Finance (No. 2) Bill

Kirsty Blackman Excerpts

Committee of the whole House
Wednesday 19th April 2023 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move amendment 21, page 12, line 31, at beginning insert—

“(A1) This section applies to any person who it employed for an average of more than 15 hours per week by an NHS body.”

This amendment would limit the removal of the lifetime allowance charge to NHS staff.

[The First Deputy Chairman]

With this it will be convenient to discuss the following:

Amendment 22, page 12, line 31, after “charge” insert

“for a person to whom this section applies”.

This amendment is consequential on Amendment 21.

Amendment 23, page 12, line 36, at end insert—

“(3) The Treasury may by regulations specify a list of NHS bodies, or types of bodies, in respect of which this section applies.

(4) Regulations under this section—

(a) may specify different bodies, or types of bodies, in England, Wales, Scotland and Northern Ireland, and

(b) are subject to annulment by a resolution of the House of Commons.”

This amendment is consequential on Amendment 21 and gives the Treasury the power to define “NHS body” for the purposes of that amendment.

Clauses 18 to 24 stand part.

Amendment 27, in clause 25, page 18, line 23, at end insert—

“(4A) The arrangements must include that the Commissioners are required to provide to an individual their calculation of the appropriate amount under subsection (3).”

This amendment would require HMRC to provide recipients of the relief with a calculation of the payment so that it can be checked.

Amendment 28, page 18, line 26, insert—

“(5A) The arrangements must include procedures for the purposes of allowing an individual to—

(a) challenge the amount the Commissioners have determined to be the appropriate amount under subsection (3), and

(b) make a claim requesting that the Commissioners calculate and pay an appropriate amount in accordance with subsection (3) where the Commissioners have failed to make such a payment.

(5B) The individual must give notice to the Commissioners of any such challenge or claim no later than four years from the end of the relevant tax year as defined in subsection (1)(b).”

This amendment would enable a recipient of the relief to challenge the amount determined by HMRC if they think it is incorrect, and would allow someone not identified as eligible for the relief by HMRC to initiate a claim for it.

Amendment 29, page 18, line 41, at end insert—

“(8A) The arrangements must include a procedure for the Commissioners to correct, in accordance with section 9ZB TMA 1970, an individual’s personal return for the relevant tax year to include the appropriate amount paid under this section.”

This amendment would enable HMRC to correct the tax return of a recipient of a payment under the new section 193A FA2004, to reflect that the receipt of the payment has increased the recipient’s income for the year.

Clause 25 stand part.

New clause 4—Review of the impact of the abolition of the lifetime allowance charge—

“(1) The Chancellor of the Exchequer must, within three months of the passing of this Act, make a statement to the House of Commons on the impact of the abolition of the lifetime allowance charge introduced by section 18 of this Act and other changes to tax-free pension allowances introduced by sections 19 to 23 of this Act.

(2) The statement must provide the following information—

(a) the number of NHS doctors who will benefit from the policies referred to in subsection (1);

(b) the proportion of those benefiting from the policies referred to in subsection (1) who are NHS doctors;

(c) the number of people who are expected to—

(i) stay in work, and

(ii) return to work

as a result of the policies referred to in subsection (1);

(d) a breakdown of the figures in subsection (2)(c) by sector, including the number of people under subsection (2)(c)(i) and (ii) who are NHS doctors; and

(e) details of how a scheme that provided benefits equivalent to the policies referred to in subsection (1) only for NHS doctors could operate.”

This new clause requires the Chancellor to make a statement setting out the impact of the tax-free pension allowance changes in relation to NHS doctors, and to set out details of how an alternative scheme targeted at NHS doctors could operate.

New clause 5—Review of alternatives to the abolition of the lifetime allowance charge—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed—

(a) conduct a review of the impact of the abolition of the lifetime allowance charge introduced by section 18 of this Act and other changes to tax-free pension allowances introduced by sections 19 to 23 of this Act, and

(b) lay before the House of Commons a report setting out recommendations arising from the review.

