Finance Bill

Nigel Evans Excerpts

2nd reading
Wednesday 13th December 2023 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats do not support the Bill. It is a deception from the Government after years of unfair tax hikes on hard-working families.

The Conservatives talk about tax cuts, but there are no tax cuts. The autumn statement maintains the Government’s unfair stealth taxes through the freezing of tax thresholds, dragging millions of people into a higher band or into paying tax for the first time. Changes to national insurance rates will not even touch the sides after years of tax hikes and spiralling mortgages. Thanks to the Conservatives’ decision to freeze tax thresholds, next year someone on a typical salary of £35,000 will pay an extra £400 in tax, and someone earning a middle income of £65,000 will pay an additional £1,200. Meanwhile, the typical mortgage will go up by £220 per month. Nobody is better off after years of this Conservative Government.

Worse still was the deafening silence on health in the autumn statement. The Government should be using any additional tax revenue to tackle the crisis in our NHS, to give people the quality of care they deserve and to let more people return to work to grow our economy. We cannot fix the economy without fixing the NHS. OBR growth forecasts have been halved, largely because people are waiting for NHS treatment. It is a no-brainer that we need to treat the millions of people on NHS waiting lists and allow them to return to work, but this Conservative Government simply do not care.

The Bill offers nothing to households struggling amid the cost of living crisis. It fails to introduce a proper windfall tax on the super-profits of oil and gas producers. That revenue could be used to fund energy support for the most vulnerable, such as doubling the warm home discount and launching a proper home insulation scheme. It could also be used to invest in British farmers, to bring down food prices for the long term.

The Bill fails to reverse tax cuts for big banks, a measure that could fund support for vulnerable mortgage holders and renters. Worst of all, it takes none of the vital steps we need to grow the UK economy, such as launching an industrial strategy, reforming business rates and the apprenticeship levy, and reducing trade barriers for small businesses.

As other hon. Members have highlighted, the creative industries are a major driver of the UK economy and the Liberal Democrats are committed to ensuring their continued success. The Finance Bill has some implications for theatre tax relief, which plays a crucial role in enabling the development of new theatre productions. UK Theatre and the Society of London Theatre have raised concerns to the Treasury about these implications, which could damage how this essential relief operates. I urge the Treasury to work with representatives from the creative sectors to address these concerns and provide clear guidance on changes to the administration of theatre tax relief introduced in this Bill.

While the Liberal Democrats support of certain measures within the Bill, such as the extension of full expensing, we cannot support any legislation that arises from such a deceptive and unjust autumn statement. Ultimately, the Office for Budget Responsibility says living standards are forecast to be 3.5% lower in 2024-25 than their pre-pandemic level, which is the largest reduction in real living standards since official records began in the 1950s. Households across the country are crying out for real support from this Government, as well as action on the cost of living crisis and investment in our NHS, but all we have heard is more stale announcements that show just how out of touch the Conservative Government are.

[Mr Deputy Speaker (Mr Nigel Evans)]

I now have to announce the results of today’s deferred Divisions.

On the draft Representation of the People (Overseas Electors etc.) (Amendment) (Northern Ireland) Regulations 2023, the Ayes were 325 and the Noes were 154, so the Ayes have it.

On the draft Equality Act 2010 (Amendment) Regulations 2023, the Ayes were 464 and the Noes were 11, so the Ayes have it.

On the draft Representation of the People (Overseas Electors etc.) (Amendment) Regulations 2023, the Ayes were 324 and the Noes were 186, so the Ayes have it.

[The Division lists are published at the end of today’s debates.]

--- Later in debate ---

[Sir Robert Syms (Poole) (Con)]

I agree with a lot of what my right hon. Friend the Member for Witham (Priti Patel) said. I was in this House for 13 years of Labour Government. Twice a year, we had the autumn statement and Budget, and all taxes were reviewed. In not one of those fiscal statements did they change the arrangement for non-doms. Why? Because it brings in more money. I am therefore shocked at the criticism from those on the Labour Front Bench of their Chancellors when in government. What we have with the Opposition is the politics of the magic money pot. The magic money pot is called non-doms, and the Opposition think that it will pay for everything. It will not; because such people are internationally mobile, they will move. The best things to tax are things that do not move, such as property. People can move, and we will not get sufficient money in as a result.

The Government have done a lot of good things. Putting up the triple lock is the right decision to look after pensioners, but those who pay tax might, because their pension will go up, pay more tax. Putting up the living wage is a good thing, because we want a higher-paid economy, but as lower-paid workers’ pay goes up, they pay more tax. It is one of the features of the modern world that those in the most successful and highest-paid economies tend to pay more tax. Although the overall tax burden, because of the freeze, has gone up, we need to reverse that, and we have started the process in the autumn statement.

