Family Businesses

Nick Timothy Excerpts

Wednesday 26th February 2025 Commons Chamber

[James Murray]

I assume the hon. Gentleman refers to the changes around employer national insurance, to which I will come in my remarks.

Let me be absolutely clear about the context: no responsible Government could have let things carry on the way they were. That was simply not a tenable situation and I think Conservative Members know that. That is why at the autumn Budget, we took the difficult but necessary decisions on welfare, spending and tax, and those decisions were vital steps towards restoring economic stability and fixing and supporting the public finances. As I said earlier, while Conservative Members have taken every opportunity to say they oppose those choices, they have yet to offer any solutions of their own. Difficult decisions were necessary, so let me set out why we made some of the choices that we did.

[Nick Timothy (West Suffolk) (Con)]

The Labour party manifesto said that by the year 2028-29, it would increase spending by £9.5 billion a year. Why, then, did the Budget increase it by £76 billion—eight times more than the Labour manifesto said?

[James Murray]

As I am sure the hon. Member will know, upon entering Government and speaking to Treasury officials about the state of the public finances, we uncovered a £22 billion black hole, which was known to then Ministers but which the OBR was not informed about.

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[Nick Timothy]

Will the Minister give way?

[James Murray]

I will give way one more time.

[Nick Timothy]

The Minister might have noticed that there is a bigger gap between £9.5 billion and £76 billion than £22 billion. His answer is clearly ridiculous. We are talking about such tax rises not because of the £22 billion fictional black hole, but because of the decision to increase spending by eight times more than the Labour party promised at the election. Will he accept that or not?

[James Murray]

The hon. Member’s comments are clearly ridiculous if he thinks the £22 billion black hole was fictional. It has real-terms consequences in terms of the pressure—

[Nick Timothy]

Will the Minister give way?

[James Murray]

I will make some progress as I have been very generous in giving way to the hon. Gentleman. He will know that his colleagues who were in government were aware of the in-year spending pressures and they chose not to share that with the Office for Budget Responsibility and thereby not to share it with the British people. That is the truth of what we inherited, and that is why we had to take difficult decisions.

I turn to some of the difficult decisions that we had to take in the Budget last year, because the Opposition motion refers to our decisions on business property relief. I assure hon. Members that the decisions we took on that and on agricultural property relief were not taken lightly. The Government recognise the role that those reliefs play, particularly in supporting small farms and family businesses, and that is why we chose to maintain rather than abolish them, which has meant maintaining significant levels of relief from inheritance tax beyond what is available to others. Indeed, the reliefs will remain more generous than the last time they were changed. The changes we are making mean that agricultural and business property reliefs will be better targeted and fairer.

According to the most recent data from His Majesty’s Revenue and Customs, 40% of agricultural property relief benefits the top 7% of estates making claims. It is a similar picture for business property relief, with more than 50% of business property relief claimed by just 4% of estates making claims. Those data bear out the fact that the benefit of the existing 100% relief on business and agricultural assets has become heavily skewed towards the wealthiest estates.

It is neither fair nor sustainable to maintain such a large tax break for such a small number of the wealthiest claimants, particularly in the light of the wider pressures on the public finances. That is why we are changing how we target agricultural property relief and business property relief from April next year. Individuals will still benefit from the 100% relief for the first £1 million of combined business and agricultural assets. On top of that amount, there will be 50% relief, which means that inheritance tax will be paid at a reduced effective rate of up to 20%, rather than the standard 40%. That sits on top of the other spousal exemption and nil rate bands, which apply more widely within the inheritance tax system.

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[Nick Timothy (West Suffolk) (Con)]

This debate has been held against the absurd backdrop of a Chancellor of the Exchequer writing to Government colleagues and begging regulators, desperately seeking advice on how to find economic growth, while the Department for Energy Security and Net Zero is deindustrialising the economy, the Home Office is welcoming fiscally negative immigration and the Department for Business and Trade is adding more than £5 billion a year in new costs to business in a single Act of Parliament. And the Government are whacking up taxes, including through the change to business property relief, because they broke their election promises as soon as they got into office.

In its manifesto, Labour promised the country that by 2028-29, it would increase spending by only £9.5 billion a year. It knew all the facts at that point, as the Chancellor of the Exchequer told the Financial Times, but just a few months later, Labour increased spending in the Budget by £76 billion a year, eight times more than promised in the manifesto. That is the reason for Labour’s broken tax promises, the higher taxes and the extra borrowing, not the poor excuses offered by the Minister earlier.

[Dr Arthur]

The hon. Gentleman makes the point that public spending is increasing faster than he expected. Perhaps he could outline where he thinks it should now be cut to make that good, starting with public services in his own constituency.