(2) The review must make recommendations on how the policies referred to in subsection (1)(a) could be replaced with an alternative approach that provided equivalent benefits only for NHS doctors.”

This new clause requires the Chancellor to review the impact of the tax-free pension allowance changes and to recommend an alternative approach targeted at NHS doctors.

[Kirsty Blackman]

It is a delight to speak first in Committee of the whole House this afternoon. I had a few extra minutes to tweak my speech during the ten-minute rule Bill, as it is unusual for such a Bill to be opposed, and those extra few minutes will presumably have made my speech extra good. I am sure the whole Committee will listen very closely.

I rise to speak to amendment 21 in my name and in the name of my SNP and Plaid Cymru colleagues, but I will first talk about new clauses 4 and 5, which were tabled by the Opposition. The new clauses would require a review of the impact of the abolition of the lifetime allowance charge, with new clause 4 focusing on NHS doctors and new clause 5 looking more widely.

A significant number of questions have been raised in the House about the lifetime allowance and the problems it has caused, particularly for NHS doctors. I do not think any Opposition Member would consider that the solution to this problem is to abolish the lifetime allowance charge completely, which seems totally out of proportion. We have been raising this very serious issue for a number of years, but I never considered arguing against this solution because it never crossed my mind that the Government would do something quite so drastic or extreme.

New clauses 4 and 5 both ask for reviews, statements and information. Particularly pertinent is information on the number of NHS doctors who will benefit from the abolition of the lifetime allowance charge, as is a report containing recommendations in the light of a review of the effect of abolishing the lifetime allowance charge. The least the Government can do, if they are to make such a massive change to the lifetime allowance or the pension tax system, is provide us with as much information as possible so that we can consider all the potential and actual implications. We would then have all the information at our fingertips. The Government are able to access HMRC data in a way that the rest of us cannot, so we need details on the actual impact of these changes.

On the specific issue of NHS doctors, Torsten Bell of the Resolution Foundation has said that 20% of those who benefit from the change to the lifetime allowance work in the finance industry. He said that

“nearly as many bankers as doctors”

will benefit from this change. The Institute for Fiscal Studies has called it “bizarre”, stating:

“if this is aimed at doctors then it really is a huge sledgehammer to crack a tiny nut.”

That accords with our understanding.

Again, we agree that this significant issue for doctors needs to be fixed, but the Government are going about it in totally the wrong way. During the covid pandemic, we clapped NHS staff from our doorsteps. We recognise how difficult NHS staff had it working on the frontline during the pandemic, and how difficult they continue to have it. When other people were furloughed, they were working hard, day in and day out, to keep as many of us alive and healthy as possible, yet the Government are giving exactly the same break to bankers as they are giving to those who worked day in, day out to keep us all safe. That does not make sense. If we want to support our NHS, to ensure that we have the best possible public services and to give the NHS our vote of confidence, our backing and our support, we should recognise that those working in the NHS provide a vital public service and therefore deserve different treatment from those who work in the finance industry, for example, and who do not provide that level of public service.

I thank the Clerk of Bills, who was helpful in drafting these amendments. I knew what I wanted to do, but I was not quite sure how to do it, so I very much appreciated that assistance.

Amendment 21 would mean that the abolition of the lifetime allowance charge applies only to those employed by an NHS body for more than 15 hours a week, on average.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

We all respect the hard work of NHS staff, but why does that argument not equally apply to, say, senior police officers?

[Kirsty Blackman]

An awful lot of people work hard. The specific issue that many of our constituents have raised is in the NHS. I have not been approached with this concern by senior police officers, but I have been approached by NHS doctors. If the hon. Gentleman feels particularly strongly about senior police officers, he could table an amendment so that people employed in the wider public sector, or in the police service, can be included in this measure. I think both police officers and NHS staff could be included, but it would be ridiculous to include everyone, no matter how little they do for the public good.

