Taxes

Rachel Blake Excerpts

Tuesday 15th July 2025 Commons Chamber

[Phil Brickell]

The hon. Member would do well to listen to what I have to say, and I will come to wealth taxation shortly, but I would appreciate it if she did not take that very condescending tone with me—I spent more than a decade working in the financial services industry myself.

These measures have been taken because it is simply the right thing to do. When a nurse in Bolton hospital is paying a higher effective tax rate than someone making millions on property or shares, the system is not just broken; it is unfair.

Thirdly, the Government have cracked down on tax-dodging, with more funding for HMRC to go after tax evaders and bring down the stubbornly high tax gap. That gap—the difference between what the Government are owed and what they actually collect—currently stands at almost £50 billion. That figure—50,000 times £1 million—is almost the size of the entire defence budget in 2023-24. Unlike the dearth of policy proposals from the Conservative party, I constructively implore the Government to continue tackling the enablers of dodgy tax schemes. Firms that promote aggressive tax avoidance schemes will now be held to account with fines of up to £1 million. I welcome that measure in particular.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

On that point, does my hon. Friend agree that it is important for HMRC to work with local authorities to take action on tax evasion by high street stores that do not act fairly, like the awful Harry Potter stores in my constituency? I am worried about the impact that they have on the high street and on our tax revenues.

[Phil Brickell]

My hon. Friend, who has been a fantastic champion on tackling that issue, makes a valid point.

The Opposition would have us believe that taxes writ large are a drag on growth, but the truth is more nuanced. What stifles growth is instability. What repels investment is unpredictability. What corrodes trust is a tax system that rewards avoidance while underfunding our schools, hospitals and police. Labour is putting more money in people’s pockets by boosting the minimum wage for 3 million workers. Wages are growing more in our first 10 months than in an entire 10 years under the Tories.

I would urge the Chief Secretary to the Treasury not to rest on his laurels, however, because there is more to do. I propose three policy priorities that I hope the Treasury will give serious consideration. First, we should review and reform current tax reliefs. Some £204 billion—a quarter of all tax revenue—was spent on tax reliefs in 2022-23, yet many of those reliefs are uncosted, unscrutinised and susceptible to abuse. The Treasury Committee was right to call for a rationalisation of those reliefs. We must audit them for efficacy, eliminate those that serve no public interest and crack down on those that have become vehicles for avoidance.

Secondly, I draw the Minister’s attention to the issue of tax-dodging in our own backyard. At the end of last month, a number of British overseas territories, including the tax haven of the British Virgin Islands, missed yet another deadline to introduce public registers of beneficial ownership. The Minister will know that this is a long-running issue. The BVI in particular has missed deadlines in 2020, 2023 and 2025, as the right hon. Member for Sutton Coldfield (Sir Andrew Mitchell) knows well, he having campaigned strongly on this issue over many years.

In January this year, the Bureau of Investigative Journalism, working alongside the BBC and The Guardian, revealed that Roman Abramovich, the former owner of Chelsea football club, may owe the Treasury up to £1 billion in unpaid corporation tax, penalties and interest. That is from corporate structures with a value of $6 billion, set up through an offshore web of hedge fund vehicles primarily registered in the British Virgin Islands and Cyprus, in what looks like an ultimately botched attempt to reduce tax liabilities.

When a Russian oligarch allegedly manipulates British secrecy jurisdictions in order to obscure profits made from UK-based centres of control, it undermines the credibility and fairness of our tax system. We need every British overseas territory to adopt full public beneficial ownership registers, so that sham structures such as Abramovich’s can be traced, challenged and taxed. Dirty money—the kind that flows beneath the waves of secrecy—corrodes the entire tax system, so I call on the Minister never to shy away from the globe-spanning challenge of tax abuse hidden in the nooks and crannies of our own backyard.

