

[Jerome Mayhew]

In a moment. If we add that all up, there would be £50 billion that could be spent on the frontline. However, the problem with the Labour party is that it takes money and spends it on inflation-busting wage rises for its union paymasters, but not on increasing and improving the outcomes for the people who use services. That is the big difference between the Conservative party and the Labour party. The focus of our spending is not the people providing the services; we are for the people who use those services—the people of this country.

[Paul Holmes]

My hon. Friend is making a typically eloquent and excellent speech. I challenged a number of Labour Members to outline that public services can be invested in if, in addition to some of the tax-raising mechanisms they have chosen, we have economic growth. Will my hon. Friend outline how much growth has been cut by under the Government’s proposals compared with ours? Am I correct in thinking it is 0.7% over the Parliament?

[Jerome Mayhew]

My hon. Friend is entirely correct: over the course of the forecast period, the Office for Budget Responsibility estimates that growth will be cut by 0.7%. It is worse than that, however, because we also have an increase in taxes on businesses of £25 billion through the national insurance contributions, which the OBR tells us will be paid for overwhelmingly by reduced pay for workers, amounting to £7.5 billion. It also forecasts that more than 50,000 full time-equivalent jobs will be lost as a result of the policies that Labour Members plan to vote for.

[Kanishka Narayan]

Will the hon. Member give way?

[Jerome Mayhew]

I will on that point.

[Kanishka Narayan]

The hon. Member keeps talking about his Government having been in the process of making a mark on productivity. Having left us with the worst productivity slowdown in 250 years, will he tell us how long the process would have taken?

[Jerome Mayhew]

The hon. Gentleman’s intervention was not on the point that he rose for, but there is one thing that he does not mention, and that is the covid impact. [Interruption.] Hon. Members can laugh about it, but we spent £400 billion supporting the economy and the people of this country in a once-in-a-century impact on our economy.

[Paul Holmes]

If my hon. Friend will forgive me, will he give way?

[Jerome Mayhew]

Yes, I will. That was extraordinary.

[Paul Holmes]

Does he agree with me that there seems to be a collective amnesia among colleagues on the Labour Benches? If we had taken their advice during covid, when we were making reasonable decisions, not only would we have seen the longer lockdowns that the now Prime Minister was calling for, but more economic damage, which they now deny ever happened in the first place.

[Jerome Mayhew]

My hon. Friend is absolutely right, and there is a point worth making here. Since covid, the private sector has improved productivity by about 6%. Productivity in the public sector has yet to improve, although before the general election it was starting to do that.

[Dr Arthur]

Will the hon. Gentleman give way?

[Jerome Mayhew]

I will not. I want to make some progress because I have been quite generous in giving way.

The OBR says that more than 50,000 jobs will be actively lost as a direct result of the decisions Members on the Labour Benches are about to take. I think that is an underestimate. I have been talking to businesses in my constituency of Broadland and Fakenham over the past few weeks and, as a former entrepreneur, I have been taken aback by quite how badly the tax and spend decisions of the Labour party have gone down with my small and medium-sized employers. Their accounts to me suggest that those choices are affecting their decisions on employment, and particularly on employing young people.

One employer said to me just two weeks ago that 18-year-olds are harder to employ than, say, 25 or 26-year-olds because overall more of them will fail in their job as they get used to the working environment. Employing 18-year-olds used to be worthwhile because the national minimum wage was lower and national insurance contributions did not have to be paid on the first £9,200 of their employment. That advantage has been removed and it is now disproportionately more expensive to employ an 18-year-old than older members of staff. That is a real-life case, where the employer told me they will stop employing young people in their business. Is that really what Labour Members wanted to achieve? That is what is happening already.

[Dr Arthur]

I am not quite clear what the hon. Gentleman is saying. Is he advising businesses in his constituency not to employ 18-year-olds, or is he telling 18-year-olds in his constituency that he wants them to be paid less?

[Jerome Mayhew]

I am not telling anyone anything; I am reporting what businesses are telling me. As a direct consequence of the actions of the Members on the Labour Benches, young people are not being employed who otherwise would have been. The OBR says that will lead to more than 50,000 jobs being lost. Time will tell, but I think that is an underestimate.

We have a reduction in recruitment, a reduction in the employment of young staff, a reduction in investment and, as a result, we will have a reduction in growth over the course of the forecast period. But worse than that, we will have a reduction in living standards. This cost of living crisis, which has now been caused by Labour, will reduce living standards by 1.25% by 2029. That reduction is a direct result of the Budget, so if Labour Members vote for this Bill, they will be voting for increasing the cost of living crisis by 1.25%.

