Finance (No. 2) Bill (Fourth sitting)

Martin Wrigley Excerpts

Thursday 29th January 2026 Public Bill Committees

[Mr Joshua Reynolds (Maidenhead) (LD)]

In November, the Chancellor told the House that what we are now seeing in clause 79 would protect about £700 million of tax revenue, ensuring that VAT is paid on fares. Yet, according to The Guardian on 2 January, Uber

“has swerved paying millions of pounds”

by simply rewriting its contracts with drivers so that it acts

“as an agent, rather than as the supplier”

outside London. That means that the vast majority of Uber fares outside the capital will avoid the 20% VAT tax on Uber and, as the majority of drivers’ earnings are below the VAT threshold, that money will not come into the Treasury. Meanwhile, passengers in London, where Transport for London has prevented the agency model, will see higher fares.

Can the Minister explain how much of the projected £700 million in revenue is actually going to be protected, given Uber’s change? Why are we now in a position where we have an absurd two-tier system in which identical journeys are taxed differently depending on whether they take place inside or outside London? I note that no Government amendment to the clause has been tabled. Has the Treasury accepted that because of Uber’s decision, this policy has failed before it has even begun?

[Martin Wrigley (Newton Abbot) (LD)]

On reading the clause, I too was concerned about the costs for SEND. Devon, which is a very rural county, spends something like—from memory—£50 million a year on taxis to move children across the county who require special schools in different areas. A 20% tax on that would equate to £10 million. Will the Minister clarify whether taxis used for SEND transport by councils are included? If so, will the Minister please negotiate the extra money that will be required, so that we do not have our SEND budget in Devon cut by £10 million?

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

It is a pleasure to speak under your chairship, Mrs Harris. I am very glad to see you in the Chair. Rather than running through these changes in detail, let me respond to some of the points that have been raised, because they are important and, in some cases, valid.

As a tax Minister, I am not going to comment on the affairs of individual taxpayers, by which I mean individual businesses, but I will say that the exclusion from TOMS applied to several large private hire vehicle operators. Crucially, it ensured that they were subject to the same tax rules as everyone else. That is what this change is trying to do.

Regarding any subsequent potential changes to the operation of business models that may or may not have taken place—hon. Members have mentioned some reports, but at this stage they are only reports—HM Revenue and Customs will always make an operationally independent assessment of whether a private hire vehicle operator is operating as an agent or, as it is sometimes called, a principal, and it will charge tax accordingly. If there are any implications—we do not know yet whether there will be—any costing update will flow into the forecast as usual.

--- Later in debate ---

[Dan Tomlinson]

We are confident that the exclusion drafted in the Bill is carefully targeted and will not have unintended implications by limiting the activities of legitimate tour operators. It is right to make this change, which will raise £700 million of tax revenue that the Government believe should already be being paid. It will be a vital contribution to the public finances.

[Martin Wrigley]

Will the Minister address the SEND concerns, please?

[Dan Tomlinson]

The Government are, of course, aware of the pressures on local council finances as a result of the growing number of children with additional needs who require transportation or other support. It is important to note that the clause does not seek to apply additional VAT to those who are not already seeking to make use of the TOMS. The vast majority of taxi services across the country are not using the TOMS and will be unaffected by this change, but we think it right to ensure that this particular use of the TOMS cannot continue, in order that we can raise revenue.

--- Later in debate ---

[Mr Reynolds]

I am very glad that the Government have ditched the plan to converge the rates of landfill tax and to massively hike the charge for inert waste, adding tens of thousands of pounds to the cost of a new build home at a time when the Government want to build 1.5 million new homes. That was not joined-up government, and I am concerned at the lack of joined-up thinking when the Treasury put forward this proposal.

There are a number of gravel quarries in my Maidenhead constituency, and converging the rates would have meant that a significant number of those quarries would have gone unfilled, resulting in more quarry lakes in our town. We know that quarry lakes are dangerous: they are quite shallow until they suddenly become incredibly deep. That is dangerous when young people are out on the water or swimming, and in areas not too far from my own we have seen some unfortunate deaths as a result.

I am glad that the Government have decided to back down on this and are not going to burden the quarry sector or developments with that proposal. However, can the Minister confirm what the cost would have been to UK infrastructure projects such as High Speed 2, and what the additional cost to the taxpayer would have been?

[Martin Wrigley]

I endorse my hon. Friend’s comments. We have a number of quarries in Newton Abbot, and the same principles apply. I am, however, doubly pleased that the extensive increase was not included in the Budget. I was taken to a local factory in Newton Abbot that makes high-value, high-performance propellers that it exports all over the world. The factory was to be put out of business, because it pours the metal into moulds of sand, and the cost of disposal of that sand would have been more than it could have borne. That would have shut down a £20 million-a-year business. I am extremely grateful that the increase has not been implemented, but I draw the Minister’s attention to such side effects when considering future proposals.

[Dan Tomlinson]

I thank Opposition Members for their contributions and for welcoming the Government’s decision on this matter at the Budget. I find it a bit tiresome that the Conservatives, when we consult, accuse us of consulting, and when we do not, accuse us of not consulting. It is right and proper, where possible, for the Government to engage with industry on proposals and then come forward with good policy outcomes. I am glad that there has been acknowledgment across the Committee that we have listened, engaged and come forward with proposals that are proportionate.