Luke Evans
Main Page: Luke Evans (Conservative - Hinckley and Bosworth)Department Debates - View all Luke Evans's debates with the HM Treasury
(1 day, 13 hours ago)
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Mel Stride
As the party that increased the personal allowance, doubling it between 2010 and the present day, taking millions of people out of tax altogether, and that brought in the national living wage, we have done a great deal to support the lowest paid in our society in particular.
Dr Luke Evans (Hinckley and Bosworth) (Con)
The point is about the culmination of all the changes the Labour Government have brought in. This Government have indeed raised national insurance, and may need to do so again in future. However, the key point is what the ramifications of all these changes will be—the living wage change, the cuts to business rate relief, the red tape being introduced with the Employment Rights Bill and the national insurance contributions going up. That toxic concoction will kill off growth. That is the problem. Does my right hon. Friend agree?
Mel Stride
My hon. Friend is absolutely right. It is not as if the Government were not warned about these issues. In its reports, the OBR made it extremely clear that while the headline figure to be raised through the national insurance contribution changes is £25 billion, the net figure will be far less because of the behavioural impacts that necessarily follow when jobs are taxed—one does not need to have spent a decade at the Bank of England to know that. National insurance increases lead to fewer jobs, lower wages and higher prices.
Of course, this Government are piling on the regulation with their Employment Rights Bill. We know that this will increase the risk of employing people at a time when the employment market itself is softening and putting an end to flexible working practices, which not only benefit many businesses but suit many people, particularly younger people and those who are more elderly. Given that, it is astonishing that the Chancellor has launched a tax raid on family businesses.
Mel Stride
My hon. Friend is absolutely right. That is where the dearth of experience of entrepreneurship on the Government Front Bench really shows. We see this not just with BPR, but with agricultural property relief. Family farms will be broken up, with years and generations of people struggling and working hard, whatever the weather, to grow businesses and provide the food that we need torn asunder with a stroke of the Treasury’s pen.
Dr Luke Evans
In an interview, the Prime Minister said that the reason for doing this to farmers was to be able to give them the NHS that they might need. Only a week later, the £10 million fund that was there to support the mental health of farmers had been taken away. It must stick in the throat of farmers when they are told that they are not a priority, that food security is not a priority, and that they will now not have the health service in place, despite having to pay the tax that is about to come into force.
The Exchequer Secretary to the Treasury (James Murray)
I thank the shadow Chancellor for opening the debate.
In their motion, the Opposition have set out a list of objections to the decisions that the Government have taken—or, in the case of the measurements around pints, decisions that shadow Ministers seem to have entirely imagined. They may be able to list their objections, but they are unable to accept responsibility for the damage that they did to our economy. Crucially, they are unable to offer any credible alternative. The motion makes it clearer than ever that the Conservatives have no vision, no ideas and no plan to deliver the change that our country needs.
In contrast, Labour is the party with a plan for change—a plan to restore economic stability, boost investment and drive growth across the UK to put more money in people’s pockets. We know that it is up to the Government to provide stability, security, fiscal responsibility, and to remove unnecessary regulation when it stands in the way of growth. It is businesses large and small—including family businesses and their workforces—that will create jobs and wealth and be the engines of growth in the economy. We know that pubs, shops, traders and services across the country not only play an important role in all our lives, but drive economic growth. Those businesses and their workforces are the backbone of our economy, and they need a Government who will take the right decisions in the national interest, even when they are difficult, to support our security and prosperity.
I briefly remind Conservative Members of the context in which the decisions have been made. That context is, of course, the inheritance that this country faced after 14 years of the Conservative party being in power.
Dr Evans
The context is that back in 2010 the then Government had to borrow £158 billion. Fast forward another decade, and we had something called the pandemic, when we had to borrow £400 billion on top of that. Collectively, that is a great big difficulty. Five years ago, when the pandemic happened, I sat in this Chamber listening to all the interventions asking for more spending. Does the Minister not agree that that is the problem the Conservative Government dealt with?
James Murray
The hon. Gentleman said that we had something called the pandemic; we also had a Prime Minister called Liz Truss and that had a pretty big impact on our economy. I know the shadow Chancellor is distancing himself from it. If his colleagues would like to leap to Liz Truss’s defence, I would welcome an intervention. No, they are not seeking to intervene. Funny that, Madam Deputy Speaker. Perhaps, in closing, one of the other shadow Ministers can defend Liz Truss’s record.