None the less, we have seen some increases: debt costs are increasing; inflation is increasing, which will exacerbate the cost of living crisis; and mortgage costs are increasing.

[Tom Hayes]

You talk about increasing inflation, yet we saw record levels of inflation—11%—under the Conservative Government, one third of which was caused by our exposure to gas shocks. Does he agree with this Labour Government that we need to invest in clean energy, so that we are no longer left vulnerable to foreign dictators and their control of fossil fuel markets?

[Madam Deputy Speaker (Judith Cummins)]

Order. Before the hon. Member answers that intervention, I remind Members not to use the word “you”. Moreover, this is a debate on the Second Reading of the Finance Bill, so can we please make comments, interventions and speeches relevant to the Finance Bill?

[Jerome Mayhew]

I am grateful for that intervention. Inflation 11% was a direct consequence of the Russian invasion of Ukraine, as everyone knows, but what is important is that the Conservative Government took the difficult decision to get it down to a target of 2%. It is already creeping up under Labour, and it will be higher than it otherwise would have been as a direct consequence of these measures. Do not trust my word for that; that comes directly from the OBR. Again, the OBR tells us that mortgage rises will occur directly because of the decisions of Government Members. Union activity will be up, with the consequential impact on productivity and efficiency of our private sector. The size of the state will go up and, shamefully, the tax take will be the highest since records began. I will not support this Finance Bill, or its Second Reading, so Labour Members will have to take the consequences of their own decisions.

Independent Schools: VAT and Business Rates Exemptions

Jerome Mayhew Excerpts

Tuesday 8th October 2024 Westminster Hall

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

We have been told by the Government that the rationale for this policy is not class hatred or class warfare; it is a revenue-generation mechanism for state schools. It is a sort of novel, hypothecated tax: education has always been tax free in this country and, in fact, around the world. Even going back to the last flowering of Labour’s socialism in the 1970s, when there was beer and sandwiches in No. 10, there was no suggestion that we should take socialism into the classroom in the way that this Government are.

If tax take is in fact the rationale, where is the impact assessment? How much will actually be raised by this policy, and what costs will be associated with its implementation? We have already heard that some 10,000 students have left the private sector and are going into the state sector just this September. What impact will there be on the education of those children?

On Friday I went to see a local headmaster at a private school in my constituency—the only one that I am aware of. At this stage, I should register my interest: I have one child at a fee-paying school. The headmaster said that there are primary schools locally that are totally full and there is no space for those children leaving the private sector to go into local primary education. Where is the impact assessment on SEND children? Some 34% of the intake of that private school are pupils with special educational needs. Partly because of the delay in the EHCP process, will they be penalised? What happens when they get taken out of their educational setting and put into a new school with new friends, or a lack of them? What will be the impact on their personal education? What will be the impact on SEND provision in the county of Norfolk?

[Rachael Maskell]

I am grateful to the hon. Member for giving way. I have always had great concern about segregation in our education system, but parents in York say that due to the different pedagogy environment and culture, certain independent schools provide the only way that their children with SEN, anxiety or care experience can currently access education. It is through necessity, not choice. Does he agree that the Government should publish an impact assessment not only for this, but for the Budget, so that we can assess the full analysis of this policy?

[Jerome Mayhew]

I am grateful to the hon. Lady, and I am sorry that she waited so long to intervene. I quite agree with the point that she makes. We need to have an impact assessment on another issue, which is the provision of boarding facilities for children in care, which again are provided in my constituency. The school provides full boarding for not just children in care, but the boarding pathway programme put forward by Norfolk county council for children on the edge of care. Their education is the single point of continuity in their lives, and this policy has a real risk of reducing that support and removing them from their school and their friends halfway through an educational year.

What assessment have the Government undertaken before the Budget on these policies and their costs, and what mitigation will they put in place? We have already heard about the impact on military families. Is it right to target the children of our servicemen for this hypothecated tax? Was targeting poor pensioners not enough for this Government?

[Mr Peter Bedford (Mid Leicestershire) (Con)]

Does my hon. Friend agree that the policy disproportionately affects families on lower and middle incomes, which the vast majority of these students come from? Parents I have spoken to in my constituency are really concerned. They have forgone foreign holidays, a new car and a bigger home because they have chosen to invest in their children’s education. Should the Government not encourage people to make those right decisions on behalf of their families, rather than penalising them?

