Mel Stride
Main Page: Mel Stride (Conservative - Central Devon)Department Debates - View all Mel Stride's debates with the HM Treasury
(3 weeks, 3 days ago)
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Sir Mel Stride (Central Devon) (Con)
I beg to move,
That this House notes recent reports that the Government is considering a wide range of increases to taxes on property; notes the Prime Minister’s commitment last year not to impose Capital Gains Tax on primary residences; and calls on the Government not to introduce an annual property levy which would tax the family home, higher rates of Council Tax, or a land value tax, or to lower the thresholds or further increase liability to Inheritance Tax, for example, by changing the seven-year gift rule.
I trust you had a good recess, Mr Speaker. I am absolutely certain that the Deputy Prime Minister also had a good recess. We saw many photographs of her down at the seaside, just off the coast in a rubber dingy—rather like many of the other photographs we saw over the summer, given this Government’s reckless policies on illegal migration. She was probably celebrating the acquisition of another property for her property empire, but that celebration was perhaps slightly tinged with a nagging doubt as to whether she had indeed paid enough stamp duty. Well, we will get to the bottom of that in due course.
Those who could not avoid paying the taxes imposed by this Government are businesses right up and down our country, many of which I took the time to visit during the recess. In the leisure sector alone, some 80,000 jobs have been destroyed by the national insurance rises, and this has particularly affected those taking their first job, younger workers, part-time workers and female workers. Jobs are being destroyed.
While the Deputy Prime Minister was lounging on her boat with her wine, this Government were all at sea, like a cork bobbing on the tide, with no control over the events swirling around them. When it came to the economy, although eclipsed by the calamities around illegal migration, we saw recently the panicked reshuffle of the Treasury Front Bench. I offer my congratulations to the Exchequer Secretary to the Treasury, the hon. Member for Chipping Barnet (Dan Tomlinson) and warmly welcome him to his new role. However, I should also tell him that he is joining a sinking ship, whose captain has just had all her authority stripped from her, while all his comrades down below deck are fiercely trying to bail it out. I also offer a fond farewell to the former Chief Secretary to the Treasury, the right hon. Member for Bristol North West (Darren Jones), who no doubt thought he was very clever when he leapt off the sinking ship. He will not be feeling quite so clever when he discovers that the place to which they have sent him is even more dysfunctional than the Treasury Front Bench.
Among all this news of arrivals to our shores, we have had a cruel summer of speculation around tax. We have seen in the skies clouds of kites flown largely by the Treasury as to what taxes it is going to put up. It has all been tax, tax and tax. I am reminded of the Beatles’ song “Taxman”:
“I’ll tax the street,
If you try to sit, I’ll tax your seat,
If you get too cold, I’ll tax the heat,
If you take a walk, I’ll tax your feet.”
When it comes to tax, it is not so much “Good Day Sunshine” as “Help!”[Laughter.] Okay—it was a bit hammy, but it was worth a try. I was going to try “Penny Lane” as well, but I drew the line there.
It is worth examining how we got to this point, for a reckoning for our country is surely coming. This will be a story for all time.
Sir Mel Stride
I will do so momentarily.
It started with broken promises. This was a party that said during the run-up to the general election that it had no intention of raising taxes left, right and centre, and yet within a month or two, this Government did precisely that, with devastating consequences: tax rises on businesses that stifle growth. They talked down the economy by confecting a £22 billion black hole that did not exist. What an irony it was that it was they who brought in the Office for Budget Responsibility to decide whether that £22 billion black hole existed and that the OBR said it could not legitimise the claim—the Government were wrong.
What happened with spending and borrowing? It got completely out of control. The combination of passing on price rises because of the national insurance increases, and the extra borrowing and spending, has led to higher inflation. We are an outlier when it comes to inflation.
Helena Dollimore (Hastings and Rye) (Lab/Co-op)
Will the right hon. Member give way?
Sir Mel Stride
In a moment.
That in turn has seen interest rates higher for longer and the servicing costs on our national debt now running at over £100 billion a year—more than twice our defence spend. I will now give way to whoever was trying to intervene behind me.
Sir Oliver Dowden
Would my right hon. Friend agree that correcting this loss of market confidence demands decisive action from the Government at the Budget, and that that decisive action cannot be taken solely on the tax side? The tax side is what has driven us into this loop. We need decisive action on spending and particularly on welfare if we are to see some restoration of market confidence and get ourselves out of this rut.