Dr Evans
The way I see it, the problem that Liz Truss had with her Budget was that she did not set out her workings. The problem with Rachel Reeves’s Budget is that she did, and the country and the world does not believe it. That is far more detrimental to the situation we find ourselves in because she cannot get out of that problem. That is the difference between Liz Truss and Rachel Reeves.
James Murray
Wow. I should let the hon. Gentleman intervene more often if he is going to say that the only problem with Liz Truss is that she did not set out her workings. I think the problem was rather more fundamental than that, as people across this country will attest.
Frankly, it is no wonder that Conservative Members want to bury their heads in the sand and try and pretend the last 14 years did not happen. It was 14 years of mismanagement and decline, along with jolts of disaster, digging ever deeper holes in our public services and our economic resilience. It was their decisions that led to their resounding electoral loss last year and it was their record in office that made necessary the difficult decisions that we had to face on entering government.
Bradley Thomas
I agree wholeheartedly. That strikes at the heart of the Government’s lack of appreciation for what fundamentally drives the economy.
Dr Luke Evans
To be fair to the Government, we may not know what their CVs show, so there could be business experience but it is just not on their CV.
Bradley Thomas
My hon. Friend raises a very valid point, but let us look at the facts. The Government will attempt to tarnish the Conservatives’ record, but in July Labour inherited the fastest growing economy in the G7, with unemployment at near-record lows and inflation at the Bank of England’s target. We have seen a complete reversal of that, in part because the choices the Government made in the Budget have destroyed that progress. The Government’s Budget and fundamental overall approach threaten the future of family businesses through new red tape—we have the family business tax, the family farm tax and the national insurance job tax. Businesses know that they are paying more and the Government know that businesses are paying more, and I do not know how some Labour Members have the gall to sit there and think that their position is one of honesty and credibility when it comes to growing the economy.
A business in my patch has got in touch with me. Jack and his family run an apprenticeship training provider. Jack said,
“My parents left school with no qualifications and over the last 50 years have worked hard paying their way getting on and building a good life and business for us as a family. Since 2007, they have been majority shareholders and owners”
of a business called Birmingham Electrical Training, for which Jack is also a director. He goes on to say that they
“currently are the 2nd biggest provider of electrical apprenticeships in the UK”
and
“train 700+ apprentices in partnership with 275 local and national…contractors, many of which reside and work within”
the west midlands region. They
“hold a department of education contract and are recognised by the Electrical Industry in providing a crucial role in training the next generation of electricians”.
That is a pertinent point when the Government are pursuing policies like the ludicrous clean heat market mechanism, which will require a step change in the number of electrical contractors to deliver on the Government’s net zero folly.
Jack makes this point:
“There is no way that I would be able to afford £800k worth of tax to access the business I have helped build and grow over the past 10 years”
as a result of the changes announced by the Chancellor to inheritance tax. He will personally be liable for £800,000 that he will not be in a position to pay. That jeopardises one of the family businesses that form the backbone of the country’s economy. He asks,
“Why would the government want to destroy family businesses, which are crucial to helping local people and provide the growth in the economy in the years to come?”
That is not an isolated case. The Confederation of British Industry and Family Business UK have warned that changes to business property relief could lead to up to 125,000 job losses and reduce economic output by £9.4 billion, as their analysis found that average family businesses would cut investment by a staggering 16.5%, reduce headcount by 10.2% and lose turnover of 7.4%. That recognises the fact that the Government do not appreciate the fundamental positive benefits to wider society of promoting small businesses and their long-term financial viability. The Government are making the UK a hostile destination for investment, both large and small. They must work to ensure that our country is the most attractive destination possible for businesses to invest and grow and to make us wealthier.
Laurence Turner (Birmingham Northfield) (Lab)
I draw attention to my declarations in the Register of Members’ Financial Interests. It is a pleasure to follow my constituency neighbour, the hon. Member for Bromsgrove (Bradley Thomas). I will just say that the clean heat market mechanism that he spoke about, which is causing concern to a business in his constituency, was of course brought forward by the last Conservative Government.