[Jerome Mayhew]

My hon. Friend is absolutely right. It feels as though the Government have a cartoonish characterisation of what a private education looks like—top hats and tails—but that is not the real experience of the modern private educational sector.

That brings me nicely on to the impact on bursaries. At the school in my constituency, 20% of fee revenue goes on bursaries. It is exactly that level of support for people with greater financial disadvantage that will be the first casualty of this unfair and ill thought-out policy. Again, it is an odd target for a tax take. What about the impact on local businesses? The school employs 286 people of all different types in my constituency, and job cuts are already under way. I ask the Government to think again. Surely the introduction of this ill thought-out policy halfway through the academic year needs to be revisited.

Then there is the impact on children who are sitting for public examinations. It is always bad when children have to change schools because of circumstances that are forced on them, but even more so when they are sitting for their GCSEs or A levels. At the very least, the policy should not be implemented for people in those years. For pupils applying for education, health and care plans, the delay in the Government process of undertaking those assessments should not mean that costs are forced on parents who are taking active steps to support the education of their children. For military families and for specialist music and dance schools, the Government have put forward no evidence to support their stated policy objectives. The policy feels rushed. The only people here to support it are those who are paid to do so, and it is vulnerable children in our society who will pay the price of these internal Labour politics.

[Several hon. Members rose—]

VAT: Independent Schools

Jerome Mayhew Excerpts

Tuesday 8th October 2024 Commons Chamber

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

I have a child at a private school. Government Members say that is not a problem. They say, “This is not a criticism of private education; this is merely a revenue-generation exercise, not social engineering or socialist class war.” It must be a coincidence, then, that this policy punishes aspiration, pulls children down rather than lifting them up, and is being rushed through, as we have heard time and again. It is a socialist, red-meat policy to placate the Labour Back Benchers who are having the gradual and terrifying realisation that they may well be single-term Members of this place.

The Government need to think again. We have heard serious objections to this policy—not to its implementation, because the mathematics of this place mean that the Government have sufficient support behind them to force anything through, however ill-advised, but we have heard serious recommendations for review, improvement and tweaking to undo some of the significant damage that this policy, unamended, will cause.

Introducing the policy on 1 January, halfway through the academic year, will damage children and children’s education. These are real people. Some 10,000 children have already left the independent sector. Their education, and that of thousands of others like them, needs to be considered by this Government. On children who are sitting public examinations this year, my hon. Friend the Member for Sleaford and North Hykeham (Dr Johnson) made a brilliant and serious point, which should be not cast aside but considered: if children studying under one exam board are transferred, in the exam year, to another system, what do they do? What is the Government’s answer?

On the subject of pupils who are applying for education, health and care plans, 34% of pupils at Langley school in my constituency are treated for SEND, and only nine of them have EHCPs. What do those other students do? Surely there should be a delay for pupils who are applying for EHCPs. We have also heard from gallant Members that military families are taking decisions now about their future in the armed services. There are also specialist schools for music and dance, which are important for the fabric of our community and the quality of life in this country; those things are not offered in the state system.

[Mr Richard Holden (Basildon and Billericay) (Con)]

Does this not further make the case for the Government publishing in full their assessment of the impact that the measure will have on schools and children right across the country?

[Jerome Mayhew]

My right hon. Friend is absolutely right. The Government have published no evidence to support their stated objective. There has been no impact assessment. This measure is rushed, and vulnerable children are paying the price for internal Labour politics. Shame on you.

Inheritance Tax

Jerome Mayhew Excerpts

Wednesday 17th January 2024 Westminster Hall

[Ian Lavery]

I will come on to that, but as ever, my hon. Friend makes an extremely important point.

After Northern Ireland, the north-east of England pays the least, but have a guess where 42% of the estates that attract inheritance tax are located—have a guess, Sir Robert. They are here in London and the south-east —the blue areas. [Interruption.] I am sorry; if the hon. Member for Broadland (Jerome Mayhew) wants to intervene, I am happy to accept an intervention. Does he want to intervene?

[Jerome Mayhew]

indicated dissent.

[Ian Lavery]

He is chuntering away, so I just wondered whether he wanted to come in.

