Finance Bill

Luke Charters Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[Chris Coghlan (Dorking and Horley) (LD)]

It is a pleasure to speak in this debate as a member of the Treasury Committee. After suffering the highest fall in living standards since records began, the United Kingdom desperately needs economic growth, yet the OBR forecasts that the policies in the Government’s Finance Bill and Budget will have no impact on growth over the next five years. The recessionary impact of the tax rises, combined with a focus on current spending that crowds out the private sector, largely offsets the fiscal stimulus of one of the largest fiscal events in recent decades, and of borrowing an extra £32 billion a year.

There are potential upsides to the growth forecasts in the Budget, mainly from the impact of planning reform, but this Budget and Finance Bill are a missed opportunity for growth. That matters, because there are chronic structural problems in the British economy that we must address. Indeed, given that public sector net debt is now approaching 100% of GDP, the Government’s ability to borrow to invest in the future, or to cope with an unforeseen shock, is severely constrained.

Many Labour Members have spoken about the importance of public investment, which I agree with, so I would like to address the following points. Since the 2008 financial crash, the UK economy has been hampered by productivity growth collapsing to 0.6% per year—the second worst in the G7. Unless and until we solve the productivity crisis, the UK will not escape its downward economic spiral of higher taxes, an ageing population, ever crumbling public services and ever higher debt. A key cause of that is chronically low public and private investment. In 24 of the last 30 years, the UK has had the lowest total investment of any G7 economy, yet as the OBR testified, under the Budget, public investment will remain flat as a share of GDP, so the Budget is unlikely to help solve the productivity crisis. This is why the OBR is forecasting that for every £1 borrowed by the Government, the economy will grow by only 60p next year, and that these effects will reverse in five years.

[Mr Luke Charters (York Outer) (Lab)]

The hon. Gentleman knows that I hold him in high regard, but I am slightly perplexed because he welcomes this Government’s investment in public services, the NHS and so forth, yet his colleagues oppose many of the revenue raisers in this Finance Bill—and perhaps he does, too. Can he help me square that circle?

--- Later in debate ---

[Mr Luke Charters (York Outer) (Lab)]

My hon. Friend the Member for South Derbyshire (Samantha Niblett) has left the Chamber, but I praise her for her maiden speech. I am pleased to speak on this Finance Bill. It underpins the first Labour Budget in 14 years. It also raises the revenue that this country needs in order to recover, rebuild and renew. I will not spend ages talking about the Conservatives and the mess they have made, but—cue groans from Conservative Members—we all know about the £22 billion black hole, the mini-Budget and their reprehensible record on public finances.

However, I want to take a moment to praise the shadow Chancellor, the right hon. Member for Central Devon (Mel Stride), because I genuinely enjoyed his astronomy references. It is just a shame that he is not quite on planet Earth when it comes to recognising that we need to not only invest in public services but pay for them—the vehicle for that being this very Finance Bill. Even while this Government are tackling the Tories’ toxic inheritance, we are, through this Finance Bill, protecting payslips, when it comes to income tax and employee national insurance.

Let me get on to other key measures in the Bill that I welcome. Measures on tobacco duty, non-dom tax status and the oil and gas windfall mean that public services in my constituency of York Outer will be all the better off. Let me start by talking about the NHS. This week, I met Yorkshire Cancer Research to talk about the vital work that it does. As we discussed on Second Reading of the Tobacco and Vapes Bill yesterday, the tobacco duty increase will act as a deterrent to smoking, and it will save lives. Taken together, these measures are important to changing habits, but the tobacco duty increase will also raise extra cash to fund our NHS.

Primary care services such as the York Medical Group, which I recently visited, and York hospital will undoubtedly welcome extra investment. I certainly welcome it, as a parent who recently had to wait many hours in York A&E with a screaming toddler after a trapped finger. It is vital that we get the NHS back up and running for constituents like mine. One constituent has been waiting seven years for surgery. Let that sink in: it is half the time that the Tories were in power. I am clear that this Bill raises the revenue to put the NHS on a much surer footing.

[Dr Luke Evans]

The hon. Gentleman is a conscientious Member of Parliament, and I understand what he is saying, but does he accept that, in the words of a former Labour leader, we invest in public services with the proceeds of growth? When he stands for re-election, will he tell his constituents that he advocated for a Budget to cut growth in his country?

[Mr Charters]

That is slightly laughable, if I may say so as an affable Yorkshireman. Things like the national planning policy framework will drive growth, and some of these measures were not included in the OBR blue book. This pro-growth Government are doing so much for growth, so I find the hon. Gentleman’s question slightly perplexing.

The Bill will abolish the non-dom tax loophole and replace it with a residence-based regime. I had a look, and this change will raise £12.7 billion. Just last week, the Transport Secretary kindly visited me and the Mayor of York and North Yorkshire to announce £12.7 million of funding for our buses, which will transform our region. My quick maths shows that closing the non-dom tax loophole will pay 1,000 times more than that sum, which is the difference this Bill will make.

I will soon be having my office Christmas do. I am sure there is a joke to be made about liquid assets, but I recently visited Elvington brewery, and this Bill rightly cuts alcohol duty on draught products. That is wonderful news for our Yorkshire pubs. I need to declare an interest for myself and my hard-working team, because these measures mean that we are looking forward to enjoying a cheaper pint of the wonderfully named Fairytale of Brew York, which will be launched by Brew York over the festive period. Conservative Members back investment in our public services, but they do not support the revenue raised by this Bill. Perhaps they have been having too many fairytale economic pints.

The VAT increase on private school fees will bring in £1.7 billion a year, which will go directly to schools like those in York Outer. The Budget announced a £1 billion uplift for SEN provision and a £2.3 billion increase in the schools budget, which will make a huge difference to places like Applefields school and Manor Church of England academy.

I have also visited Askham Bryan college, a fantastic agricultural college in York Outer. Its great students, who are studying T-levels, will benefit from £300 million of extra funding for colleges, directly stemming from this Finance Bill. While making some proportionate tax rises in the Budget, we have maintained our position of having the lowest capital gains tax in Europe. We have struck the right balance, because we will have extra cash for our schools, and it is a real lifeline.

For all the Conservatives’ obfuscation, we have actually kept so many of our manifesto promises, one of which was to deliver a windfall tax on oil and gas companies—a policy so good that the Conservatives stole it when they were in government. The additional revenue raised by the EPL will help us to set up GB Energy, which will deliver for the British people by delivering the green jobs of the future.

May I briefly refer to the first Bill I ever spoke on in this House, which is now the Budget Responsibility Act 2024? I said the Bill was important because it was

“the only way we can grow those public services with a stable economy.”—[Official Report, 30 July 2024; Vol. 752, c. 1253.]

That is as true now as it was back then—[Interruption.] I hear grumbles from the Opposition Benches. Conservative Members do not seem to think that economic stability matters when it comes to investing in public services; they certainly know quite a lot about economic instability. This Government have been tasked with ripping out the rot following 14 years of chaos. The Bill helps to fix the foundations by providing the revenue to restore public services in York Outer and beyond.