Finance Bill

Paul Kohler Excerpts

Report stage
Monday 3rd March 2025 Commons Chamber

[Nesil Caliskan]

I will make some progress and conclude in a moment.

Politics is full of choices. The Government have to balance the books and take a decision to ensure that we close the black hole, so the choices they have made feel like the fairest ones. A long-term commitment to ensuring that we have stability in the energy markets, while ensuring that people who need help right now can benefit, is the correct approach.

I am happy to support the Government’s position on the Bill. It is a Bill that sets out the right choices, as I have said, and it is the first important step to ensure that the country is back on the road to recovery after a dark period, where people were impacted not just through an economic crash, but in their day-to-day living through a cost of living crisis.

[Mr Paul Kohler (Wimbledon) (LD)]

I will speak to new clauses 7 and 8. As the MP for Wimbledon, I am proud to represent a constituency with such a rich and diverse educational offering, including fantastic primary and secondary schools in both the independent and state sectors. But recent Government decisions, including the increases in employer NI contributions on all schools, the removal of business rates relief and the imposition of VAT on school fees at independent schools, are pushing many in the state and private sectors to the brink. The changes to independent schools have caused considerable concern in my constituency, as can be clearly seen by the over 1,000 signatures from my constituents on the petition being debated today in Westminster Hall.

It is my belief and that of my party, as Liberals, that education should not be taxed and individuals should be able to freely make choices about how their children are educated. The ambition should be to reach a point where the state offering for schools is so high that no parent feels particularly compelled to send their children to independent schools. However, these ideologically driven policies of taxing education are not the solution. They simply put further strain on the state sector while financially hitting those who make what they believe to be the best choice for their child. These policies are a piece of red meat to show that the red flag is still fluttering on the Labour Benches.

Admittedly, the long-term impact that the changes will have on schools is still to be seen, but the early signs are not good. This academic year we have already seen a drop of 10,000 pupils at independent schools—three times higher than the Government estimated. Many believe that the change will not be a one-off event, but the start of a longer period, with more pupils expected to leave independent schools in the coming years, making any financial gains to improve the state sector illusory.

It is important to note that the cost per pupil is likely larger than the national average due to the sheer number of students in the independent sector who have special educational needs. The Independent Schools Council estimates that over 130,000 pupils in independent schools have special educational needs, with 90,000 of them receiving special educational needs and disabilities support with no education, health and care plan.

Independent schools in my constituency, such as the Hall school, Wimbledon high school and Donhead prep school, to name but three, do a huge amount to support children with special educational needs, and many parents choose to send their children there for that reason alone. I have spoken to many parents who have made tough financial sacrifices to send their children to those schools. They speak of the barriers to their children receiving the support they need in the state sector, including long waiting lists to receive an EHCP. The changes are already forcing many to reconsider their decision because they simply no longer can afford to use the private sector to relieve pressure on the state system.

As is well documented, there are huge issues around the provision of SEND support in state schools, with many children waiting years for support and many schools not being able to provide the support they would like to due to budgetary restraints. At a time when the Government and local councils are already struggling to support schools with the money they need for SEND support, avoiding further strain on state schools is vital—these decisions do the opposite.

Turning to new clause 8, I draw the House to my entry in the Register of Members’ Financial Interests. I will speak about the impact the Bill will have on the wine industry, the night-time economy and hospitality in general. Under the current wine easement, 85% of all wine sold in the UK is subject to the same rate of duty. With the alcohol duty now set to be linked to the volume of alcohol in each bottle of wine, that will be replaced by 30—yes, 30—different rates of duty. While I understand the Government’s broader intentions, the new regime is simply not workable in the context of wine. It fails to account for the fundamental difference between wine and other more manufactured drinks.

The alcohol by volume of wine cannot be predicted with precision before or during the wine-making process. The alcohol content is stable only at the point when the wine goes into the bottle. The ABV varies between different years and vats. Until bottling, we do not know the ABV of a particular bottle. It therefore creates huge uncertainty about price and profit margins for the industry if there are different rates of duty depending on the specific ABV, down to a gradation of 0.1%. That is particularly important with low-cost wines. This regime is utterly impractical for wine producers and merchants.

Hal Wilson, co-founder of Cambridge Wine Merchants, told me:

“In my business this feels like death by a thousand cuts, or even two thousand cuts. We sell over 2,000 different wines each year and from February will need to know the precise ABV of each and every one before being able to calculate their full cost. For each 0.1% ABV difference there is a different amount of tax to be paid.”