[Anthony Browne (South Cambridgeshire) (Con)]

Not only NHS staff and senior police officers but state school headteachers, senior civil servants in our local authorities, air traffic controllers and senior Government scientists are affected by the lifetime allowance. In fact, about half the people affected work in the public sector. If the hon. Lady follows her rationale, she would end up with a completely different tax regime for public sector pensions. Does she think that would be fair for private sector workers?

[Kirsty Blackman]

Given how much we have relied on our public sector, and given how unwilling this Government are to come to the table on pay negotiations, it would be totally reasonable for this House to say, “Our public sector is incredibly important. We want to support our public sector workers, and therefore we want to give them differential access to lifetime allowance exclusions.”

Amendment 22 is consequential on amendment 21. Amendment 23 would allow the Secretary of State to specify which NHS bodies, or types of bodies, are covered, given that the NHS is structured in different ways in England, Scotland and throughout these islands. It makes sense for the Secretary of State to make that decision.

The amendments cover NHS staff who work, on average, at least 15 hours a week so that they cover all the NHS staff who have come to us with pension concerns, particularly doctors but also other senior NHS staff. I have a large teaching hospital in my constituency, and there is another hospital just over the boundary. There is a medical school too.

[Anthony Browne]

Will the hon. Lady give way?

[Kirsty Blackman]

Not just now.

A significant number of doctors live and work in Aberdeen, and a number of them have come to me with concerns about the pension regime. One of them did not realise that he was about to hit the lifetime allowance until his accountant came to him and said, “This is how much you are required to pay in tax.” He had tipped over into this additional tax because he had taken on hours to teach junior doctors and medical students how to be better doctors. He had taken those extra hours on at the request of the hospital. This was because the immigration laws and rules have meant that a number of our doctors are struggling to jump through the hoops that the UK Government have put in a place or they are feeling that the Home Office is particularly against doctors coming from other countries.

That constituent had been asked to take on those hours as a result of the changes in some of the departments. He had willingly taken on those hours because he knows how important continuing professional development is in the NHS and how important it is to have a new generation of doctors coming through, but he had then been hit with a massive tax bill as a result. When I met him, he said to me, “I do not want to take on any more teaching as a result of what has happened to me. The amount I have been taxed means that the teaching costs me money. I don’t see why I should be asked to do this when I am training the next generation of doctors.”

[Anthony Browne]

I am glad that the hon. Lady recognises the dangers of high levels of taxation in discouraging people from work, as I believe those on both sides of the House can agree on that. Her amendment mentions the NHS and people who work for “an NHS body”. What does she think about this applying to GPs? The overwhelming majority of GPs do not actually work for the NHS—they are self-employed or work for their partnerships. Does she think that GPs should be excluded from this legislation as well?

[Kirsty Blackman]

That is one reason why our amendment 23 would allow the Secretary of State to make those specifications, so that all the people considered to be working for NHS bodies—GPs are commissioned by NHS bodies—are included. The measure was intended to allow that level of flexibility. If I had not intended to allow that level of flexibility, we would not have tabled amendment 23 to allow the Secretary of State that flexibility. We referred to NHS bodies and specified a number of hours so that someone who works for the significant majority of their time in private practice and private systems, and perhaps works an hour or so every few months for the NHS, would not be caught by this measure. The intention is that those people who work for a significant amount of their time in contributing to the health of the population, making people better and well, ensuring that they stay healthy and live longer lives, are recognised and given the opportunity to benefit from this measure.

My understanding, from everything that the Government have said previously about this, is that one of the biggest concerns in this area relates to NHS doctors. If the Government feel that there are other significant areas of the public sector where people could and should benefit, I look forward very much to the Minister standing up and explaining all of those. I am sure I will be asking further questions about this in Committee.

The lifetime allowance was in place for a reason and it does not work in relation to senior NHS staff, but it does work in relation to those places where people are not contributing to the health and wellbeing of our population and where people have not been on the frontline during the past few years, working under immense pressure for the public good. SNP Members will therefore vote against clause 18 standing part of the Bill if we have a vote on that. That clause is about the abolition of that lifetime charge. We do not agree that that should apply to everyone. The Government need to bring in a bespoke scheme to solve this problem, rather than applying it to everybody, no matter how much money is involved and how little public service they provide for that income that they receive. I ask the House to support amendment 21, which stands in my name and those of my colleagues.