Sir Mel Stride
My right hon. Friend, as ever, is absolutely right. The reality, as we see in the bond yields at the moment, is that the markets have no confidence in the ability of this Government to get on top of spending. We saw the farce of a Government who came into office scrapping the £5 billion of welfare savings that were already baked into the OBR’s scorecard because we had brought them in, and attempting to bring forward their own reforms only for their Back Benchers to vote them down. My right hon. Friend is so right; this Government do not have the will or the plan to deal with spending, and that is at the heart of the reason why we will all be punished and pay the price of more taxes come the Budget in November.
Jim Shannon (Strangford) (DUP)
I commend the shadow Chancellor for bringing forward this subject for debate. He clearly shares my deep concern that I have, and that I think everyone in this Chamber should have, that the Government are considering a further tax on property, despite the fact that the Prime Minister committed to not imposing capital gains tax on residents of this United Kingdom of Great Britain and Northern Ireland. Last year, it was the family inheritance tax; this year, those who own property—those who have scrimped and saved for their house, those who are middle class, those hard workers—have now become the latest target of Labour tax policy.
Sir Mel Stride
The hon. Gentleman is entirely right. Of course, if the Government have got into a situation where they are having to scrabble around and look at property taxes, as we are debating this afternoon, than really nothing is safe from the taxman under this Government.
Helena Dollimore
I gently remind the right hon. Member that since this Labour Government came to power, interest rates have been cut five times—a vote of confidence in our Chancellor, fixing the foundations of our economy. That saves the average family on an average tracker mortgage in my constituency over £100 a month. Will he remind me what happened to interest rates when his party was in power?
Sir Mel Stride
As the hon. Lady will know, interest rates are one of the key tools in monetary policy and are applied to bring down inflation. While she is right that there have been five reductions in the level of the base rate, there should have been many more. The reason is—the evidence is there—that this Government have stoked inflation. Inflation is still rising. It is at twice the level or thereabouts that it was on the day of the general election. When a Government stoke inflation, we pay the price through higher interest rates, and that is precisely what has been happening.
Graham Stuart (Beverley and Holderness) (Con)
My right hon. Friend is right to highlight the massive impact of these tax rises on so many families and businesses up and down the country. Will he comment on how we can have a Deputy Prime Minister who has admitted avoiding paying the tax that she owed and who continues in office? And this, from a party that called for the resignation of people for far lower offences! Does that not expose the rank hypocrisy that seems to run right through this Government?
Sir Mel Stride
If the right hon. Lady wants to make the rules, she should live by them. That message will go out to businesses and families up and down the country. There is no way that they can avoid the juggernaut of taxes that are coming down the track.
Tim Farron (Westmorland and Lonsdale) (LD)
In return for the right hon. Member’s generosity in giving way, I will say something pleasant about the last Conservative Government. [Interruption.] I know—wait for it! It will be just one thing.
The last Government allowed councils like Westmorland and Furness, run by the Liberal Democrats, to double council tax on second homes. It is right to do that because excessive second-home ownership annihilates communities in the lakes and the dales, the west country and elsewhere. But can I encourage the Conservatives and the party in government now to do something that would do much more to limit the number of second homes than that: bring in a new planning category of use, so that national parks and councils can manage the numbers and save communities?
Sir Mel Stride
I thank the hon. Gentleman for his kind words about the Conservative party—I am sure that they are deeply felt and very genuine. What the Deputy Prime Minister should be doing is delivering more homes. It is quite clear that the target of 1.5 million homes, which the Government claim they will deliver at the rate of 300,000 a year, will not be met. I am quite happy to be proven wrong, but I very much suspect that I will not be, unfortunately.
We have ended up in a situation in which a huge black hole is looming. The National Institute of Economic and Social Research puts it at possibly as much as £40 billion. The economic mismanagement of the Labour party is a recurrent theme. In the October Budget—the Government’s first—there was headroom of about £10 billion against the fiscal rules. That, plus £4 billion more, was blown by the time of the spring statement—the emergency Budget. Once again, it appears that considerably more has been blown all over again.
That is no surprise. The U-turns on winter fuel payments and on welfare reform, which we have already discussed in this debate, led to unfunded commitments of around £6 billion—unfunded commitments after the Chancellor had said that the Labour party would never find itself in that position. What she said has simply not happened. What signal does it send to the markets when the Government cannot control spending? In the long-term, it will be interesting to see what the Office for Budget Responsibility has to say about its forecasts for growth. In recent times, 30-year bond yields have hit a 27-year high. We are paying more to borrow than Greece. There is a potential debt crisis looming, and this country could be on the brink—all on Labour’s watch.