It is amazing how inheritance tax can be avoided. The biggest exemption, of course, is the nil rate on leaving everything to a spouse. Other exemptions include transfers to qualifying charities or registered clubs, and lifetime gifts given within seven years before death—this one is interesting: wealthy grandparents use it as tax relief on paying their grandchildren’s private school fees. Another exemption is business property relief, which allows no inheritance to be paid on the transfer on death of shares in a business that is not quoted on the stock exchange. Many of those shares are in valuable family firms. Agricultural land also often passes tax-free. Debts owed by the deceased can be deducted from the tax bill.

Cost of Living Increases

Jerome Mayhew Excerpts

Tuesday 25th April 2023 Commons Chamber

[Tulip Siddiq]

I thank my hon. Friend for her intervention. Having campaigned in her constituency, I know there are huge levels of poverty in certain places. Someone from the back said that we are lucky here because we are MPs and get paid a decent salary. We certainly should not be laughing at people who are struggling to make ends meet.

I remind the House that, when Labour was in government, real GDP growth averaged 2%. If growth had continued at the same rate under this Tory Government, we would have £40 billion more to spend on our public services, without having to raise a single tax. Instead, a lack of strategic policy making, economic uncertainty and the absence of an industrial strategy mean that the UK is going through the slowest economic recovery in the G7.

[Jerome Mayhew (Broadland) (Con)]

The hon. Lady is asserting that the UK economy has fallen behind since 2010. Does she recognise the figures that show that this country has actually grown faster than Italy, Japan and France since 2010 to date and that, since 2016—since the Brexit vote—it has grown at about the same pace as Germany?

[Tulip Siddiq]

The Conservatives can manipulate the stats as much as they want, but they cannot run away from the fact that we are falling behind our peers. [Laughter.] I do not care how much Conservative Members want to laugh; I know that is the truth. It is families who are bearing the brunt of the low growth. A decade of stagnant wages has left the British people highly exposed to rising prices. If the hon. Member who just intervened can dispute this figure, he is welcome to intervene again: the average French and German family are now 10% and 19% richer than their respective British counterparts. If we continue down this path of managed decline and our growth rate stays where it has been over the past decade, families in the UK will be poorer than those in Poland by 2030 and poorer than those in Hungary and Romania by 2040. I see the hon. Member—

[Jerome Mayhew]

rose—

[Tulip Siddiq]

Yes, please.

[Jerome Mayhew]

It is a great pleasure to be given the role of the Opposition spokesman from the Back Benches here, but there is a difference between economic data that is factual, has happened and can be verified, and straight-line projections of the future between now and 2030 that have not happened and will not happen.

[Tulip Siddiq]

As I figured, the hon. Member did not have a response to the question I asked. If we do not break with the Tories’ failed economic model, the necessary underpinnings of a good life—as I have mentioned, fair wages, secure work, a decent home—will be further eroded.

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[Jerome Mayhew (Broadland) (Con)]

The hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) is right to feel empathy and sympathy and to feel angry for the people challenged by the cost of living, as everyone in this House does, whatever side they are on. Families are struggling right across the country and that is because of inflation, which steals money from everyone’s pockets. The best cure for all the issues we have all been discussing on either side of the House is to deal with inflation, yet in its 12-line motion on the cost of living, Labour has not made any mention at all of the Government’s intervention to reduce the level of household inflation. It is as though the Opposition are not aware of the £94 billion package that the Government have instituted over the last period. That is an average of £3,300 of Government support per household, which is having a direct impact on reducing the headline level of inflation. It includes halving people’s energy bills over this winter at an average of £1,500 of support per household. That has been extended to the summer, when prices are forecast to come down.

There is an enormous irony that we are having this Opposition day debate on the cost of living, on a motion with no mention of Government support, on the very day when £301 has landed in the bank accounts of the 8 million most-vulnerable families in the country through the household support fund. However, the motion does have some positive suggestions to make. It suggests we should freeze council tax. The best way for people to ensure that their council tax is frozen is to vote Conservative on 4 May. People should come and look at my council in Norfolk, Broadland District Council, which has frozen council tax not for one year, but for the past two years. If Labour councils were serious about helping people with the cost of living, they would run their councils just as efficiently as we do, and they would keep their council tax down and freeze it.

The other thing that the Opposition have done today is to have the first Opposition day debate on water infrastructure, yet in that debate, the effect of what they were arguing for with their so-called plan would have had the effect of increasing water bills by a full £1,000 a household. Is that joined-up opposition? I do not think so. What we have is the Conservatives giving £3,300 of support per household and freezing council taxes more often than not in Conservative-run districts such as my own, against Labour which, through its policy requirements, is saying we should increase bills by £1,000 and have higher council taxes in areas they represent. The best solution to the cost of living crisis is to halve inflation, grow the economy and reduce debt while supporting the most vulnerable in our society. Those are the priorities of my constituents and constituents right around the country, and they are the priorities of this Government.