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman). We are covering clauses 18 to 25, which will remove the pension tax barriers to remaining in work that highly skilled and experienced individuals across the public and private sectors, including senior NHS clinicians, are facing. The clauses also ensure that the tax regime works appropriately for the winding up of collective money purchase schemes and legislates to provide taxpayer-funded top-up payments for up to 1.2 million of the lowest earners in net pay pension schemes.

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[Andrew Griffith]

My hon. Friend makes exactly the point that I was making, and does so extremely well. It is wrong for us in this House to seek to assign to ourselves the ability to judge the virtuous nature of people’s activity. I am sure that an accountant in the private sector works as diligently as an accountant seeking to drive value for money and the best medical outcomes in the NHS. With the greatest respect, I think that the hon. Member for Aberdeen North goes a little too far in seeking to “unbake” the wonderful cake of our mixed economy health system, which involves contributions from the private sector, private forensic laboratories and private diagnostic machines, and the wonderful work of our clinicians, and administrative, ancillary and domiciliary staff, who are mostly in the public sector. As I have said, her approach is the wrong basis on which this House should proceed.

Clauses 18 to 23 will reform pension tax thresholds to remove the current disincentives for highly experienced individuals to remain in the labour market or even to return to the workforce to build up their retirement savings. Currently, there are limits placed on the amount of tax-relieved pension savings individuals can make each year and an additional second restriction that applies to the total. That is an unusual feature of the tax system, where almost every other allowance is on an annual basis. The Government listened to stakeholders from across the public and private sectors, who have said that the annual and lifetime allowances can influence the timing of retirement and act as a barrier to remaining in the workforce.

The changes made by these clauses will increase the annual allowance from £40,000 to £60,000 and remove the lifetime allowance charge from 6 April 2023. The changes will ensure that pensions tax does not act as a barrier to staying in or returning to work, and will eliminate the chilling impact that the mere fear of triggering an extra tax charge has, even for those who are not immediately subject to falling foul of the cap. Much as the opposition parties may not wish to hear this, these changes command support across the economy. The Guild of Air Traffic Control Officers told us that pension taxation risks causing its members to reject tasks essential for the safe and efficient operation of air traffic control in the United Kingdom.

Dr Vishal Sharma of the British Medical Association has said that this is

“an incredibly important step forward”.

He said that the abolition of the lifetime allowance will mean that

“senior doctors will no longer be forced”—

his words—

“to retire early and can continue to work within the NHS, providing vital patient care.”

The Forces Pension Society said that this is a positive development and that it had been lobbying for it for several years. It said that these changes will help keep our streets safe. Marc Jones, chairman of the Association of Police and Crime Commissioners, confirmed that, as it relates to the police, they

“will be a game changer for thousands who love their jobs and do not want to retire.”

To support those who have left the labour market to return and build up their retirement savings, these clauses will also increase the money purchase annual allowance from £4,000 to £10,000 from April 2023. This will enable more individuals who have previously retired to return to the workforce and to continue to build their savings. In line with these headline reforms, there are also technical changes. They increase the minimum tapered annual allowance from £4,000 to £10,000 and the adjusted income level required for the annual tapered annual allowance to apply to an individual from £240,000 to £260,000.

[Kirsty Blackman]

While the Minister is talking about all the public sector individuals who will benefit as a result of these changes, he has not made the case for why this should apply to bankers. Why should bankers receive this exemption from the lifetime allowance? What benefit will the country get as a result?