The Government have set out a good long-term plan, which is essentially based on increasing the incentives for business to invest. We have a problem in Britain on productivity. One way of getting productivity up is to get pay up and investment in machinery and equipment up. If we can do that, we can pay for the public services that we all want, on both sides of the House, in terms of better education, a better health service and better outcomes. However, that requires getting productivity up. One of the problems since 2008 has been that Britain has struggled with productivity. Whatever we do, whether it involves incentives, higher pay, or credits for research and development, if it gets productivity up, that has to be a good thing.

I welcome an awful lot of what is in the autumn statement, but we should not look at it as one event; it is part of a series of events brought in by the Chancellor that mean that our national debt is falling over the plan. Our yearly deficit looks like it will be in the 3% range rather than the 4% range. Even the trade gap looks like it is improving. Our economic situation does not look too bad, and when we look over the channel to the EU and the eurozone, our problems seem rather less than theirs, with some of those countries going into recession.

I, too, saw today’s GDP figures. I would caution against any flash estimate of GDP. The monthly figures bounce around. I spent six weeks on a Finance Bill Committee during the days of the coalition when every day those on the Labour Front Bench talked about the double-dip recession, which was revised away six months later. The key point is to do the right things for the economy, get productivity up and get the economy growing, and the other things will come right. They will certainly come right when a lot of data is in. Even the three-monthly GDP data is based on something like a quarter of the stats. It is constantly updated over years and months. We should not be too fixated on short-term figures.

One reason I think the economy will grow over the next 12 months is that living standards have gone from falling to rising. That means that ultimately the British consumer ought to come to the rescue of the British economy and get it growing, if the Government can keep a stable economic situation, and pay continues to outstrip inflation, which I am very optimistic about. Brent crude has fallen under $75, which means that gas prices are now barely above where they were before the invasion of Ukraine. That has improved since the autumn statement. Petrol prices are falling again. This morning, the 10-year bonds interest rate was under 4%. That is a sign that the pressure now is to lower interest rates. The overall Government economic policy is not only to balance the books and reduce taxation in terms of national insurance, which will help 29 million people, but to get interest rates down so that, when people come to refix their mortgages, they can do so at a more reasonable rate. Good progress has been made, but we will not be free with one bound; it will take Budgets, statements and steady persistence. That means not giving in to every request for extra spending, however worthy they are individually. I commend those on the Treasury Bench and the Chancellor of the Exchequer. He has put together a good package, and I look forward to what will happen in March.

Before I sit down, I will pay tribute to a Labour Chancellor, Lord Alistair Darling of Roulanish, who was a very modest but very competent man. He faced what would be anybody’s nightmare in the Treasury, with banks collapsing. I think that history will treat him well for his management of the economy at that very difficult time. He is missed by this House and I am sure the other place will miss him too.

[Mr Deputy Speaker (Mr Nigel Evans)]

I echo that tribute to Alistair Darling. I was in the House with him for many years. He was a great politician and an excellent Chancellor of the Exchequer.

David Simmonds will make the last Back-Bench contribution. We will then move on to the wind-ups. I anticipate at least one Division.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to speak in this debate, having been here to listen to some incredibly insightful and useful contributions from so many colleagues. I will endeavour not simply to repeat those excellent points, but to focus on some additional ones that have been raised in the course of the debate. My hon. Friend the Member for West Worcestershire (Harriett Baldwin), the Chair of the Treasury Committee, touched on something that is not in the autumn statement, but that I am sure those of us on the Government Benches will wish to seek further assurances about from Ministers: the tax on education proposed by the Opposition.

I represent a constituency in which there are five independent fee-paying schools, which have certainly been in contact with me to raise their concerns about the Opposition’s proposal. Every secondary school that serves my constituency, including the state-funded ones, is an independent school, because they are all academies. Every special educational needs and disability school that serves my constituency is an independent school, including those that have never been part of the state sector but came into existence as charitable organisations with a view to providing specialist SEND services. There are even stables in this country that provide equine therapy to non-verbal autistic children that, because they serve more than one child, are registered as independent schools with Ofsted.

The implications of the proposed policy, which it is said would raise £1.7 billion, would be additional VAT on fees paid by local authorities up and down the land and, more significantly from the Exchequer’s perspective, to bring a huge amount of VAT within scope of being reclaimed by that wide variety of institutions. I hope that Ministers will state with great clarity that it remains the policy of this Government that we support the excellence in our incredibly diverse independent sector, which includes both SEND and state-funded education.