[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.

[Charlie Dewhirst (Bridlington and The Wolds) (Con)]

Does my hon. Friend agree that the impacts of the changes to agricultural property relief and business property relief are already being felt by businesses across the country? Farmers are simply having to shelve investment for fear of a huge inheritance tax bill. That is affecting the wider rural economy, because no new machinery is coming and no new buildings are being built. It means fewer tax receipts for the Treasury, fewer jobs and a poorer United Kingdom.

[Nick Timothy]

I absolutely agree. I was baffled by the speeches of Labour Members; they were lining up to say that they had been meeting local businesses that were desperate to congratulate them on the tax rises that their Government are imposing on them. That is clearly ridiculous.

In my constituency of West Suffolk, I am proud to represent so many family businesses that contribute to the economy. The Hadley shipping group, owned by James Warwick, is one of the last remaining family-run shipping companies in Britain. The Claydon family has manufactured and exported world-class agricultural machinery since the 1980s. Wedge Group Galvanising in Haverhill is a leading business in hot-dip galvanising in Europe and beyond. We need those vibrant and successful family businesses to help us build again and, as my hon. Friend the Member for Bridlington and The Wolds (Charlie Dewhirst) has just said, they are telling us the same thing: that because of the policies of this Government, they are confronted with a choice between selling their business altogether, selling parts of their business or cutting much-needed investment.

I will conclude by saying that repeating the word “growth” in press releases, ministerial speeches and tweets does not make growth magically appear. Pummelling business, as this Government are doing, is the fastest route to killing growth and our prosperity.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

UK-China Economic and Financial Dialogue

Nick Timothy Excerpts

Tuesday 14th January 2025 Commons Chamber

[Rachel Reeves]

This is the first economic and financial dialogue between our two countries since 2019. Since then, other countries around the world have continued to engage with China, securing tangible benefits for their economies. I do not want UK businesses and the people working in our country to miss out, which is why this weekend we secured £600 million-worth of tangible benefits for businesses that export to China, thereby helping to create more good jobs paying decent wages in our country.

[Nick Timothy (West Suffolk) (Con)]

I am slightly worried that investors will be watching this statement and wondering what planet the Chancellor is on. She just said that she is investing in transport infrastructure, but she is actually cutting transport capital budgets. She has previously said that she wants only one Budget a year, and the March statement is billed only as a fiscal forecast. Can she rule out any new tax rises or departmental spending cuts in the March statement, or will the fiscal forecast become an emergency Budget?

[Rachel Reeves]

We have committed to having just one Budget a year to provide businesses with the certainty they need to invest, so we will have an update from the Office for Budget Responsibility in March. I also give the commitment that, as I have already said, the fiscal rules mean we will balance day-to-day spending with tax receipts, and we will get debt down as a share of GDP within the forecast period. We will continue at all times to meet those fiscal rules.

Public Finances: Borrowing Costs

Nick Timothy Excerpts

Thursday 9th January 2025 Commons Chamber

[Darren Jones]

Yes, I can. There is no denying that the economic inheritance that we were given by the Conservative party makes life very difficult for us: it means that we have to take difficult decisions. The fiscal rules are non-negotiable and public services have to live within their means because that is that the bedrock of any approach in government. Is that going to be easy for us? No, it is not, but it is part of our responsibility in clearing up the mess left by the Conservatives, and from that we can build for the future, as is set out in the Prime Minister’s plan for change.

[Nick Timothy (West Suffolk) (Con)]

The issue here is spending. Will the Chief Secretary confirm that the Labour manifesto said that a Labour Government would increase spending by £9.5 billion a year, and the Treasury Red Book is increasing that to £76 billion? Is that not the issue?

Oral Answers to Questions

Nick Timothy Excerpts

Tuesday 3rd December 2024 Commons Chamber

[Rachel Reeves]

I am happy to arrange a meeting between my hon. Friend and the relevant Minister.

[Nick Timothy (West Suffolk) (Con)]

Last week, the Chancellor told the CBI conference that she would not come back

“with more borrowing or more taxes”.

Last Wednesday, the Prime Minister hung her out to dry and refused to repeat those words. Will she repeat them today and rule out any more borrowing or any more taxes—yes or no?

[Rachel Reeves]

At the Budget in October, we had to fill a £22 billion black hole left by the previous Government. We will never have to repeat a Budget like this one, because we will not have to clear up the mess of the previous Government ever again.