[Andrew Griffith]

I am sure that the significant number of people—over half a million—who depend on jobs in the financial sector, including in places such as Edinburgh, one of our great financial centres, are listening with consternation to the politics of envy. The hon. Lady singles out individual professions and invites us to set separate tax policies on the basis of a particular profession. That would be entirely wrong. If she had been listening very carefully—I understand that she wanted to get in, because this is a debate and is the opportunity to do so—she would have heard that I was talking about the annual tapered allowance. That is a feature in pensions policy that is there entirely to ensure that it continues to have a progressive nature. A banker who is earning £260,000 a year can get only a reduced amount. They cannot avail themselves of the same annual allowance as the hon. Lady’s friends, colleagues and those she seeks to represent in our public services. I can assure the House that this is not a charter for bankers. In fact, the annual tapered allowance remains unchanged in its operation. We are updating the thresholds here today.

Unless the hon. Lady wishes to withdraw her amendment at this point having heard the strength of our arguments, I will now turn briefly to the remaining clauses that we are debating today, covering collective money purchase pension arrangements and relief relating to net pay arrangements. Collective money purchase is a new type of pension arrangement. Clause 24 will prevent any unintended tax consequences should a collective money purchase scheme wind up. It will ensure that members and their dependants can receive payments and transfer funds without incurring an unauthorised payments tax charge—I do not think that that should be controversial for the House.

Finally, clause 25 relates to the introduction of top-up payments for the lowest earners—another highly progressive measure—who sit within net pay pension schemes. There are two main methods of giving pensions tax relief. Although they provide the same outcomes for most individuals, lower earners can have different levels of take-home pay depending on how their pension scheme is administered for tax purposes, and the Government believe they are right to rectify that.

Clause 25 makes changes to ensure that eligible low-earning individuals whose income sits below their personal allowance receive a taxpayer-funded top-up payment so that they will have broadly similar take-home pay regardless of how their pension scheme is administered for tax purposes. The hon. Member for Ealing North (James Murray) has tabled some amendments in this respect, and I wrote to him yesterday to provide some of the comfort that I think he was looking for. They were well-intentioned amendments, and I hope that the letter I have sent him gives him some of the satisfaction that he seeks. Fundamentally, we do not disagree with what he is trying to achieve, and it has the support of those who have been agitating for low-income earners. That measure could benefit an estimated 1.2 million low earners who save into an occupational pension under net pay arrangements.

In conclusion, as I have set out, we know that there is a problem that needs to be tackled. It is a fact that individuals are choosing to retire early to prevent incurring pension taxes. The changes today, which have been widely welcomed by sectoral representatives across the economy, will ensure that we can retain our most skilled and experienced workers in all sectors while also simplifying and improving the pension arrangements for millions of households. I therefore urge Members to accept that clauses 18 to 25 should stand part of the Bill.

--- Later in debate ---

[Andrew Griffith]

I thank my hon. Friends for their contributions to this debate. It has been brief, and I will try to keep my remarks brief, too. The Government do not want any doctor to retire early because of the way that pension taxes work, but as my hon. Friends have said, the issues that these changes address go much wider than doctors and affect workers across the economy. Nobody should find themselves having to reduce their work commitments due to interaction between their pay, their pension and the tax system. It is detrimental not just to those individuals who feel compelled to retire earlier than they would like, but also to the economy, and with them goes their often irreplaceable knowledge and experience.

My hon. Friend the Member for Poole (Sir Robert Syms) reminded us that today is a bad day for the purveyors of golf equipment, because this measure will allow people to come back into work. More than anything, we should be talking about the patients and others who will benefit, as well as the benefit to the economy from doctors, consultants and workers across sectors continuing to pay tax at their normal rate for those extra years.

My hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) conjured up the image of how it would oh so wonderful to be a fly on the wall for the recent conversations between the hon. Members for Ilford North (Wes Streeting) and for Ealing North (James Murray) in respect of this policy. We took our cue from the hon. Member for Ilford North, who called the cap “crazy” and said that removing it would “inevitably save lives”. I find it remarkable that that is no longer the position of the official Opposition.

My hon. Friend the Member for Amber Valley (Nigel Mills) talked about the fiendishly difficult position of trying to create a special scheme. Though we take the amendment of the hon. Member for Aberdeen North (Kirsty Blackman) in good faith, she nevertheless conjures up an “Animal Farm” tax policy, where we hit GP practices, people who work in hospices and adult and social care, mental health consultants, those who work in air ambulances and medical charities, and give preference to NHS finance directors over long-standing public servants elsewhere in the sector. I could not make those unequal choices, and I am surprised that she and her party feel able to do so.