We have been challenged to say what has been the biggest achievement of the Government in the past 13 years. For me, it is the thing that forms the backdrop to this Finance Bill and to my right hon. Friend the Chancellor’s autumn statement: the transformation in the number of people in our country who earn their own living through work. The Office for National Statistics data shows an incredibly clear trend in youth unemployment. Under the last Conservative Government, it was falling and falling; once Labour took office, it began to rise. Since this Government took office in 2010, the rate of youth unemployment has halved. That makes an incredible difference to both the financial wellbeing and, most importantly, the mental and physical health of our young people. It gives people prospects. It gives people hope. It means all our citizens have a stake in the economy of our country.

The same trends are replicated elsewhere. I remember what it was like as an employer trying to engage with the incredibly complicated systems under the last Labour Government, in which so many people were disincentivised to work—especially women who wanted to work part time and fit that around bringing up children. The changes in policy—particularly universal credit and really good childcare offers—have transformed the ability of people in this country to access the workforce over that period. While that has not always meant that those individuals are much better off, the fact that they are able to earn their own living and take pride in having a stake in our economy is incredibly important.

There are particular reasons why this Bill strikes me as important. I would like to develop the point made by my hon. Friend the Member for Amber Valley (Nigel Mills) about tax avoidance stop notices. I have a number of constituents who have been affected by the loan charge over the past few years, and it particularly concerns me to hear from them that, in some cases, they are still being contacted by businesses trying to sign them up to schemes of the kind that have already got them into significant financial trouble.

I enormously welcome the fact that the Government are taking steps to make sure that that behaviour can be brought to an end and that we do not see any more of our constituents trapped in financial situations not of their own making as a result of the marketing of organisations that should know that, while what they are doing is theoretically and perhaps technically within the law because a loan is free of tax, if it is not a genuine loan and not to be repaid during the person’s lifetime, it should be considered part of their remuneration for the purposes of taxation. I welcome the step that the Bill makes in that respect.

The second thing I particularly welcome is the abolition of the lifetime allowance charge. I have heard from a very large number of professionals across my constituency, especially in the NHS, but also in other types of businesses in the private sector. The impact of the lifetime allowance has been the loss of highly experienced staff from those organisations. These are generally people in their 50s and 60s who are at the peak of productivity and have an enormous amount to give, but face a financial cliff edge and are forced by that limit to make a decision to leave a career that, in many cases, they love and enjoy and in which they have much to contribute. In the NHS in particular, the change will enable experienced GPs, surgeons and consultants to return to the workplace or continue working at a higher level than they would have been able to in other circumstances. For that reason, it will benefit our public services enormously, both in productivity and by ensuring that waiting lists, which are already beginning to fall, come down much faster.

Let me turn to some of the measures designed to support our small businesspeople and the self-employed. In politics, the loudest voices in debates about the economy are often those of large corporations with substantial, well-funded public affairs departments. However, we also know from the ONS that around 70% of people employed in the UK economy are in an enterprise with fewer than five staff. The voices of those small businesses, which are the bedrock of our economy, are not heard collectively as often as the voices of big international businesses.

The measures to simplify and reduce national insurance for small businesspeople and the self-employed are enormously welcome, and not just because of the money that they put in people’s pockets—it is important for us to remember that point. We heard some scoffing and comments of “big deal” from the Opposition when the reductions in class 2 national insurance contributions were mentioned, but the reductions represent about a quarter of what most households in the UK spend on Christmas, or a significant contribution to a child’s school uniform, a summer holiday or maintaining the car. All of those things make a small difference individually and a big one collectively. They send a message to our lower-income but entrepreneurial people that we are a Government who are on their side and keen to get off their backs.

I will finish with two suggestions. The first—to develop again a point made by my hon. Friend the Member for West Worcestershire—is to tackle some of the cliff edges in our tax system. The abolition of the lifetime allowance charge is one example of that. It is clear that around the £100,000 income level—that is a significant sum of money, but one typically earned by many of the public sector professionals on whom services such as the NHS, GP practices and schools depend—many of the benefits of extra earnings begin to be withdrawn. The situation in which two earners on £99,000 a year, with a joint income of £198,000, can continue to enjoy the benefits of tax-free childcare, but if one earner goes to £100,001 a year, those benefits are completely withdrawn, creates a significant marginal tax rate for professionals with children.

I have heard from a number of constituents who work in public sector bodies, particularly the NHS, that they have had to scale back their hours or decline to take on additional waiting list initiative work funded by the Government because the impact of that cliff edge is so financially significant for them. Of course, we see the same impact at that point from the pensions taper. I suggest to my Front-Bench colleagues that, as we think about the public sector productivity strategy, we need to consider how to take out some of those cliff edges so that the people we are asking to work and contribute more, and who are in a position to make a transformational difference to some of our public services, have good financial incentives to do so.