Dr Scott Arthur (Edinburgh South West) (Lab)
The Government inherited bond yields higher than those in many other countries. Right now bond yields are going up in Japan, Germany and the United States. Is the Chancellor responsible for all that?
Sir Mel Stride
There is no doubt that under the previous Government there was a need to support the economy. That involved the expenditure of £400 billion, not least on the furlough scheme. I do not remember the hon. Gentleman’s party arguing at the time that we should not do that; in fact, it argued that we should go further still. The Conservative Government stepped in, supported jobs and saved us from going into mass unemployment that many feared would be worse than even in the 1980s, and I take great pride in that. But we are where we are now, and what the Government should be doing is growing the economy, stoking up business sentiment, getting taxes down and getting the economy moving, but they are doing precisely the opposite.
Dr Luke Evans (Hinckley and Bosworth) (Con)
Is not the difference now that we are seeing stagflation—high inflation and the economy not growing as it should be? We are therefore seeing job losses and unemployment going up every month under this Labour Government. Unless they do something drastically different, it will only get worse, and that will impact on our growth prospects and therefore on the prosperity not just of our nation but of the individuals who work and try to thrive here.
Sir Mel Stride
My hon. Friend is absolutely right. We are seeing high inflation, anaemic growth, high gilt yields and a pound that has been plummeting in recent times. All those are signals flashing red on the dashboard.
Instead of getting a grip on spending and getting taxes down, the Government have been out there pitch-rolling yet more taxes. Over the summer, we have seen briefings to the press suggesting tax rises on property. The Labour party has an opportunity this afternoon to rule out those possibilities, and the Minister should do just that when he responds.
First, there has been a suggestion that there will be changes to the private residence relief under the capital gains tax regime. That would strike at the heart of our country as a property-owning democracy. People would be penalised simply for selling up and moving home. It would have clear implications by bunging up the property market, and clear economic implications by causing friction in the process of people moving from one part of the country to another, often in search of work. It would discourage downsizing, even though that would be beneficial in providing more homes for people to live in. Before the election, the Prime Minister said that there never was a policy of that type so it did not need to be ruled out, but let us rule it out just in case anyone pretends that there was such a policy. When he responds, will the Minister confirm that he stands by the words of the Prime Minister?
Secondly, there has been a suggestion of an annual tax on homes. What a tax on aspiration! What a tax on people who have saved hard and managed to get on the property ladder, but who will then be stuck with annual taxes. What about those who are asset-rich but income-poor and cannot afford to pay—are they expected to sell up? Will the Minister rule out that possibility and put people’s minds at rest?
If that was not enough, we hear that the Government may be considering changes to the gifting regime in inheritance tax. They are not content just to pulverise farmers and family businesses, and to see those businesses and farms broken up when they are passed on from one generation to another, because of the imposition of tax. In fact, it was a Labour Government in the 1970s who brought in the reliefs that this Government have chosen to abolish. The inheritance tax yield will double over this Parliament. The Opposition say, “Enough is enough.” We should not punish parents who wish to pass something on to their children. Socialists do not understand that we do not all stand as atomised individuals; we work together as families and communities. We care about each other, we care about the people we love, and it is right that we have the opportunity to pass something on to them.
Harriet Cross (Gordon and Buchan) (Con)
I thank the shadow Chancellor for introducing this debate on such an important issue. Properties and assets are vital to the country and to people. On the lifetime limit for inheritance tax, over the past year everyone will have heard the Government telling farmers and family businesses to get their affairs in order and to plan. Not having a limit on the lifetime cap was what allowed them to plan. If that is cut or the cap is not in the right place, it will negate every argument that the Government have made in the past year to justify their family farm and family business tax. Will the Minister please acknowledge that and rule out any change to the cap, which would penalise family farms and businesses?
Sir Mel Stride
My hon. Friend has put it brilliantly and succinctly, and she is absolutely right. In their horror—in their recoil from the inheritance tax changes—that is exactly what farmers and family business owners have been doing: thinking about alternatives. The seven-year rule has been one of those alternatives, and it would be a really heartless and extraordinarily cruel moment if the Government were to shut that down as well.
Dr Andrew Murrison (South West Wiltshire) (Con)
My right hon. Friend is explaining the situation in his usual powerful way. If, as seems likely, the Government impose capital gains tax on a person’s principal private residence, will he, as mitigation, consider whether there should at least be indexation allowance to provide some relief from the horror that I fear is about to be inflicted on my constituents? He will remember that the Finance Act 2008 abolished that relief on other property. I suspect that the Government will not be sympathetic to such a suggestion given what happened in 2008, but it would at least take the edge off the imposition of taxes on the sale of a person’s principal private residence.