Let me turn to my third and final recommendation for the Government, which relates to the often overlooked distortion in our system of pension tax relief. This long-standing relief disproportionately benefits higher earners, and it has been my settled view for a number of years that we must look again at how it operates. Currently, higher rate taxpayers enjoy 40% relief on pension contributions, while the highest earners enjoy 45% relief. Basic rate taxpayers nevertheless enjoy a rate of just 20%. Total pension tax reliefs cost circa £40 billion per year to the Treasury, according to HMRC. Of that total, two thirds is relief for those on incomes in the 40% and 45% income tax bracket, which represented 12% of the adult population in 2023-24, according to the IFS.

That highlights the inequity here: a system of relief that is tilted to those who need it least, not to incentivise moderate earners putting into pensions but to support those on the highest incomes. I urge the Minister to consider moving to a flat rate model of, say, 30%, independent of income bracket, so that every saver gets equal recognition for securing their own retirement.

Finally, with my industry expertise in addressing tax evasion before I came to this place, I would like to address the siren calls of a broader wealth tax being made by a number of colleagues on the Government Benches and elsewhere in the House. Increases in capital gains tax to align them closer to income tax are welcome. Wealth and work should be taxed at similar rates—it is as simple as that—but I have a few words of caution for proponents of wealth taxes.

The Wealth Tax Commission itself acknowledges that wealth taxes could incentivise the wealthy to hide assets behind legal vehicles using expensive lawyers and secrecy jurisdictions. HMRC is already chronically short-staffed, under-resourced and hamstrung by complexity. Without dismantling the complex web of ultimate beneficial owners, offshore trusts, nominee directors and secrecy jurisdictions, we are at grave risk of opening up a game of whack-a-mole that we would likely see the Government lose to deep-pocketed and well-lawyered high net worth individuals who can run circles around HMRC and law enforcement and secrete their assets elsewhere.

My firm view is that the Government should instead crack down on tax evasion, simplify the tax code, streamline existing reliefs and bring capital gains tax levels closer to income tax. The Centre for the Analysis of Taxation estimates that closer alignment of capital gains and income taxes alone could raise some £14 billion for the Exchequer.

As a country, we face enormous challenges: an ageing population, creaking infrastructure, rising global instability and the urgency of the net zero transition. We know that public services are under strain. We need to raise funds in a way that is both fair and that promotes the growth we need to get our country back on its feet after 14 years of Tory decline. Let us be clear: taxation is not merely a tool for revenue but the lifeblood of our social contract, which is why we desperately need a responsible and workable tax system, to ensure that education is a right, not a privilege, that healthcare is free at the point of use and that the most vulnerable in our society are protected.

Government Performance against Fiscal Rules

Rachel Blake Excerpts

Monday 7th July 2025 Commons Chamber

[Darren Jones]

The hon. Lady encourages me to act above my pay grade. The Chancellor will set out the date for the autumn Budget in due course. The hon. Lady invited me to explain to the House what our strategy was at the Budget—it was about investing in the renewal of Britain. That is why the Chancellor’s decision to update the fiscal rules to allow billions of pounds of investment in our capital infrastructure across the country, including into schools and hospitals, was the reason that the Budget was set out as it was. She also asked me about trade deals. I politely point to the three trade deals that the Government have already agreed with the European Union, India and the United States of America, saving thousands of jobs across the UK and generating growth in the years ahead.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Does the Chief Secretary to the Treasury agree that it is because of these fiscal rules that this Government have been able to establish firm foundations for future growth? Will he explain to the House how the Budget stability rule supports the Government with confidence of investors and businesses?

[Darren Jones]

My hon. Friend knows from her work on the Treasury Committee that the fiscal rules are important because they prove that the Government are in control of the public finances. We saw what happened when the last Government lost control: the cost of Government borrowing went through the roof, and that takes money out of budgets before they even get to public services like the national health service. That is why this Government are committed to our fiscal rules and will ensure that they are being implemented.

