Finance Bill

Nesil Caliskan Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to take part in this debate. Let us travel back in time to those halcyon days for the Labour party: so confidently predicting victory in the election, so far ahead in the opinion polls and so clear on the prospectus they laid before the British people. It had a fully funded, fully costed programme. When the now Chancellor was challenged about whether she had a full insight into the public finances, she assured the interviewer, if I recall correctly, that absolutely she did. Therefore, people could rely on the cast-iron promise, which all Labour Members stood on, that Labour would not raise national insurance, would not raise income tax, would protect farmers and would not cut pensioners’ benefits. That was the promise.

But it is better than that. It is not just that Labour was not going to bring in all those taxes, but that it was going to make growth their No. 1 mission for a mission-led Government. Those who feared a return to a sort of socialist job-destroying and enterprise-wrecking past could be reassured that this was a moderate party that had put the right hon. Member for Islington North (Jeremy Corbyn) well behind it, no matter how many Labour Members had said he was a great friend and would make a great Prime Minister. They had changed their mind. There was a moderate promise.

It was not only members of the public who were led to believe in the Labour mission and what it could bring for the country. Imagine Labour Members, the people who were selected as candidates for the Labour party, who came in not to Jeremy Corbyn’s Labour party but to this Labour party of enterprise, protecting workers and encouraging a low-tax system, but doing so in a way that none the less would prioritise the healthcare system, special educational needs children and the like. That was the promise and it did not just beguile many people in the country—although not that many, as only 34% of people actually did vote Labour, but none the less enough. Imagine what it was like—I say this to Opposition Members—to come to this place and be a part of that fantastic crew of hundreds and hundreds of Labour MPs to deliver that manifesto. And where are we now at the historic Second Reading of the Finance Bill of the central policy measures of this new Government. Where are they?

[Nesil Caliskan (Barking) (Lab)]

Will the right hon. Gentleman give way?

[Graham Stuart]

They have been humiliated in the Budget debate, as one after another repeated their rote words. It was the most intellectually empty Budget debate I have ever taken part in. I listened to Labour Member after Labour Member trot out their “14 years of chaos” and their “£22 billion black hole”.

[Nesil Caliskan]

Will the right hon. Gentleman give way?

[Jim Dickson]

Will the right hon. Gentleman give way?

[Graham Stuart]

It would be entirely wrong of me, given how few Labour Members there are in the Chamber prepared to defend the Budget, if I did not now give way to one of them.

[Nesil Caliskan]

I thank the right hon. Gentleman for finally giving way. I wonder if he might use the opportunity to reflect on the economic record of the previous Government, which saw the highest interest rates and inflation through the roof that affected people’s pockets and their ability to get on in life. Will he also reflect on the fact that his party lost the election and perhaps show some humility?

[Graham Stuart]

I am grateful to the hon. Lady. I am happy to do so, although it is worth pointing out that we are supposed to reflect today on the actual proposals put forward by the Government of which she is now a member.

But the hon. Lady is right to highlight the Conservative’s economic record. I have a criticism of those of us on the Conservative Benches: I do not think we do enough to talk about it. From 2010 to 2024, which economy in Europe grew the most? Was it Germany or the UK? Oh, it was the UK! Was it France or the UK? Oh, it was the UK! Which country in Europe created 4 million more jobs? For which Government did the horrible scar of youth unemployment, which was a permanent feature even in the good years prior to the crash—for those interested in the history of employment—stay horribly high, with its long-term scarring impact on young people? It was the Labour Government.

All that was turned around. People were paying tax at £6,500 when Labour left power. That was lifted to £12,500. They may be decrying and disowning their part in the coalition Government, but the Liberal Democrats should have some pride in what we were able to do together. We inherited an economic basket case. We brought discipline back. But while we were fixing the foundations, we did not lose sight of the fact that we knew where the wealth comes from. It comes from the private sector, not the public sector—from those small shops, those restaurants, all those other businesses on which the country relies for its wealth. This Budget has gone down and damaged each and every one of them, one by one. It has looked around for targets—the “broad shoulders” for the socialist envy to vent itself on—and who better than landowners?

So the Budget focuses on people. I am not an expert on every area of the economic life of this country, but let us suppose that I looked across the entire economy and tried to find people in private enterprise using their own assets. Where would people have millions of pounds in assets and be prepared to receive a 1% return on them? Who would keep that up, year after year, simply in order to feed the nation as part of a pact—a compact—between them and the Government, indeed the whole country? Who would be prepared to do that, and to feed us, while asking so little in return? Attacking farmers, of all groups in society, is one of the most retrograde and regrettable of attacks.

--- Later in debate ---

[Nesil Caliskan]

I thank the right hon. Member for inviting me to intervene. I remind him that the IFS has confirmed that there is enough capacity in the state sector for the transfer of pupils. Also, on the point of special educational needs—

[Damian Hinds]

Thank you.