Finally, my hon. Friend the Member for South Cambridgeshire (Anthony Browne), who speaks with such great knowledge on matters financial, reminded us of the fundamental principle. We could call it the Starmer principle: what is good for the Leader of the Opposition should be good for everyone.

Since this is part of the fundamental economic debate, I will conclude by reminding my hon. Friends what happened the last time Labour had its chance to put its hand on the economy: the then Chief Secretary to the Treasury left a note saying that there was no money left. [Interruption.] I have answered the questions from the hon. Member for Ealing North, and I was kind enough to write to him about the matters that he raised with me.

[Kirsty Blackman]

The Government have been battling manfully to attempt to retrofit a justification to a policy that was unveiled like a rabbit out of a hat on Budget day. We have been speaking about doctors’ pensions in this Chamber for years, and suddenly it turns out it is actually about air traffic controllers, senior police officers and others who were not being mentioned, because the Chancellor has made the decision to abolish the lifetime allowance. The Minister was continuing to try to pull at the heartstrings by mentioning NHS doctors and consultants in every second sentence as if they are the only ones who will benefit from the £1 billion tax cut that is being made, and as if we should all support this change because it is for our NHS heroes, but actually it is not just for our NHS heroes.

The Government have chosen to implement this in the widest, most ham-fisted way. If the current policy of the lifetime allowance was so bad, why did it take the Conservative Government 10 years to change it? Why did it take them so long to decide this was so horrific that they had to get rid of it? Why, if they cannot possibly have a scheme that allows for one profession or one public service to be treated differently, did they allow the scheme for judges to continue for such a long period of time? If that was so discriminatory and cannot possibly be replicated for NHS doctors, why have they only realised this in the last few months? Their arguments do not stack up. Therefore, we will do what we intended to do, which is to press amendment 21 to a vote.

Question put, That the amendment be made.

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[Jamie Stone]

You’re dead right—I stand corrected by my right hon. Friend. Tourists love it and it contributes a huge amount to the Exchequer. It matters passionately to my constituents and to me. If I do nothing else for my constituency, I will try to boost the economy in every way I can because every job counts. I rest my comments with that.

[Kirsty Blackman]

I fear that, if I was to talk about the names of all the distilleries in my constituency, the debate would be much shorter than if the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) were to do so. In fact, I have much more of a tendency to drink gin than whisky, although other spirits are available.

It was interesting to hear the words “economically fragile”. That is an incredibly good point. Rural depopulation is a real issue. The Scottish Government are doing what we can to ensure that it does not continue, but if the UK Government keep working against what we are doing to encourage people to live and stay in our rural communities, we will have a real problem. That is not a small thing.

We tabled our amendments because we specifically wanted the word “whisky” on the Order Paper and we wanted to make the case in relation to whisky. However, I will not be pushing our amendments to a vote, and will support that of the right hon. Member for Orkney and Shetland (Mr Carmichael) because I concede that his is better. I am always happy to do that in such situations.

The reality is that Scotch whisky is 4.9% of the Scottish economy. Some £8.1 billion can be attributed to the sale of alcohol, around 60% of which comes from whisky exports. The numbers stated by the right hon. Member about how the differential rates work and how much people are taxed on those 14 units were incredibly interesting. The Government’s purpose is to make money from some of the alcohol measures, but there is also a population behaviour change intention behind what they do with tax on spirits and alcohol, particularly the allowance on draught beer. They have different taxes to encourage a change of behaviour, or differential behaviour in people. The Government may intend to use this tax to shift some of the population, but they are actually discouraging people from buying the very spirits that a huge amount of our livelihoods relies on. It is the case that 90% of spirits in the UK are produced in Scotland. The Government’s measures therefore have a massive negative impact on Scotland.

