Finance Bill

Debate between Mel Stride and James Wild

2nd reading
Wednesday 27th November 2024 Commons Chamber

[Mel Stride]

You’re special.

[James Wild]

Thank you. We all appreciated the kind words from the hon. Member for South Derbyshire about Heather Wheeler’s work. I am sure that the hon. Lady will continue that manufacturing event with Rolls-Royce and the other world-class businesses in her constituency. I know from personal experience that she will enjoy taking part in the armed forces parliamentary scheme with the RAF.

There was a familiar theme in the speeches of other Government Members, which the Whips will have been pleased to hear, with lots about fixing the foundations and black holes, although the hon. Member for Macclesfield (Tim Roca)—I cannot see him at the moment—did concede that it was not a perfect Budget. Perhaps he has been taken away by the Whips to reflect.

I turn to Opposition Members’ speeches. I congratulate my hon. Friend the Member for Bognor Regis and Littlehampton (Alison Griffiths), who spoke powerfully about the impact of the Bill and the damaging impact of the Budget on high streets, hospitality and family firms in her constituency. My right hon. Friend the Member for Beverley and Holderness (Graham Stuart), in a masterly contribution, took us back in his time machine to the time when cast-iron promises were made. He focused on what is happening in reality and the importance of enterprise. He also highlighted that economic shocks may come, as they have done in the last few years, for example through covid and energy prices, and that the Chancellor may have already boxed herself in.

My right hon. Friend the Member for East Hampshire (Damian Hinds) displayed his considerable knowledge as a former Education Secretary. He talked about caring for 100% of pupils, and about the damaging impact that the education tax will have. There will be serious consequences for smaller schools, religious schools and parents and pupils involved with them. That theme was also drawn on by my hon. Friend the Member for Solihull West and Shirley (Dr Shastri-Hurst), who talked about his constituents and put us in the footsteps of the pupils who will be affected, as well as their parents.

My hon. Friend the Member for Gordon and Buchan (Harriet Cross) returned to her consistent theme of the real-world consequences for energy firms of the energy profits tax, the lost revenue, and the self-defeating nature of that measure. Finally, my hon. Friend and neighbour the Member for Broadland and Fakenham (Jerome Mayhew) focused on young people’s employment prospects, which will take a hit as a result of the Bill.

There were two very different takes in the debate. Unlike some, I would not claim to be an economist, but the OBR is full of them, and its verdict on the Budget and the Finance Bill is clear: they mean lower growth, higher inflation and higher borrowing. As the Shadow Chancellor, my right hon. Friend the Member for Central Devon (Mel Stride), put it, the British people put their trust in Labour to stay true to its promises. What did they get in response? A Finance Bill that is stuffed full of tax increases and breaks trust with the British people. It has £40 billion of annual tax rises. It is the biggest tax-raising Budget in modern history, and it is working families and businesses who will pay the price.

As we heard, the Government have said that their priority is growth. We will not let them forget that they inherited an economy growing at the fastest rate in the G7. Following the Budget, the OBR has downgraded its growth forecasts for the period by 0.7%. Inflation, which went up to 2.3% last week, is now expected to be higher in every year of the forecast period. The tax burden will increase to the highest level since records began. Borrowing will increase by an additional £140 billion over the Parliament. It is little wonder that business confidence is plummeting. The Labour party has consistently talked our economy down. The consequences are clear. The latest purchasing manager’s index output data shows that private sector activity has shrunk for the first time in more than a year. Businesses are rightly blaming the Chancellor and this anti-aspiration, anti-enterprise Government.

Let me turn to some of the parts of this broken promises Budget that were covered in the debate. First, the Bill deliberately undermines incentives for investors, entrepreneurs and people willing to take a risk and back enterprise. It hikes the main and lower rates of capital gains tax. The Treasury states that this measure alone will hit over a quarter of a million people, who will pay more tax as a result. It puts up tax rates on investor relief. It is little wonder that experts have warned that this Government risk stymieing the very investment that they seek to stimulate.

Secondly, the Bill continues the fundamentalism of the Government’s energy policy, which fails to put our energy security first. It will increase the energy profits levy to 38%, bringing the headline rate on oil and gas activities to 78%. The Exchequer Secretary could not name a country that had a higher rate. I am sure that Denis Healey would approve. It extends the rate by a year and removes investment allowances. On the real-world consequences, Offshore Energies UK has said that the hike will choke off investment and put 35,000 jobs at risk. We should be maximising our home-grown energy, not undermining domestic production and relying on imports that have a higher carbon footprint.

Having highlighted the Government’s broken promises, I turn to a single promise that they are actually keeping, unfortunately—the education tax. For some who do not seem to understand, the Labour party is not ending a relief, but bringing in a new tax. It is a vindictive tax, being imposed partway through the academic year, deliberately designed to disrupt the education of thousands of children. Putting VAT on independent schools will particularly hurt parents on modest incomes who choose to save and send their children to a school that they think is best for them. More than 100,000 children with special needs who are without an education, health and care plan, and are in independent schools, will be hit by this charge—something that Government Members who are not in their place at the moment did not seem to understand, but really should. This is an attack on aspiration, pure and simple, and we oppose it.

Other hon. Members have referred to the family farm tax. Next week, every Member will have the opportunity to vote and show whether they stand with their farmers or with Labour’s family farm tax, which will do so much damage to our countryside and food security.

As I mentioned, the consistent theme in this debate from Government Members has been blaming a fantasy black hole for this tax-increasing Bill. Those claims were thoroughly debunked by the OBR, and by the shadow Chancellor in his opening remarks. Before the election, the Chancellor said that she would not pretend to have not known the state of public finances in order to justify tax rises. Then she did just that. Let us hope that she meant what she said to the Treasury Committee on 6 November:

“We have now set the envelope for spending for this Parliament, and we are not going to be coming back with more tax increases or, indeed, with more borrowing.”

There we have it. Read her lips: no more tax increases. That was the commitment, not to the Confederation of British Industry, but to this House; but at Prime Minister’s questions today, the Prime Minister failed to repeat that pledge. He hung the Chancellor out to dry. If the Chancellor breaks that promise, how can she credibly continue in post?

Labour inherited the fastest growing economy in the G7, inflation at target, unemployment halved and the deficit halved. Labour Members may not like it, but it is true. [Interruption.] It is absolutely true. The measures in the Bill do not boost growth but target working people, pupils and parents, small businesses, and the wealth creators we need to grow the economy. Many Government Members have loyally clung to the idea that the Government are fixing the foundations of the economy. Not many would agree—not Tesco, Lidl or the other retailers who have warned that the £25-billion-a-year jobs tax will mean job losses and people’s weekly food shop going up; not the two thirds of firms who say that they will scale back on taking on new people; not the pubs, bars, restaurants and hospitality sector, which is hit by an extra £1 billion of costs.

The Prime Minister has found someone who agrees with him, although he did have to go to Rio to do so. However, while President Xi is so well practised in parroting meaningless slogans that he could be a Labour MP, the British public and British businesses are not buying it. They know that this Government do not back enterprise and do not keep their promises. The difference could not be clearer: we stand with working people, people taking a risk to start businesses and take people on, and people investing in companies. Unlike the Labour party, we are on their side. I urge Members to support our amendment tonight.