[Madam Deputy Speaker (Caroline Nokes)]

Order. The right hon. Member will know full well that it is for me to decide if the hon. Lady’s intervention is too long.

[Nesil Caliskan]

The right hon. Member may also recognise that the Government have been clear that when special educational needs are being met in the private sector, VAT will not apply.

[Damian Hinds]

On three counts, I am afraid that is incorrect. First, it does not cover everybody with special needs at a private school. Secondly, the IFS has not said that there is ample space in state schools, nor could it possibly know that. Thirdly, and most importantly, the point on which I was heckled, and on which I invited somebody to intervene, was a completely different one. My point was that unlike in quite a large number of countries, here there is no tax break for those using independent education providers. Everybody contributes towards state education through general taxation; if we take up a private school place, that contribution does not reduce.

In the modelling that goes with the Finance Bill, the Government say that they expect a little over £1.5 billion to be raised from the measure in maturity. We do not know the detail of the modelling and how robust the analysis is. However, I agree, intuitively, with the Treasury that a small part of the effect will be felt immediately in January, but that the effect will really start from September 2025. It will be felt gradually, through some children leaving the independent sector; the bigger effect will probably be from those who do not start in the independent sector in the first place, or who do not start their next phase of education in the sector.

I am not totally clear from what the Treasury has published whether it factors in all the effects of the change. It obviously factors in families who are directly priced out of the independent sector, but what about those who are indirectly displaced, because they were at a school where a number of other families were priced out and the school had to close? Does it factor in the higher number of education, health and care plan applications that will be made, and the much higher than average per-place cost that the state will have to meet for those displaced?

I am also unclear whether the Treasury’s analysis looks at all the effects on independent education cumulatively. Yes, there is the VAT, which is in the Finance Bill, but there are also a number of other measures being taken this year that materially affect the cost base of independent schools, and that is likely to be reflected in fees. They include the increased contribution to the teacher pension scheme; business rates changes, which affect about half of independent schools; and the massive hike in employer national insurance contributions, which will affect so many sectors.

All those are transfers from the independent state sector to the Exchequer, so the real increase in the cost base for that sector will be considerably more than 20% over the course of the year. In the Minister’s summing up, I would love her to tell us what assumption was made about the total average price increase. Whatever it was, the Government calculate that, in the policy’s maturity, 37,000 children will be displaced from the independent sector, and of those, 35,000 will go to the state sector. Ministers say, “Don’t worry; there are loads of places available in the state sector.” In fact, the hon. Member for Barking (Nesil Caliskan) suggested that a third party had said that as well, and the Exchequer Secretary said it again in his remarks. He said that we are talking about 0.5% of the total population in state schools. It is useless to have places available in primary schools in inner London if that is not the age group of people leaving the independent sector. The effect will be uneven across the country, and need is concentrated largely in secondary schools and sixth forms.

There are plenty of places where even a small number of children being displaced from one sector to the other could have a big effect on the state school system. What discussions have Ministers had with colleagues, and with councils in Salford, Stockport, Sale, Bury, Bedford, Bristol and so on? I could name considerably more. What contingency plans are in place?

--- Later in debate ---

[Nesil Caliskan (Barking) (Lab)]

The Budget that was presented to the House will turn the page on what has been a chaotic few years under the last Government. It is also an opportunity for my constituents to welcome a Budget that demonstrates a responsible Government who will take tight fiscal rules seriously. The truth is that economic growth comes when there is financial stability, and the first step towards financial stability is to ensure that the books are balanced.

This Budget protects working people from higher taxes in their payslips and provides an increase in the national minimum wage, which my constituents will absolutely benefit from. It speaks volumes that the majority of the time spent by Opposition Members has focused on a subsidy that used to exist for private schools and now does not because this Government are ensuring that we invest in the state sector.

[Dave Doogan]

Will the hon. Lady give way?

[Nesil Caliskan]

No. I can tell those Members that when additional money is spent on the state sector, it improves the life chances and opportunities of my constituents.

[Jerome Mayhew]

I am grateful to the hon. Lady for giving way. Could she identify which subsidy she is talking about?

[Nesil Caliskan]

I am talking about the VAT relief that existed for private schools. [Interruption.] Yes, it was a subsidy. Politics is full of choices, and a Government’s first responsibility is to ensure that they balance the books. If a Government are responsible, they will invest in decent public services and create conditions for economic stability. I want to concentrate on that final point for a moment. We have heard remarks from Opposition Members on small and medium-sized businesses; I say to those Members that when I speak to local businesses in Barking, they say that the economic instability over the past few years is what has created pressure for them.

I welcome, in particular, the Government’s tax announcements on non-dom loopholes. The Government changing the residential base means they will increase revenue by almost £13 billion. The rate changes on capital gains mean we will maintain our position as having the lowest capital gains tax of any European G7 economy. These measures are a collection of decisions that show we are prioritising investment in public services, alongside an absolute commitment from the Government to create economic stability to achieve the future growth that this country deserves.