Co-operatives, Mutuals and Friendly Societies Bill

Jerome Mayhew Excerpts

3rd reading
Friday 24th February 2023 Commons Chamber

[Andrew Griffith]

My hon. Friend, as well as being a doughty champion for the co-operative movement in general, is right to emphasise the voluntary element. It is right that those membership organisations that wish to use the lock have the architecture within the Bill to do so, but it is not the business of Government to interfere with the strategy, desire or, in some cases, need of those in the mutual sector to consolidate or raise capital through other means by taking all those options off the table with a mandatory asset lock.

That approach is typical of this Government. My hon. Friend will understand, as an experienced man of business, that our principle is to allow people to regulate and conduct their affairs in the way they feel best serves their needs. As he knows, we have heard very clearly that the mutual sector likes this architecture and will benefit from it. In that context, it is right for the Government to support the Bill.

[Jerome Mayhew (Broadland) (Con)]

As my hon. Friend says, it is important that the Government are in favour of the mutual movement, yet last year Liverpool Victoria was at risk of being taken over by private equity. Does he think we have the right balance between the free market being at liberty to appoint capital as it thinks best and the Government’s objective of supporting the mutual movement and allowing it to grow?

[Andrew Griffith]

My hon. Friend raises a point we have discussed a number of times during the Bill’s progress. It is a poster case for the need to provide some sort of protection. Without getting into the details of that case, Liverpool Victoria clearly continues as a mutual to this day, after deciding not to accept those offers. It is probably right that people were able to make those offers, but it is equally right that members were able to determine the outcome for themselves.

As I hope my hon. Friend recognises, the tapestry of the Government’s financial regulation role and the needs of a vibrant and competitive market occupies all my waking hours. It is a difficult task to calibrate, but we are greatly assisted by the presence on these Benches of so many colleagues with so much experience to offer. It is always a joy to receive representations on behalf of the myriad parts of the sector, all of which we are trying to help grow and deliver jobs across the economy. As I never fail to remind the House, two thirds of jobs in the financial services sector are outside London and the south-east. The sector touches communities across the country, as we have heard again today.

By permitting a stronger lock in law for those entities that wish to adopt it, the Government are aiming to provide the sector with an additional deterrent against demutualisation. It will empower mutuals to continue the legacy left by previous generations of members to deliver in service of their members and wider society. However, the Government are not seeking just to play defence on the mutual model; we want to advance the interests of the sector and to grow diversity so that we have a rich financial services sector that has all sorts of forms of ownership within it.

As the House will be aware, we are taking action to support credit unions, which are another type of member-owned, democratically controlled financial institution. This Bill does not apply to credit unions, but through the Financial Services and Markets Bill we are seeking to promote that sector. As the latest Prudential Regulation Authority data shows, there are 249 credit unions in Great Britain, representing more than 1.4 million adult and child members. There are exactly 650 constituencies; would it not be wonderful if every one of them had a thriving credit union? That is a vision for us to hold in mind.

As the Financial Services and Markets Bill makes its way through the other House, we are making a number of important amendments to the Credit Unions Act 1979 to allow credit unions to offer a wider range of products and services. Where they decide it is in their interests to do so, they will be able to offer hire purchase agreements and conditional sale agreements, and to distribute insurance products to their members. Those are all ways in which they can increase their utility to their members, and improve their own scale and financials, which is one of the challenges that they have had. We will also allow them the option to lend to and borrow from other credit unions on a short-term basis, which will sometimes allow them to manage their liquidity better. Again, that will improve the strength and resilience of the sector. That delivers on interests that were raised with the Government by the sector.

The Financial Services and Markets Bill also gives the Government a new power to allow credit unions to offer further products and services in the future through secondary legislation. The message is that the door is ajar. If we hear representations from the sector about more ways in which this Government can be on its side, it should keep pushing, because we will have the ability through secondary legislation to do that.