Oral Answers to Questions

Nick Timothy Excerpts

Tuesday 29th October 2024 Commons Chamber

[Rachel Reeves]

I thank the Chair of the Treasury Committee for that question. She is absolutely right that in our July statement, we set a 2% productivity target, not just for the Department of Health and Social Care, as the previous Government did, but for all Departments. Ministers are absolutely determined to deliver against those targets, because that is the way to ensure that we have resources for the frontline public services—our schools, hospitals and police—that we all rely on.

[Nick Timothy (West Suffolk) (Con)]

Under the last Government, the Chancellor said that interest rates and gilt yields were driven by Government policy. Will the Chancellor guarantee that neither will rise higher than they did under the Conservatives?

[Rachel Reeves]

The last Government crashed the economy with a mini-Budget and sent interest rates and mortgage rates soaring, putting huge pressure on the costs borne by families and businesses. We will set out our Budget tomorrow, including robust fiscal rules on paying for day-to-day spending through tax receipts and borrowing only to invest, whereas the previous Government borrowed for day-to-day spending, which is why we are in the mess we are in today.

Fiscal Rules

Nick Timothy Excerpts

Monday 28th October 2024 Commons Chamber

[Darren Jones]

I welcome my hon. Friend’s question. [Interruption.] I know that Opposition Members find it uncomfortable, but it is a matter of fact that we will return to time and time again, because the sheer truth of it is that the last Government made promise after promise to the British people, knowing that they did not have the money to pay the bills. It is shameful, and the sooner they come to the House and apologise for their behaviour, the better it might be for them in the long run.

[Nick Timothy (West Suffolk) (Con)]

If the Minister is so confident in his fiscal rules, will he take this opportunity to commit to the House that the 10-year gilt yield in this Parliament will not exceed the maximum it was over the past 10 years?

[Darren Jones]

The hon. Gentleman is trying to be clever, but he is inviting me to speculate on the Budget. He will have to wait until Wednesday.

Winter Fuel Payment

Nick Timothy Excerpts

Tuesday 10th September 2024 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

The hon. Member is absolutely correct. May I just helpfully point out to all hon. and right hon. Members that, in seeking to make repeated interventions, they are actually cutting into each other’s time? I have made the point previously about the correct way to address each other, through me as Deputy Speaker. Interventions need to be a great deal shorter because they are just cutting into the time for the debate and there are an awful lot of Members who wish to contribute.

[Nick Timothy (West Suffolk) (Con)]

On a point of order, Madam Deputy Speaker. I would like advice from the Chair, please. Reportedly, more than 200 Labour MPs received more than £2 million in donations before the election from the trade unions. Before other Members give speeches about issues such as public sector pay, would it not be in order for them to declare that interest at the beginning of their speeches?

[Madam Deputy Speaker]

As the hon. Member will know, it is for individual Members to declare their interests, if one is applicable.

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[Nick Timothy (West Suffolk) (Con)]

Let us be absolutely clear about what has happened today: every single Labour MP who voted to cut the winter fuel allowance has broken their promise to the country. Pensioners know that before the election Labour denied that it was going to do this, but they might not know that the Chancellor had been planning it for 10 years. In 2014 she said:

“we will cut the winter fuel allowance for the richest pensioners and means-test that benefit to save money”.—[Official Report, 25 March 2014; Vol. 578, c. 174.]

Are we supposed to believe that she changed her mind after that and then changed it back again shortly after the general election? I do not think so.

There may be a case for means-testing, but the Chancellor is cutting the payment not just for the richest pensioners, but for pensioners on very modest incomes. She is also not making the case for it. She is asking the Secretary of State for Work and Pensions to do her dirty work for her. If winter fuel payments are to be means-tested, surely the proceeds should go towards low-income pensioners and the cost of social care, but they are not. They are going on above-inflation pay rises for the likes of Labour donors ASLEF.

Public Spending: Inheritance

Nick Timothy Excerpts

Monday 29th July 2024 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

We could do with some masterclasses in short questions and short answers.

[Nick Timothy (West Suffolk) (Con)]

Earlier, the Chancellor quoted Paul Johnson of the Institute for Fiscal Studies, but she omitted the end of his comments. He said that half of the spending hole she claims is public sector pay

“over which govt made a choice”.

That is the truth, is it not? The Chancellor does a good shocked face, but she chose to create her own spending hole, did she not?

[Rachel Reeves]

It was the previous Government who set the mandate for the pay review bodies. It is extraordinary that they did not include in that remit a measure of affordability, but they did not, which is why the pay review bodies made these recommendations. The previous Education Secretary could have rejected those recommendations, but she let them sit on her desk, because the previous Government were not willing to make tough decisions. We have made those decisions, including making sure that a third of the cost of these pay awards is absorbed, but there is a cost to inaction: last year, there was a £1.7 billion cost to the NHS alone because of industrial action.