Sir Mel Stride
My right hon. Friend raises his point in his usual eloquent manner. That is a question for the Minister, and I hope that, when he rises to the Dispatch Box, he will rule out our concerns in their entirety. In the event that he cannot, perhaps he will choose to answer my right hon. Friend’s inquiry.
Is it not the case that those in the Labour party have a clear misunderstanding because they have no business experience? Those on the Government Front Bench have no business experience in setting up companies or understanding the meaning of business taxes—the experience is simply not there. Labour will talk about taxing wealth, but does it not understand that if we tax wealth, we will get less of it?
It has been estimated that about 15,000 high net worth individuals have left our country in the period in which this Government have been in power. A consequence of that tax just walking out of the door is that we will require somewhere around a third of a million to half a million people on average earnings to make up the difference. This is not a case of good riddance to wealth; the Government should—as the Conservative party would—encourage and turbocharge wealth at every turn.
Andrew Pakes
I am sure Hansard will correct me.
The right hon. Gentleman just made some comments about high net worth or high value individuals. In my constituency, I am particularly interested in individuals on low incomes. In Peterborough, I represent a city with one of the highest levels of those employed on zero-hours contracts and in chronically insecure work. Does he not agree that his party often wants all the spending, but none of the funding for delivery? He talked about reducing taxation for some of those with higher net worth, but will he also talk about which doctors’ surgeries in my constituency would suffer cuts under his plans, which individuals would receive no protection for their employment rights, and how the people of Peterborough would be worse off because he wants to reduce the spending that will fix the foundations of this country?
Sir Mel Stride
The hon. Gentleman refers to cutting spending. His party attempted to cut spending, but entirely failed to do so. My point is that if he wants money to spend on public services, he needs to cut welfare and should worry about how to do so. I do not know how he voted when that was put to the test in this House, but if he in any way voted against his own Government and against getting on top of the welfare bill, he should ask his own question of himself.
As for those on low incomes, they are precisely the people who are now being devastated by the increase in national insurance. There is not just an increase in the rate, but a substantial reduction in the threshold at which national insurance kicks in, which has meant higher unemployment, in particular among younger workers, part-time workers, women and people getting that vital first job so that they can get themselves on a career path. They are the people whom the Labour Government are punishing most.
Dr Luke Evans
Is that not exactly the point—that the top 1% of earners pay almost 30% of income tax? If we lose them, we damage the people who need the support and the investment from the very taxpayers we have just scared off. Should not the reverse be happening? We should attract more people into this country to spend more money, so that we have more money for such services through tax collection.
Sir Mel Stride
My hon. Friend is absolutely right. I have already shared with the House the classic example of the number of people who have left this country because of a punitive tax regime and the costs of that.
Sir Oliver Dowden
Further to the excellent point made by my hon. Friend the Member for Hinckley and Bosworth (Dr Evans), the Labour party denigrates wealthy individuals who choose to come to this country. However, it is about not just the tax that they provide, but the jobs and opportunities they create by investing in constituencies up and down the country. This country has prospered for hundreds of years by being open and welcoming to inward investment. If we lose that, we lose a key plank of the competitiveness and growth that have been associated with our economy.
Sir Mel Stride
That is right. We live in a highly mobile world; it is easy for people with substantial wealth or money to invest to go anywhere in the world. We have to remain competitive, and this Government are making us less competitive. My right hon. Friend refers to unemployment, but just look at the record—should we have expected any more from this Government? No, not really. Every single Labour Government in history have left unemployment higher when they left office than it was at the time they came into office. What have we seen on unemployment since this Government have been in office? It has increased every single month since they have been in power.
Yuan Yang (Earley and Woodley) (Lab)
The right hon. Gentleman has spent the past five minutes circling around figures gathered by a consultancy that aids the super-wealthy to migrate from this country. Where is the Conservative party getting its economic ideas from? It speaks volumes that he has spent so much time up to this point speaking for the 15,000 high net worth individuals served by that consultancy; and his previous point was about inheritance tax, which is paid by only 4% of all estates in the UK. If he has any ideas, what will the Conservative party do to grow the economy for the benefit of all people in this country?