Additionally, the Government are taking forward a programme of work to ensure that building societies, mutual savings providers and mortgage lenders have a modern and fit-for-purpose legislative framework that promotes opportunities for growth. We have concluded our consultation on the Building Societies Act 1986. As was announced in the Edinburgh reforms package, the Government will in due course bring forward legislation to amend that Act. That will give building societies further flexibility in raising wholesale funds and help to modernise corporate governance requirements, enabling building societies to compete on a more level playing field with retail banks and, again, to promote competition and diversity of provision within the financial services sector.

We are not stopping there. The Government are committed to the health and prosperity of the mutuals sector, and we recognise the valuable contribution mutuals make. It is a matter of record that I believe we need to go further to cement a modern and supportive business environment in which mutuals can thrive. That is why we continue to have active discussions with the Law Commission on options to proceed with reviews of both the Co-operative and Community Benefit Societies Act 2014 and the Friendly Societies Act 1992, with a view to launching those reviews in the next financial year. Work is ongoing to define the terms and scope of the reviews, which includes close engagement with the sector, and I expect to be in a position to provide an update with more detail very soon, particularly as I know that many Members here today have a keen interest in that work. Clearly, that is something we wish to see move forward and I am sure it will. As such, I can confirm that a core aim of the reviews will be to focus on dysfunctions in the law that result in those organisations being unnecessarily impeded or facing additional time, expenditure or opportunity cost.

In conclusion, the prospects for mutuals are bright. I am delighted that we have been able to make progress on this important Bill today. I commend the cross-party spirit in which the hon. Member for Preston and the Opposition have worked closely with the Government and officials. I am very happy to commend support for this Bill.

Economic Responsibility and a Plan for Growth

Jerome Mayhew Excerpts

Wednesday 19th October 2022 Commons Chamber

[Andrew Griffith]

No, I am going to make some progress.

I have talked about the measures that we are taking to support growth, and about the tough decisions that the Chancellor spoke about in the House on Monday. I reiterate that, as we must not sugar coat it. In common with every other major economy, we face economic challenges at this time for three reasons.

First, there is the cost of covid. Through the first two years of the pandemic, the Government borrowed more than £300 billion more than had been forecast in March 2020—about £260 billion more in 2020-21 and £70 billion more in 2021-22—to fund emergency covid support, which had support on both sides of the House.

Secondly, interest rates are rising around the world on the back of increased costs and Putin’s war in Ukraine.

[Jerome Mayhew (Broadland) (Con)]

We recently heard that inflation in this country has risen to 10.1%, but is the Minister aware that the European Union reported its inflation figures this morning, and inflation in the eurozone has risen to 10.9%?

[Andrew Griffith]

My hon. Friend is absolutely right. I was aware of that, and inflation is 11% in Germany and 17% in the Netherlands. I hope that the hon. Member for Leeds West is listening, because we are seeing this phenomenon in all major developed economies. She has a background in economics, and I hope she can devote some of her energy to sharing her wisdom and insight with colleagues.

When it comes to interest rates, the Federal Reserve has implemented three consecutive increases of three quarters of a basis point, and the European Central Bank has increased rates at its last two meetings, including its largest ever single rate hike in September. As we hear contributions from Opposition Members, I hope that we will hear a little more about the broader context and a little less about attributing the situation to this Government.

--- Later in debate ---

[Jerome Mayhew (Broadland) (Con)]

If we have learned one thing from the experience of the past few weeks, it is that there really is no magic money tree, and the Government really do have to pay their way. Some of us, including myself, had started to doubt that essential economic truth because of the Government’s heroic response to the covid crisis.

I had intended to say that we had supported the families and businesses of this country to the tune of £400 billion. However, I listened to the Minister at the Dispatch Box, and when we add up all the unplanned borrowing very substantially as a result of covid, the total is actually £630 billion. It is because of that enormous intervention to support families and businesses by this Government that we did not have thousands of bankruptcies and millions of people cast out of work, as was the expectation. Right hon. and hon. Members will recall a forecast that we would have 12% unemployment, but because of the economic management by this Government the impact was cushioned and the economy protected from that enormous external shock.

The Government were quite right to do that, but why were they able to? It was because of the decade of prudent economic management that repaired the enormous economic damage left by Labour in 2010—prudent decisions that Labour fought against tooth and nail. The Labour motion before us calls for a plan to make the economy work for working people, but Labour does not stand up for working people. Every Labour Government in history, without exception, have left office with more people out of work than before. Their policies, again and again, are not the policies for working people, but the policies of unemployment.