I wrote to the Minister about the matter and received a long and detailed response, for which I am grateful. He made the point that His Majesty’s Revenue and Customs will change its practice and accept the ABV on the label of the bottle to the nearest 0.5%, but that is current practice; it is not in the legislation as I understand it. It is still far too complex and much of my criticism still holds.

Secondly, the letter fundamentally misunderstands why people drink wine. Wine is consumed primarily for the taste, not the strength. The ABV affects the taste profile. Compare a light Beaujolais with a robust Rioja—it is all about taste, not whether it is stronger so one can get more drunk. That is not how people consume wine.

Turning briefly to hospitality and the night-time economy, the industry faces an existential crisis owing to the cost of living crisis, rising energy prices, inflation, labour shortages following Brexit, changes to commuting patterns and the more than doubling of business rates. The increase in alcohol duties will be yet another burden. Every incremental cost makes survival more difficult, as I know myself, and the Bill shows that the Government are still not taking the dangers seriously.

[Jim Shannon]

It is a pleasure to speak in the debate—is it the end? No, I am sure it is not. I thank you, Madam Deputy Speaker, for calling me so soon; I was just getting myself prepared. This is an opportunity to speak on this Bill one last time. I have spoken every time it has come to the Chamber, and I am pleased to do so again.

The shadow Minister, the hon. Member for North West Norfolk (James Wild), referred in his contribution, which was helpful for setting the tone and level of the debate on these important issues, to the impact of the inheritance tax changes on small and medium farms. That needs to be raised at every opportunity until the Government understand the devastation that it will wrought on farmers, causing them to sell their land and their future to pay the Government. I have sat beside the Minister and asked for the threshold to be increased. If the threshold were increased by £1 million to £5 million for farms, it would mean that many farms would not be penalised by the changes. The Government urgently need to promote food security in the United Kingdom of Great Britain and Northern Ireland. This decision beggars belief. If they are aiming the measures at those who abuse the system, they should design a scheme for them—not a scheme that affects many farmers across this great United Kingdom, including 70% of farmers in Northern Ireland.

The other major concern is that of the NI contributions. GP clinic and health centres are the latest to suggest that they will have reduced hours and capacity because of the constraints of their NI contributions. That must not be the case.

I support the Opposition’s new clause 2, on “Energy (oil and gas)”. The shadow Minister made the case for it extremely well, and others have spoken to it. I agree with them, and my party will support the new clause if it is pressed to a Division, as I understand it will be.

On new clause 8, the hon. Member for St Albans (Daisy Cooper), who spoke for the Lib Dems, referred to the whisky sector. I will make the case for Irish Whiskey Association, which was clear when I met it before Christmas that the measures will have a great impact on a sector that is already under pressure. Let us be honest: most Irish whiskey organisations’ trade is under pressure. They export most of their whiskeys to make their money, but the fact of the matter is that they find that extremely difficult to do. They tell me clearly that if they are taxed more heavily, it will lead to job losses and a reduction in what they are able to do. They do incredible work for the community. I have known the owners of three whiskey distilleries in my constituency—Rademon, Hinch and Echlinville distilleries—since they have had their businesses, and they are concerned about the impact of the measures.

--- Later in debate ---

[James Murray]

I was hoping that the hon. Gentleman would again leap to the defence of Liz Truss, as he did just last week. Sadly, that was not to be the case in his intervention. I will come on to the new clauses in a moment; I am only halfway through thanking people on his side of the House for intervening, so I would be grateful if he would let me make a little progress.

The hon. Member for Wimbledon (Mr Kohler) spoke about his concerns that things will be unworkable when the wine easement ends, but it ended over a month ago. Our early indications are that firms, warehouse keepers and HMRC have adapted well to the new system, although I and my officials will carefully monitor the situation.

[Mr Kohler]

Has the Minister actually spoken to people in the wine industry? They are absolutely at their wits’ end about this.

[James Murray]

I have been in routine contact with people from the wine industry throughout my time as Exchequer Secretary, and my officials are also in touch with the industry. As I said, the end of the wine easement happened at the beginning of February, and our early indications are that firms, warehouse keepers and HMRC have adapted well.

The hon. Member for Strangford (Jim Shannon) made a rare early speech during the debate, which rather took me by surprise. He raised his points with typical grace and forthrightness. I will address some of his points later in my remarks, but on the point about the impact of changes in the Finance Bill on some of the firms that export their spirits, I remind him that duty does not apply to exports. That part of the legislation would not be relevant to those considerations.