The average price of a bottle of Scotch whisky is £15.22 at a supermarket in Scotland. Following the new alcohol duty plus the VAT, £11.40 of that £15.22 will go to the Treasury. That is such a significant amount, and does not compare with other alcohol. I appreciate what the Government are trying to do on draught, and it is important that they have laid out their rationale for doing so—that was very helpful—but this is incredibly unfair and risks damaging those economically fragile areas, particularly in rural Scotland. Those areas have already suffered as a result of Brexit, with people’s reduced ability to freely move here.

I want to raise a small flag with the Minister in relation to the Public Bill Committee. When we come to that stage, I will be raising questions around clause 87, which is on post-duty point dilution of alcoholic products. I know there have already been problems in relation to that, so when we come to that stage of the Committee, I would appreciate Ministers being absolutely clear about their reasons for the changes in clause 87. If they are able to lay out those reasons clearly, that will reduce the number of questions I am likely to ask.

In summary, we support the amendment proposed by Liberal Democrat Members. We agree with the Scotch Whisky Association and think that the increase in duty is unfair and hits spirits, particularly Scotch whisky, unfairly. We want to stand up for our constituents, our constituencies, rural Scotland and Scotland as a whole in supporting the amendment.

[Abena Oppong-Asare]

I rise to speak, on behalf of the Opposition, to the clauses that are related to the tax treatment of devolved social security benefits and the new alcohol duty regime.

I will address clause 27 briefly. Clause 27 introduces a new power to enable the tax treatment of new or new top-up welfare payments, introduced by devolved Administrations, to be confirmed as social security income through secondary legislation. That will allow the UK Government to confirm the tax treatment of new or new top-up payments within the new tax year rather than be subject to the UK parliamentary timetable.

I note that the income tax treatment of social security benefit is currently legislated for in part 10 of the Income Tax (Earnings and Pensions) Act 2003, and that this clause will introduce a new power to add new benefits to the table of taxable benefits included in the Act. I can see that the clause is largely administrative. Therefore, the Opposition do not take issue with the clause and will support it.

I will now move on to the clauses concerning the new alcohol duty regime. The Bill contains 77 clauses establishing a new structure for alcohol duty, but we will discuss just some of those today, before moving to consider the remainder in Public Bill Committee.

Labour agreed with the principles behind the alcohol duty review. We want to see the alcohol duty system made simpler and more consistent. We recognise that there is a balance to be struck between supporting businesses and consumers, protecting public health, and maintaining a source of revenue for the Exchequer. We have consistently raised concerns about the Government’s rushed and confused messaging on this area.

Before I come to the clauses and schedules, I want to paint a brief picture of the context behind the changes. Back in October 2020, the Government announced a call for evidence, seeking views on how the alcohol duty system could be reformed. At the time, they said this would make the system

“simpler, more economically rational and less administratively burdensome on businesses and HMRC.”

However, what we have seen since then is indecision, U-turns and delays.

Businesses and consumers had to wait until September 2022 for the Government’s response to the alcohol duty consultation. What ensued was chaos. In the shambolic mini-Budget that crushed the British economy, the then Chancellor announced a freeze on alcohol duty that was due to come into force in February 2023, but then the new Chancellor scrapped the freeze in October’s autumn statement. Fast forward to December, and I was back standing at the Dispatch Box responding to another Government’s U-turn, that time deciding that the freeze was back in place until August 2023.

The Government have now confirmed that the freeze will end in August and a new system of alcohol duty will be put in place. Alcohol duty rates will be adjusted in line with inflation and moved to a system that links duty rates to alcohol by volume. Clause 47 sets out the new regime, while clause 48 and schedule 7 specify the new adjusted rates of alcohol duty for different drinks. I note that some sectors are concerned about these changes—particularly wine producers and Scottish whisky producers, as the right hon. Member for Orkney and Shetland (Mr Carmichael) highlighted.

The reason the Tories have hit people and businesses with stealth taxes is that they have failed to get the growth that our country needs and have failed to get a grip on inflation. That is what makes the boasts of halving inflation so hollow. Prices are already soaring, hitting industries with steep tax rises.