Spending Review 2025

Rachel Blake Excerpts

Wednesday 11th June 2025 Commons Chamber

[Rachel Reeves]

The allocations have been made to Government Departments, and the Treasury is not going to micromanage every scheme, so it will be up to Departments to allocate the money in the way they choose. I am sure that the Transport Secretary will come to the House and set out those plans.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

The spending review says that there will be a report from the Office for Value for Money on temporary accommodation and the terrible waste of money going into poorly procured temporary accommodation. Some 90,000 children live in temporary accommodation in London. Does the Chancellor agree that the £39 billion for new, genuinely affordable homes, combined with that review of the cost of temporary accommodation, is really positive for all children living in London who, sadly, do not have a permanent home into the future, and does she agree that this will make a transformational change in London?

[Rachel Reeves]

My hon. Friend has spoken to me powerfully on many occasions about how much Westminster city council has to spend on temporary accommodation, which is why the investment in affordable homes grants is so important—and not just for London, but for the whole country—but there are specific issues. As I said in answer to my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), there are particular challenges in London because of the extraordinarily high house prices and rents. This investment in affordable and social housing can have a big impact in London. Combined with the additional money for free school meals, the roll-out of breakfast clubs and the increase in the national living wage, this is a spending review to benefit people across the whole country, including in Westminster and London.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Rachel Blake Excerpts

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

[Gareth Davies]

To answer simply, I do not think the Government did that assessment before announcing this tax rise, but with plummeting business confidence, declining economic growth and forecasts for economic growth that are consistently downgraded, the profound impact on businesses and growth—as I was saying—is clear for all to see.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I listened carefully to your answer to the Minister’s question about what you would cut if this change were to be reversed. You have not been clear about whether you would reverse it, but I listened carefully to the answer, and what I heard you say—[Interruption.] I am so sorry, Madam Deputy Speaker. The shadow Minister referred to GB Energy and the National Wealth Fund. Will he clarify whether he is really saying that he wants to reverse record levels of investment in energy infrastructure and innovation jobs, and in jobs across this country, to stabilise our economy into the future?

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I remind hon. Members that interventions should not be short speeches. The hon. Lady is absolutely right; looking at the Chair should hopefully prevent her from saying the word “you” repeatedly.

--- Later in debate ---

[Daisy Cooper]

As a fellow Hertfordshire Member, I have met representatives of Quantum Care a number of times and have heard the same reports as my hon. Friend. This is extremely worrying for our social care providers, who are very clear about the impact that this measure will have. They will have to put up their costs, they will have to hand back contracts to local authorities, and they will not be able to provide the level of care that many vulnerable people require.

The measure will also have a huge impact on small businesses and high streets. As I have said before, high streets are the most visual and visceral indicators of whether the economy is working in their area. If small businesses see their local high street going down the pan, they will lose confidence in their local economy. Pubs, hospitality companies, retailers, beauty salons and day centres are the glue that holds our communities together, but they are also the engines of local growth. Small businesses are crying out for assistance. What makes them feel so overwhelmed is the cumulative impact of all the measures that we are seeing from this Government: the national insurance increase, the rise in business rate bills, and the new obligations that are imposed by the Employment Rights Bill without the resources to manage them.

Throughout the passage of the Bill before us, we Liberal Democrats have set out alternative ways for the Government to raise funds. The Government say that this measure will raise £25 billion for the NHS, but the Office for Budget Responsibility says that when behaviour change and reimbursement in the public sector are taken into account, it will raise just £10 billion. We believe that that money could be raised from different sources, from the digital services tax to the gaming tax to reforming capital gains tax so that it is fairer and raises more money than it can currently raise because of the way in which the Government have addressed it.

This measure will destroy growth, decimate parts of our high streets, and cause vulnerable people to lose out on vital services. That is why we Liberal Democrats have opposed the increase in the jobs tax, and it is why we ask for, at the very least, an exemption for our valuable health and care providers.

[Rachel Blake]

Lords amendment 21 calls for a review of this policy. I will come to the practical reasons for my opposition to it shortly, but first I want to focus on the cause of the problem and the cause of today’s debate.

The last Government presided over economic chaos, scaring businesses away from long-term investment. The last Government failed to invest in the skills that are required in the vital sectors about which we have been hearing today. The last Government left the NHS on its knees, in desperate need of long-term investment. It will be hard to take the serious steps that will put the country back on its feet, but I believe that the measures we are debating today are necessary. What a contrast we see now: a Government laser-focused on economic stability, a Government determined to invest in skills for the future, a Government who are already reducing the NHS waiting list thanks to a £23 billion investment. That is the outcome of this policy, which is part of a package of measures to stabilise our economy and enable us to invest in public services.