Economy, Welfare and Public Services

Nick Timothy Excerpts

Monday 22nd July 2024 Commons Chamber

[Nick Timothy (West Suffolk) (Con)]

I congratulate the other new Members on their excellent maiden speeches, in particular the hon. Member for Hartlepool (Mr Brash), where I know his predecessor, Lord Mandelson, recommends the mushy peas.

It is an honour to be called to speak for the first time. I pay tribute to the last MP for West Suffolk, Matt Hancock, who oversaw the delivery of the covid vaccines, a vital achievement for our country. Less well known is that Matt once rode in, and won, the Blue Square Cavalry Charge horserace in Newmarket, a feat that required him not only to be propelled forward by a thoroughbred horse at 30 miles per hour, but to train for three months and lose 2 stone. For all these reasons, not least the dubiousness of the idea that I have 2 stone to lose, I can assure the House that I will not be stepping into my predecessor’s stirrups.

Newmarket is the best-known town in my constituency. It is most famous for horseracing, an international success story that brings thousands of jobs and hundreds of millions of pounds to the local economy every year. From Charles I to Charles III, racing gives West Suffolk its long connection to royalty, but unfortunately ours is not an unblemished record, for Newmarket was once the home of Oliver Cromwell’s new model army. Old Ironsides championed free expression yet persecuted his enemies. He attacked aristocratic privilege and patronage, but handed power to his cronies. Censorious, joyless and puritanical—it is like he wrote the Labour manifesto.

Fortunately, we have left those days of self-denial behind, and from the Star in Lidgate to the Queen’s Head in Hawkedon, the Affleck Arms in Dalham to the White Horse in Withersfield, and many others, we have some of the best pubs in Britain. And we have plenty more besides: beautiful villages, vibrant towns and farms that feed the country; Anglo-Saxon settlements and ancient churches; rolling countryside and big Suffolk skies; dense forest and the world-famous gallops; businesses doing everything from seed drills to particle engineering; charities such as Reach in Haverhill and the day centres in Brandon and Newmarket; Highpoint prison near Stradishall; the airbases at Lakenheath and Mildenhall; and public servants working for their communities every day.

I look forward to championing them all and addressing our challenges too, including dealing with flooding in Clare, Cavendish and elsewhere, and fighting the appalling decision to approve the Sunnica solar and battery farm, due to be built on high-quality agricultural land. In Brandon, lorry traffic is a problem. We need the Ely and Haughley junctions sorted to get freight on to the railways. In Mildenhall, where 1,300 new homes are coming, we need a relief road. We are not against new house building in West Suffolk—we have had 3,000 new homes built in the last five years—but we need attractive family homes in the right places. We need services and infrastructure to keep pace. We need to get tougher with the developers and reform the construction market. We need to drastically cut immigration, not just for the economic and cultural reasons that should by now be obvious, but to limit new demand for housing.

Our largest town, Haverhill, has doubled in size in only 30 years, to almost 30,000 residents. It has an incredible community spirit, but the town centre is struggling. We need a new start for our high streets, and I will fight for a railway linking Haverhill to Cambridge. The development of Cambridge looms large for us, but I want us to embrace the opportunities, not just fear the risks. If we get it right, we have the chance to get better infrastructure, new investment and more jobs. That is why I wanted to speak in today’s debate.

From potholes to public sector pay, the thread that runs through all our challenges is an inconvenient truth. While it is plainly incorrect to claim that the new Government have the worst economic inheritance since the war—[Interruption.] It is incorrect, but we are less prosperous than we often tend to assume. This is not a question of party politics, but of the decline and failure of our country’s long-established economic model. Put simply: we do not make, do or sell enough of what the world needs.

Our £33 billion trade deficit—1.2% of GDP—means we sell off valuable assets and build up external debt to limit the current account deficit. We end up with less control over our economy, and more exposed to global risks and shocks. From low pay to regional inequality, poor productivity to the funding of public services, all the things we worry about are symptoms of this wider problem.

We need to question economic theory, challenge Treasury orthodoxy and think beyond the intellectual limits of ideological liberalism. Theories like comparative advantage have led us to offshore industry and grow dependent on hostile states, like China. But international trade is neither free nor fair, and net zero cannot mean sacrificing our prosperity and security. Being a services superpower is a great advantage, but alone it is not enough. We need a serious strategy to reindustrialise, narrow the trade deficit and rebalance the economy. We need to change and, in the months and years ahead, I look forward to debating how we do so.

[Mr Deputy Speaker (Sir Christopher Chope)]

I call Alan Strickland to make his maiden speech.