Sir Mel Stride
The hon. Lady asks where we are getting our ideas from; where we are not getting them from is from academics and researchers who believe in taxing wealth and who now sit there on the Treasury Bench, or in other places where they advise No. 10. They talk on a regular basis about taxing property, wealth, shares and assets of any description that they can think of, but that is the road to ruin. She asked where we get our ideas from, and I will tell her. I set up my own business in the 1980s, from absolutely nothing. I grew it from scratch, and then I took it over to America and grew a business there. I have lived, breathed and eaten business most of my life. I also go up and down the country to speak to other such businesses. They are the people who understand what needs to be done on the tax front and who have to live with the red tape that her party is bringing in to tie them down. They are the people whom this party is listening to.
Mr Jonathan Brash (Hartlepool) (Lab)
The right hon. Gentleman has talked at great length about taxing the wealthy, but he has omitted one of the suggestions that came forth over the summer, which was to get rid of the punitive council tax system, which taxes poverty and deprivation in this country. The former Conservative leader of Hartlepool borough council famously cheered when he put up council tax on deprived people in Hartlepool. Why are the Conservative party and now Reform—that former Conservative leader has now defected to Reform—so attached to that regressive system?
Sir Mel Stride
I think that council tax, different variants of it, revaluations and so on are things that Government should look at, because we do not want them to be entirely static; there can always be reform and change. I will observe, however, that the average council tax paid in Labour areas is demonstrably higher than the equivalent taxes in Conservative areas. That comes down to the approach that a Conservative council takes to spending and to ensuring that councils are efficiently run, rather than the profligate approach of the Labour party.
Luke Murphy (Basingstoke) (Lab)
One of the suggestions made to the Government earlier this year was from Conservative-run Hampshire county council, to increase the council tax on my constituents by 15%. That was blocked by this Government, by the Secretary of State. Will the right hon. Gentleman join me in condemning Conservative-run Hampshire county council’s proposal to increase council tax by 15%?
Sir Mel Stride
I am not going to get into specific things going on in the hon. Gentleman’s area. How can I be expected to opine with authority on something of that nature relating to his constituency? [Interruption.] Hold on. My general point stands: the simple fact is that Labour-controlled local authorities charge more in council tax than Conservative-run councils do.
Emily Darlington
What the right hon. Gentleman has said is not a fact. The reality in my region is that Milton Keynes, the Labour-run local authority, has lower taxes than all the surrounding Tory authorities, including in Northamptonshire, which has failed over and over again. Two Conservative and now Reform councils have failed, as has Buckinghamshire, while Milton Keynes has been labelled by the Local Government Association as one of the best-run councils. It still delivers lower council tax than all those Tory-run authorities.
Sir Mel Stride
It is a simple matter of logic that even if the hon. Lady’s assertion is true—I do not know whether it is or not—it does not contradict the point that I made.
Dr Luke Evans
Was it not the current Prime Minister who said
“not a penny more on your council tax”?
Is the shadow Chancellor aware of how that worked out?
Luke Murphy
A moment ago, the shadow Chancellor suggested that he would not get into speculation, but this whole debate is premised on media speculation. I asked him to comment on an actual proposal that was made to the Government by a Conservative-run county council to increase local council tax for my constituents by 15%, so he is asking us to vote on a motion about media speculation but he will not comment on an actual proposal.
Sir Mel Stride
My point is very clear—I need to make some progress as I have been fairly generous in taking interventions—that when it comes to council tax, it is a fact that Conservative-controlled councils charge less, because their whole approach to running the council is the same as our approach to running the economy: to ensure it is done efficiently and not to impose undue burdens on people by way of tax.
We were told by the Chancellor that the tax hikes in the Government’s first Budget, last autumn, were a “once in a Parliament” event. It is now a question not of whether there will be further tax increases, but which taxes will be increased. The uncertainty that has flowed from the disastrous situation over the summer has meant that, because of Labour’s choices, a hold has been put on businesses investing, on property transactions and choices, and fundamentally on some of the freedoms that we, as citizens, often take for granted.
Labour Members will desperately dismiss all of this as press speculation—I expect to hear that from the Minister in a moment—but is it not the truth that this sorry tale is entirely of their own making? It is the inevitable result of their choices and the failure that has followed, with much of this speculation seemingly fuelled by briefings from within the Government. This House and the public deserve answers.
The Chancellor cannot borrow more and has shown no ability to control spending. That can only leave tax, but which taxes will it be? Are family homes safe or are they simply fair game? If Labour Members fail to vote for the simple motion before us today, then the answer will be clear: under this Labour Government, nothing is safe—not people’s homes, pensions, savings, businesses or farms, and not that which they simply wish to pass on to their own children. The message to hard-working people up and down our country could not be clearer: Labour will always duck the hard choices and tax the living daylights out of your family’s future, to pay for its failure.