I have to admit that I have been struck by the passion and commitment of Members on both sides of the House who have spoken about important public services. I talk to representatives of those services regularly myself, and I firmly believe that the investment that this Government will be able to make in childcare, in early years, in breakfast clubs, in the NHS and back into local government, where it needs to be, will in the round create the more sustainable public services that we so desperately need.

On the practical reasons why I oppose Lords amendment 21, the OBR has already considered the implications of this policy—

[Joe Robertson]

Will the hon. Lady give way?

[Rachel Blake]

I will not give way.

Jobs data is already publicly available that will enable everybody to analyse the impact of this policy, and there has been a detailed assessment of it by HMRC. I firmly believe that this amendment will not deliver on the objectives that our country needs.

Oral Answers to Questions

Rachel Blake Excerpts

Tuesday 4th March 2025 Commons Chamber

[James Murray]

As part of the reforms announced at the autumn Budget, we are modernising the system for people from overseas spending time in the UK with a new residence-based test. We are always looking at ways to encourage people from overseas to spend time in and invest in the UK and to help grow our economy.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I congratulate the Government on announcing the greatest level of financial sanctions last week. Does the Chancellor agree that keeping dirty money out of the City of London and homes and communities across our country is vital for our national security, as well as our economic stability?

[Rachel Reeves]

It is absolutely right that we increased and stepped up the sanctions last week. Also, under the loan agreement we made with Ukraine last week, the loan will be repaid with the profits on foreign sovereign Russian assets. Russia should pay for the damage it has done.

Growing the UK Economy

Rachel Blake Excerpts

Wednesday 29th January 2025 Commons Chamber

[Madam Deputy Speaker]

I call Select Committee member Rachel Blake.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I thank the Chief Secretary for his statement about investment and growth. Does he agree with me about the role that new towns will play in tackling our country’s housing crisis and how important it is that, alongside the homes in the new towns, we see the delivery of new social infrastructure? Can he outline how those plans will work?

[Darren Jones]

I thank my hon. Friend. As I informed the House recently, our infrastructure strategy, which will be published in June, will for the first time align social infrastructure plans for schools, GP surgeries and other public service facilities with those for housing and economic infrastructure. For the first time, we will be making strategic decisions about the places where people live.

On the house building target—I met tenants who will be moving into new social homes in Erewash last week—we talk about 1.5 million homes and about economic growth, but in every one of those buildings is someone’s life, their opportunities and the dreams they want to fulfil. This Government are delivering on economic growth, and we are doing so because the people at the heart of all these decisions are the people we need to get the economy moving and Britain doing well in the future.

Finance Bill (First sitting)

Rachel Blake Excerpts

Committee stage
Tuesday 28th January 2025 Public Bill Committees

[Gareth Davies]

Oh, so it was more of a heckle than an intervention, but that is very welcome too; it makes it a bit more lively for the very large audience we have today.

I would be grateful if the Minister could set out the policy of this Labour Government. Do they support holiday lets? The Environment Secretary clearly supports them and wants farmers to diversify into them, while at the same time the Treasury—yes, we announced the policy in March—clearly wants to tighten up the rules on taxation. It would be great to hear the Minister clarify that, but it seems that the answer depends on which Minister one talks to on any given day. Let us see what the answer is in this Committee, from this Minister, today.

