Finance (No. 2) Bill

Katie Lam Excerpts

Wednesday 11th March 2026 Commons Chamber

[Gareth Snell]

That is an incredibly fair question. The Treasury has been unable to give me an answer, but I hope that the Minister will be able to when he sums up the debate. Regardless of one’s views on gambling, we must ensure that the implementation of new levies does not drive people into the black market, because that is where they are most exposed to risk. If people are to participate in gaming and betting, I would much rather they did so in UK-based, regulated services, where they can get help and support if needed, and where the taxes they pay can go towards funding our public services. It is a fair point, and one on which I hope the Minister will be able to provide an answer.

I wonder whether the Minister could also give some thought to the following point. This taxation has been hypothecated, in the narrative, as being directly to fund the Government’s welcome lifting of the two-child benefit cap, but in reality that is not how taxation works in this country—we do not hypothecate specific taxation lines to pay for specific social policies; instead, the money goes into the Treasury pot, and the Treasury, in its infinite wisdom and benevolence, hands it out to other Departments, which then make their spending commitments.

Now, the Government’s own OBR forecast suggests that, given the behavioural changes expected to take place as a result of the differential rates between the regulated and unregulated sectors, and given the people who will pay tax, the yield from this tax will potentially be down by a third by 2029-30—that means somewhere in the region of £300 million will be lost. If we are making this direct comparison, saying that the levy is needed to fund the welcome change in the two-child benefit cap, can the Minister set out where the additional funding will come from in 2029-30, if the reduction resulting from behavioural change takes place?

Even if the Government are unable to support my new clause 8 tonight, a proper impact assessment would at least allow a better understanding of future challenges relating to the behaviour of consumers and the impact on tax yield.

My new clause 9 seeks a similar impact assessment, but in relation to our friends in Gibraltar. The Minister will be acutely aware that the gaming and gambling sector is a huge part of Gibraltar’s economy—30% of its GDP comes from the sector, and it employs some 3,500 people. The gambling and gaming companies that have a footprint in Gibraltar pay Gibraltar corporation tax as well as any levies paid in the UK. However, because it is a top-line tax, rather than a bottom-line tax, any impact on the profitability of companies based in Gibraltar, or any behavioural changes in the stakes put through those companies, will have an immediate and direct impact on Gibraltar’s revenues.

One third of Gibraltar’s tax receipts come from the sector, so anything we do in this place that has an impact on the sector there—I entirely accept that this is not an intended consequence of the decision—would leave a huge hole in its economy, and that will have to be filled. We are talking about potentially tens of millions of pounds, if not hundreds of millions. Gibraltar is, of course, one of the family of nations that make up Britain, and we have to ensure that, given its strategic importance because of our defence work, we do nothing that makes it less safe as a result of tax changes here.

Of course, the Government of Gibraltar are currently putting through their Parliament the changes to the EU-Gibraltar treaty, which will help with the flow of the gaming sector’s workforce, given the cross-border nature of the workforce. However, Nigel Feetham—the Member of the Gibraltar Parliament who holds the justice, trade and industry brief—has said that what Gibraltar really needs is stability, and not to have “avoidable” decisions from the UK. I know that the Government will resist my new clause, but I ask the Minister to lay out what communications and active engagement he and the Treasury have had with our friends in Gibraltar.

Gibraltar is of strategic importance to us and part of the family of nations that makes up who we are, and decisions that we take in this Finance Bill are having a huge impact on its economy and its ability to fund its public services, which contribute to our overall national defence. While Gibraltar is embedding the new treaty changes, it is important that it has some certainty about its revenue stream.

The media are reporting that the Gibraltarian Government are looking at rapid diversification of their economy to make up the difference, but realistically we do not know what the impact will be on our economy, and they certainly do not know what the impact will be on theirs. The Minister will be acutely aware that as Gibraltar is dependent for 30% of its tax intake from one sector, even a small change here in the UK could have a hugely detrimental impact over there. I hope that he will address the stability that the Gibraltar Parliament has been asking for, and for which Nigel Feetham has rightly been asking in his engagements with the Treasury.

Finally, I had not intended to do so, but I will touch on new clause 10 tabled by the Opposition about CBAM. I have often talked in this place about the importance of our manufacturing industries, and not least the ceramics industry, which falls outside the current proposals for CBAM but will be subject to the emissions trading scheme. There is a perversity about the emissions trading scheme and CBAM in that if we get it wrong, we will just drive up prices for consumers and for producers, while others are importing into our country ceramics produced using cheap Russian gas, which means that their price point is much below what we can produce them here. It also has the distorting effect that our exports become more expensive when they hit the CBAM—particularly for Europe.

Therefore, while we are at a point of global turmoil and gas prices are increasing hugely overnight—the price per therm was 74p last week; it is now somewhere around 160p—there is some work to be done by the Treasury. I asked the Chancellor about that in her statement on Monday; unfortunately, she missed the point about gas-intensive industry and went straight to electric-intensive industry, which is different. When the Government look at how we do CBAM and where we will have free allowances for the ETS, will the Minister bear in mind those small sectors such as ceramics that are crucial to our foundational manufacturing? I am talking not about the tiles, tableware and giftware that I talk about so often, but about the advanced ceramics that we need in this country, which are dependent on a gas price that works and being able to trade across the European border without huge external tariffs being placed on them because of carbon leakage.

Nuclear submarine air filtration systems are ceramic, and the rotor blades that go on small modular reactors made in Derby will require a ceramic powder coating for them to be utilised that will have to cross many borders. There is the potential that we price out British manufacturers as a result of the CBAM and the ETS if we do not have some of those lifelong allowances and we do not think about the interplay of components that travel over borders. Therefore, while I had not intended to speak about the Opposition’s new clause 10, the hon. Member for North West Norfolk (James Wild) made a valid point in terms of ceramics. Even if the Minister will not take the new clause forward—obviously we will not support it, because it is not a Government amendment—the hon. Gentleman’s point is worthy of consideration in a different form.

[Katie Lam (Weald of Kent) (Con)]

Since the Government announced their tax raid on family farms, they have made numerous false claims about the policy and what it will mean for farmers. Raising the threshold, as the Government propose today, does not fix the fundamental wrongs at the heart of this awful policy. I will speak in favour of amendment 6, tabled in the name of my hon. Friend the Member for North West Norfolk (James Wild), which would remove those problems altogether by doing away with this pernicious tax.

What are the claims? The Government have claimed that farmers are rich and so can afford to bear the cost of tax increases. To the surprise of nobody who actually works on a farm, that myth is born of a fundamental misunderstanding of how agriculture works. A farm is not simply another asset like a share portfolio where we can sell a little today and buy a little tomorrow. The assets of a farm—primarily its land, its crops or livestock, and its equipment—are huge long-term investments, completely inseparable from the ability to produce whatever it makes. There is often little relationship between the value of the land held by a farmer and the profitability of that farm. That is particularly true at a time when, to sell their produce at all, farmers must abide by a seemingly endless list of regulations, all of which drive up costs and reduce profit margins. Farmers tolerate a rock-bottom level of return on investment that most businesses would never consider.