Finally, the OBR has been mentioned a few times in the debate. There is a degree of controversy about whether it is the correct body to provide a view about the sound financial management of our national finances. Having spent a lot of time in the local government sector, it is striking to me that it is a legal requirement for councillors making decisions in any of our local authorities to have before them the financial and legal implications of the decision, whereas in this House we usually decide on policies in a crowded debate with a big row about what we should do and then, sometimes months later, have a scantily attended debate at which the financial implications of the policy are debated and agreed. We do not take the financial implications and the policy decision together. I suggest that Ministers should consider whether, in order to emphasise the sound financial management approach of a Conservative Government, in addition to statements such as those about compliance with the requirements of the European convention on human rights, we should seek to ensure that every Government policy and paper on which this House makes a decision states what the financial implications of that decision might be.

Coming back to the point about VAT on school fees, I will make a forecast: should there be a change of Government, we will find ourselves back in the position that we were in under Gordon Brown. The announcement will be, “We want to spend the extra £1.7 billion that we have assumed, but we can’t actually raise that in taxes because the policy doesn’t work in practice, so we’ll borrow it,” and the £28 billion will become £29.7 billion. In addition, the non-dom money will not be forthcoming, so the Government will say, “We’ll assume how much that might be when we get around to tackling that and add that on to the borrowing as well.” That is the reason why under Gordon Brown we spent something like 10% more in every year than we raised in tax revenue. As a measure to prevent future Governments from running our finances into the ground again, let us make sure that we have that clarity of financial rigour in the decision making of Parliament, so that when Members cast our vote, we all understand the implications for taxpayers of the policies on which we are making decisions.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Tulip Siddiq to begin the wind-ups.

Finance Bill

Nigel Evans Excerpts

Report stage
Monday 5th February 2024 Commons Chamber

[James Murray]

I begin by wishing His Majesty the King the very best for a speedy recovery. My colleagues and I are thinking of him and the royal family at this time, and we wish him a swift return to full health.

Throughout consideration of the Bill, the Opposition have made it clear that it contains a number of measures for which we have been calling for some time. For instance, we welcome the Government finally making full expensing permanent after so many years of chopping and changing capital allowances; we have made it clear that we will maintain that policy if we win power this year. We have also made it clear that we will maintain the system of R&D tax credits introduced by the Bill—again, after so many years of this Government chopping and changing the design of the scheme. In both cases, that is because we prize stability and predictability for businesses; they have made it clear to us that they value that greatly.

We know that providing certainty is a critical factor in boosting business investment and economic growth. If Labour won the next general election, we would put that certainty and stability at the heart of our approach in government by publishing a road map in the first six months, setting out our business tax plans for the whole Parliament. We have set out our approach to full expensing and to corporation tax, so I am disappointed that the Minister was not able to give us a clear guarantee that the Conservatives will maintain full permanent expensing and cap corporation tax at 25% for the whole of the next Parliament. Businesses can have confidence, however, that both of those commitments are locked in with Labour.

Of course, there are provisions in the Bill of which we have been critical, not least the fact that it freezes tax for passengers flying around the UK on private jets, while hiking taxes for everyone else who is flying economy or business class. Also, the Government admit that some provisions will need to be returned to and corrected. That is a far from ideal position to be in before a Bill has even become law. We know this is the case because, towards the end of last month, HMRC admitted that the way in which the Government have legislated to remove the lifetime allowance has

“created unintended consequences for members with multiple pension schemes”.

HMRC says that further legislation will be necessary to fix three areas in schedule 9 relating to the abolition of the lifetime allowance. That clearly indicates rushed legislation that runs the risk of creating problems for all involved. The legal firm Wedlake Bell, for instance, has said:

“The proposed new tax regime replacing the LTA at breakneck speed from 6 April 2024 is very risky for all parties including trustees, administrators, members and indeed HMRC itself.”

More widely, our concern with this Bill, as with the autumn statement it followed, is that the Conservatives cannot hide or move on from their 14 years of economic failure. Those 14 years of failure have left economic growth languishing and people across Britain worse off. Last November’s autumn statement for growth was the 11th attempt at an economic growth plan from the Conservatives. The truth is that the Conservatives are incapable of getting our country back on track. We need a general election so that Labour can offer the change and the plan that families and businesses across Britain need.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call the Chair of the Treasury Committee.

--- Later in debate ---

[Mr Deputy Speaker]

I call the SNP spokesperson.