Clause 25 also touches on a long-standing issue of whether letting constitutes a trading activity or a property business. The FHL regime created a clear distinction by deeming a letting business to be considered a trade for certain purposes. Some organisations, such as the excellent Chartered Institute of Taxation, are concerned that removing the regime removes this distinction and could open up a whole can of worms, leading to costly disputes for both the taxpayer and HMRC. Can the Minister clarify what defines a letting as a trading activity in the absence of the FHL regime, or at least commit to the publication of updated, clearer guidance for the industry on that subject? The Chartered Institute of Taxation is also seeking confirmation on the following points—

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I am confused as to why a party that brought in the proposals is now arguing so vehemently against them—perhaps it is still attached to its chaotic approach to government. What I am not following in the hon. Gentleman’s remarks is the argument that the equalisation of the taxation could have negative consequences. Has the hon. Gentleman interrogated the evidence that has been brought forward by those people who are letting out their holiday lets, and does he really think that there would not be an economic benefit to supporting a change in use of those homes?

[Gareth Davies]

These sittings are long, but I did say at the beginning of my speech that we announced in March 2024 that we would bring in this same measure and that we will support it today.

I am not saying that we are against it, but I am saying two things. First, as I was saying at the beginning of my speech, the context in which the measure is being introduced is very different from the context in March 2024. The context today is that hospitality businesses across the country, but particularly in rural communities, are being hit by a series of taxes that they did not ask for, did not vote for and were told would not happen. That is the context in which we find ourselves.

Secondly, His Majesty’s official Opposition have a duty to communicate the concerns of the British public and the sectors that will be directly impacted by this measure. It is vital that His Majesty’s Opposition scrutinise whatever policies are put in front of us, with a forward look at how that will economically damage or benefit communities. As you can tell, Mr Mundell, and as the hon. Member for Cities of London and Westminster can tell, I take a constructive tone. When we do support measures, we will say so, and when we do not, or we feel that additional scrutiny is needed, Members better believe that I will be there. That is what I am doing today. I hope that addresses the intervention from the hon. Member for Cities of London and Westminster.

In the interests of scrutiny on behalf of the many thousands of people that will be impacted by the measure and in a context of a wider hammering through the tax system by this Labour Government, let me continue my questions on behalf of the Chartered Institute of Taxation.

First of all, I seek confirmation from the Minister that an FHL disposal must be made before 6 April 2025 in order for a qualifying replacement asset to be eligible for roll-over relief, even though the replacement asset itself can be purchased up to three years after FHL disposal. Secondly, I seek confirmation that lettings must cease altogether before 6 April 2025—not just furnished holiday lettings, but even unfurnished long-term rentals—for an FHL disposal to qualify for business asset disposal relief. Thirdly, I seek confirmation that married couples or civil partners who jointly own an FHL must make an election if they are to continue to split the income unequally, rather than reverting to the normal 50:50 rule, and make a declaration to HMRC before 6 April 2025 if this is to have effect in the 2025-26 tax year. I ask those questions constructively, on behalf of the Chartered Institute of Taxation, and if the Exchequer Secretary is not able to answer them, of course I will take a written answer by way of letter following this sitting.

In addition to the confirmation on those three points, I would be grateful if the Minister could provide reassurance that HMRC guidance has been specifically and sufficiently clear on these points, so that those affected are aware of the implications of the changes. It is important to remember that when the Government make changes and when we made changes, we were very conscious—I am sure he is too—that the public are aware. He should take all measures possible to ensure that people are aware of these changes, but I appreciate his guidance on what measures are being taken.

Finally, on the case of joint ownership—

UK-China Economic and Financial Dialogue

Rachel Blake Excerpts

Tuesday 14th January 2025 Commons Chamber

[Rachel Reeves]

I am slightly confused by the hon. Lady’s response. The Liberal Democrats opposed every decision we made to get the public finances under control at the Budget, and now they say that we need to spend more on public services. Well, I am afraid they cannot have it both ways. The only way there is more money for our public services is by raising it, as we did in the Budget—decisions that the Liberal Democrats apparently oppose.

The hon. Lady says that £600 million is not worth it. That is £600 million of tangible benefits for British businesses trading overseas. I would have thought she would welcome enhanced trade and investment as a way to create more good jobs paying decent wages in St Albans and, indeed, in all our constituencies.

The hon. Lady says that we should not go to China because we need to raise difficult issues. I am not sure how she thinks we are going to raise difficult issues unless we engage with the second biggest economy in the world. Because I went to China, I was able to raise issues around human rights, forced labour, Hong Kong and Jimmy Lai and the sanctioning of parliamentarians. We cannot raise those issues unless we are in the room. I was in the room and therefore able to do just that.