Compare that record with that of this Government. Despite suffering the biggest economic shock to the world economy in a century or perhaps longer, unemployment has not gone up, as it always does under Labour. It has gone down, most recently to 3.5%, the lowest level since I was a tiny boy in 1974. In my Broadland constituency, the rate is even lower. That economic management is forcing employers to offer higher wages for staff—exactly the kind of economic conditions that help workers, particularly the lowest paid. It also serves to increase productivity, as local employers invest to limit the number of staff needed to produce. That is what will pay for the wage increases of the future, not Labour meddling.

I recognise, as does the Prime Minister, that the mini Budget went too fast and too far, and she has rightly apologised for it, but this Government have the right economic policies for growth. As one of the few entrepreneurs in this place, having helped to create hundreds of worthwhile, well-rewarded jobs and careers, I know the truth of the business saying that time kills deals. Speeding up the ability of businesses to get projects up and running will have a huge impact on the future growth and prosperity of this country.

The Government are right to launch investment zones. These zones do not just corral investment into a particular area; by speeding up the process of business, they will also grow the size of the pie. I hope that the results will be so striking that over time they will become a beacon for wider economic policy, showing the way for the rest of the economy.

The Government are also right to accelerate productivity-enhancing infrastructure projects across Britain to help with levelling up, including the building of the western link road in my constituency, which will shorten ambulance times by 20 minutes, open up a swathe of Norfolk businesses to improved market access and relieve the residents of Weston Longville and others from terrible rat-running—all opposed by Labour, I might add. As for the local Lib Dems, literally half of them have said they want it and the other half have said they do not. That says it all about the approach of the Liberal Democrats: to say whatever they think will sound good to local constituents, with no consistency at all.

Finally, the Government are right to speed up the review of EU-inspired regulations to make them bespoke for the United Kingdom economy. That will help British businesses and British workers. This Government have an economic record to be proud of, and I would back them to the hilt over Labour any day.

Economic Update

Jerome Mayhew Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

I do not think I could have been clearer in my statement. I said that the turmoil we have had is the result of international and domestic factors.

[Jerome Mayhew (Broadland) (Con)]

The Chancellor will be aware that his actions over the past few days have already lowered long-term expectations for interest rates. Can he set out for the House what impact he anticipates that that will have on mortgage rates in my constituency and across the country, as well as on the Government’s ability to fund future services?

[Jeremy Hunt]

I absolutely salute my hon. Friend for thinking about the needs of families having to pay mortgages, which have an enormous impact on their finances. As I have learned in my short time in this job, Chancellors never comment on what mortgage rates or interest rates should be, but I absolutely want to make sure, in so far as the Government can influence it, we make sure that they are held down as low as possible.

The Growth Plan

Jerome Mayhew Excerpts

Friday 23rd September 2022 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

Without growth, government just becomes an exercise in rearranging the deck chairs, so I absolutely welcome this unashamed focus on growth. As my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer) said, it is a vote of confidence in the future of our country. Let us look at the western link road in my constituency. Does my right hon. Friend agree that the decision to accelerate that project is exactly the kind of enabling infrastructure and investment that helps local communities and unlocks local economic growth?

[Kwasi Kwarteng]

My hon. Friend is absolutely right. By accelerating infrastructure projects, we can generate economic growth, generate achievement, enthuse the supply chain and get Britain moving again.

National Insurance Contributions Increase

Jerome Mayhew Excerpts

Tuesday 8th March 2022 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

The hon. Gentleman is asserting that the poorest will be worst hit by this, but Treasury analysis of the impact of tax and spending decisions on households in ’22-23 in cash terms clearly shows that the bottom eight deciles—80% of households—will be better off as a result of the Government’s combined tax and spend decisions, including on national insurance. What does the hon. Gentleman say to that?

[Richard Thomson]

I say that I very much doubt that, and there is analysis by the Institute for Fiscal Studies that suggests very differently, but again this comes back to the marginal rate of tax and there is no doubt that this is going to have a greater impact on the marginal rate of low earners than that of higher earners.

--- Later in debate ---

[Jerome Mayhew (Broadland) (Con)]

When we discuss whether we should have the national insurance contribution rise, we ought to look at what we intend to use the money for, because, after all, as my hon. Friend the Member for Gloucester (Richard Graham) mentioned, it is a hypothecated tax. The Government are looking to address two crucial elements to improve to our society, which are the covid backlog—currently more than 6 million people are waiting for treatment, of whom 310,000 are waiting for more than a year—and adult social care, where there is a desire widely held by constituents of hon. Members across the House to cap care costs. Such reforms would assist 150,000 people with their care costs at their time of greatest need. There is a degree of consensus that they are good proposals and must happen—we need to spend the money—so the real question is not whether we spend the money but how we pay for them.