I will start by talking about the Employment Rights Bill, because some of us have just spent two months in Committee going through it line by line. I thought that the House might want to hear about some of the opinions and positions put forward by the Opposition during that process. The Opposition tried to exempt millions of workers in some of the lowest paying sectors from protection against harassment at work. We heard from the shadow Minister that he does not believe that public sector employers should offer facility time at all. The Opposition attempted to block better contracts for teaching assistants and other low-paid members of school support staff. A witness who was presented as representative of business opinion had previously said that lockdowns would kill far more people than covid. I do not think that the motion or the party putting it forward is a credible voice of economic growth or business.
Dr Luke Evans
The independent Regulatory Policy Committee looked at the Bill back in November and said that eight out of the 23 categories were “not fit for purpose”. Was that discussed? Given that the committee is independent, does the hon. Member give that point any credit when it comes to discussing the Bill?
Laurence Turner
One of the pleasures of the Committee is that we have 970 pages of transcript where those matters were discussed at length, and the Government are indeed bringing forward further impact assessments on those points.
Looking at my constituency and, indeed, the constituencies of all Members of the House, the economic record that we have inherited is one of pallid economic and wage growth. After 15 years, average real wages in Birmingham Northfield are £300 lower a month than they were in 2010. The costs of delayed and cancelled NHS appointments, crime that goes without investigation and shortages in key teaching posts are borne not just by our constituents, but by businesses. We should say this clearly: public services create value. Businesses and the people who work for them need strong public services to sustain themselves and grow.
When I recently met small businesses on Northfield high street, we had—as you would expect, Madam Deputy Speaker—a serious and robust discussion about a whole range of Government policies and policies enacted by the previous Government, but the first issue raised was crime and antisocial behaviour. Anyone who has been a victim of crime can attest to the devastating impacts that it can have on a person or business.
Nick Timothy
The hon. Gentleman is a little confused. Public spending is not increasing faster than I expected; it is increasing faster than his party told the country. That is the point.
The Treasury might not be what it once was, but even if we believed what the Minister said about the fictional black hole, which the Office for Budget Responsibility has disowned, £9.5 billion plus £22 billion does not reach even half of the £76 billion in extra Labour spending. I am not sure whether the Minister is listening, but he can intervene if he wants to explain himself at this point—he clearly is not.
What do we get for these extra taxes? The Home Office budget is being cut by 2.7% in real terms compared with last year. The Department for Transport budget is being cut by 2.5%, and its capital budget is being cut by 3.1%. That is economic illiteracy. This amounts to taxsterity —tax rises and spending cuts—to go with stagflation, or stagnation and inflation. That is Labour economics.
Dr Evans
To be fair to the Labour Government, they have seen a surplus in self-assessment tax receipts, at £15 billion. The problem is that the OBR was expecting that to be £21 billion. We therefore have the prospect of them trying to find where we get that extra money from. The Government need to set out whether they are going to break their fiscal rules, cut public spending again, or increase taxes. Does my hon. Friend have any inclination on what they might choose, because I certainly have not heard anything?
Nick Timothy
Based on Labour’s track record, one would always bet on tax rises rather than fiscal responsibility.
The bond markets have taken a single look at the Chancellor’s fiscal plans and increased Britain’s borrowing costs, which means another Labour tax rise for all of us. Not one word in the speeches we have heard from Labour Members today recognised the cumulative damage caused by their Government’s policies. There is the national insurance jobs tax, hiking the cost of hiring staff by £900 for an employee on the average salary and costing businesses £25 billion in total. There is the business rates relief cut, from 75% to 40%, meaning that businesses will spend £2.7 billion extra a year by 2026-27.
There is the Employment Rights Bill, which, as I said, will cost businesses £5 billion a year, and probably more once the Government finally get their impact assessments right—normally Governments produce an impact assessment before a Bill is published, not after it has passed through all its stages in the House of Commons. There is the Energy Secretary, who wants to increase the carbon price higher than Europe’s and, according to the National Energy System Operator report that he constantly endorses, up to as much as £147 per tonne of carbon dioxide by 2030. As industry is lining up to tell the Government, that is yet another jobs killer. There are also, of course, the changes to business property relief that we have discussed today, which will cost £1.25 billion in lost revenue and mean 125,000 jobs lost by 2030.