Labour is the party that put £20 billion into the national health service at the Budget in October. We were able to do that because of the difficult decisions we took, including on taxation. The hon. Lady seems to want the additional money for public services but without finding any way to pay for them. That is the way the Conservative party got into its troubles. I am afraid the Liberal Democrats are going down exactly the same path.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

May I thank the Chancellor for raising the case of my constituent, Jimmy Lai? I know it will mean a lot to him and his family. Does she agree that it is because of the profound differences that it is vital we maintain this strategic engagement?

[Rachel Reeves]

I thank my hon. Friend for what she has just said. On behalf of the whole House, I want to send our best wishes to the family of Jimmy Lai at this difficult time. I had the opportunity to raise this as well as other issues during my time in China, and it is incredibly important that at every opportunity we have, we raise some of the difficult issues and challenge the Chinese authorities in a way that is appropriate and consistent with our British values.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Rachel Blake Excerpts

Committee of the whole House & 3rd reading
Tuesday 17th December 2024 Commons Chamber

[Joe Morris]

As the hon. Lady well knows, when one inherits a difficult context, one has to take decisions that one did not want to take. The public understand that the NICs rise was important and was needed because of the circumstances that we inherited and to repair the black hole that we found in the public finances. Spending the national overdraft three times and not telling anyone about it is what has fundamentally undermined public trust.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Listening to Members speaking to the amendments has caused me to reflect on the challenges at the heart of this debate. Does my hon. Friend agree that the amendments that are trying to unpick a holistic approach to fixing the foundations of our public finances entirely miss the point, first of the challenge that this Government face in re-establishing confidence in public finances, and secondly of our approach to long-term investment in public services that are so desperately needed? I believe that all the amendments—

[The Second Deputy Chairman]

Order. The hon. Lady has every opportunity to contribute to this debate if she so wishes. Interventions are getting longer and longer; they must be shorter.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Rachel Blake Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[Bradley Thomas (Bromsgrove) (Con)]

There appears to be a glaring omission on the part of the Government: without a thriving private sector, there is no public sector to fund at all. I wish that Labour would acknowledge that much more vehemently and clearly than it appears to.

The Government talk a lot about public services and how the proposals they have put forward in the Budget will support a thriving public sector, but we do not hear about the public sector needing to deliver much more, in terms of productivity gains. If we keep throwing money into public services without a serious plan for structural reform, we fail every single stakeholder—the taxpayer, and, if we are talking about the NHS, the patient and the doctor.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

We have heard a lot this afternoon about investment in the public sector and what the proposals will do to small businesses, but we have not heard the Opposition recognise that this country needs a healthy workforce. The Bill proposes a sustainable and manageable approach to funding that healthy workforce. Will the hon. Gentleman describe to the House how damaging the previous Government’s treatment of the workforce was, and the long-standing and growing number of people claiming out-of-work benefits? Does he not see that the Bill will make a sustainable contribution?

[Bradley Thomas]

I think the hon. Lady misses the point that I am making. If we are to have a thriving, sustainable set of public services, it is not just a case of funding them; we need structural reform, so that we can deliver the best-quality services at the point of need. Take the NHS as an example. It is fundamentally different from how it was at its inception. People live longer and suffer from different illnesses. It is incumbent on Government, the whole of the public sector and this Parliament to focus on how money is spent to deliver value for money for everyone involved.

A few weeks ago, the Chancellor said that businesses that were concerned about the impact of proposals in this Budget should “cut their cloth accordingly”. Well, the same should apply to Government. Every single one of us should challenge Government to spend our money much more effectively. Once we do that, the tax burden will come down, and when that happens, we can pass on those savings. It is those savings that will ultimately underpin and provide the foundation for an economy that will grow and incentivise businesses across the board.

The Government talk a lot about the climate and the context that they inherited, but they repeatedly fail to acknowledge covid—one of the biggest public finance interventions this country has seen, which took place only a few years ago.