[Mr Betts]

The hon. Member mentioned the 150,000 people who will benefit from the cap on care costs, and they are disproportionately people in more expensive homes. Where in that funding is the help for the 1.5 million people that Age Concern has assessed should be entitled to social care but have now been excluded from the provisions?

[Jerome Mayhew]

The hon. Member made a number of interventions on the Minister, and I refer him to the full responses that were given.

The question that I take from that is: how we will pay for the proposals? It seems to me that there can be only three answers. We can take money from other priorities in Government, we can borrow, or we can increase taxation. So far, I have heard no suggestions of other areas of Government spending that should be reduced. The Opposition typically move to defence spending as a simple way of extracting money for other commitments, but that is unlikely to be an area of future reductions in today’s environment; in fact, I submit that it will be the opposite.

[Grahame Morris (Easington) (Lab)]

The hon. Member is seeking suggestions. What does he think about the £8.7 billion of personal protective equipment that has been incinerated and gone up in flames? Surely nobody in their right mind would suggest that that is a good use of public money. Is it not possible to claw back some of those costs from the suppliers, if indeed the supplies were defective?

[Jerome Mayhew]

I am grateful to the hon. Member for his intervention. I suggest that a very good use of public money was emergency funding for PPE when we most desperately needed it in a national lockdown. It was inevitable that there would be a trade-off between speed—everyone in the House was cheering the Government on at the time—and maximising the effectiveness of every single contract. I hope that the Government make no apology for the speed with which they dealt with the crisis. They should be commended for that.

It has also been suggested that we should crack down on fraud. The hon. Member for Leeds West (Rachel Reeves) referenced a £4.7 billion headline in covid-related fraud, but she failed to give the Government credit for the actions that they have taken to address that. We have the Taxpayer Protection Taskforce, which has recruited 1,265 staff. We also have the work done on powers for the Insolvency Service and Companies House to link company directors directly to their bounce back loans, which has been used on 61,758 companies, catching loans worth £2.1 billion. The combination of those two factors means that the new estimate, which she did not find time to refer to, is not £4.7 billion but £3.3 billion. Fraud is therefore reduced to an estimated 7.5% of contracts, which is at least within spitting distance of the average for Government programmes of, I am sorry to say, as much as 5%.

[Anthony Browne]

My hon. Friend makes a valid point about the need to increase spending to pay for social care and has raised the different ways of doing that. Does he agree that if we are to increase spending sustainably, we need a sustainable source of money and that a one-off windfall that occurs in just one year cannot fund long-term commitments? Cutting back on fraud in one particular year cannot fund long-term commitments.

[Jerome Mayhew]

My hon. Friend is absolutely right. Even if we recovered all of that £3.3 billion, that would be for a single year only. The great mistake that the Opposition have made is to conflate single events—a windfall tax is another example—with ongoing revenue needs.

The next option is to borrow money. Of course, that is the easy response, and that really is the Opposition’s position, even if they cannot bring themselves to admit it from the Dispatch Box. However, that is not free money, because we have to service the debt and, eventually, we have to repay it. So we are passing the responsibility on to our children and our grandchildren for tax cuts now, which is essentially what the Labour party is arguing for. Our servicing of debt already cost an estimated £64 billion last year, which is £955 for every single member of the population. Because of inflation, which is a global phenomenon, and the likely rise in interest rates, that is forecast to rise to £75 billion for this financial year. The hon. Member for Leeds West says that the Government have a policy of buy now, pay later, but what could be a better description of Labour’s response to this pressing need? We want to improve social care, and we need to have a covid fightback, and we have got to pay for it.

There is the option to borrow, but, as I said, it is our children and grandchildren who will pay that price. I therefore believe that the Government are quite right to balance the increased social spending that we want to achieve with the tax necessary to pay for it. If we look at the total measures that the Government have brought in, we see that they are deeply progressive. Treasury analysis shows that they are net positive for 80% of households, whereas Labour’s plan to remove the national insurance contribution would actually help the top 10% the most—by more than £1,000. Surely that is not Labour’s policy.

No Conservative Government want to raise tax, but it is our duty before cheap popularity to be responsible custodians of national finances. That is a lesson that Labour has never learned.

[Several hon. Members rose—]