Treasury
Rebecca Long Bailey Excerpts(2 months ago)
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Rebecca Long Bailey (Salford and Eccles) (Lab)
The Financial Secretary to the Treasury (Nigel Huddleston)
Eighty-five per cent of the funds recovered from the loan charge so far—about £3.9 billion in total —have come from the employees, therefore those who were running those schemes, so the hon. Lady is mischaracterising where we have gone so far. There has been one criminal conviction so far; others are in place. I repeat what I said to the Opposition spokesman, the hon. Member for Ealing North (James Murray), earlier: if they were that concerned about ensuring we go after the wrongdoers, they would have voted with us last night in the Finance Bill.
[Official Report, 6 February 2024, Vol. 745, c. 117.]
Letter of correction from the Financial Secretary to the Treasury, the hon. Member for Mid Worcestershire (Nigel Huddleston) :
Errors have been identified in the response I gave to the hon. Member for Salford and Eccles (Rebecca Long Bailey).
The correct response should have been:
Oral Answers to Questions
Rebecca Long Bailey Excerpts(2 months, 2 weeks ago)
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The Economic Secretary to the Treasury (Bim Afolami)
I thank my hon. Friend for his question and I will write to him with the specifics of the answer.
Rebecca Long Bailey (Salford and Eccles) (Lab)
The Financial Secretary to the Treasury (Nigel Huddleston)
Eighty-five per cent of the funds recovered from the loan charge so far—about £3.9 billion in total—have come from the employees, therefore those who were running those schemes, so the hon. Lady is mischaracterising where we have gone so far. There has been one criminal conviction so far; others are in place. I repeat what I said to the Opposition spokesman, the hon. Member for Ealing North (James Murray), earlier: if they were that concerned about ensuring we go after the wrongdoers, they would have voted with us last night in the Finance Bill.
Autumn Statement
Rebecca Long Bailey Excerpts(1 year, 5 months ago)
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Jeremy Hunt
My hon. Friend was an extraordinary advocate for Medway Hospital when I was Health Secretary. That is continuing, and rightly so. I will take away what he says. I am not sure about the exact situation with respect to a new hospital in Medway, but I will write back to him.
Rebecca Long Bailey (Salford and Eccles) (Lab)
The statement proposes council tax increases to top up social care funding, but the Chancellor must be aware that in Salford, the 18th most deprived local authority, with a current list of 27,000 people accessing council tax reduction support, any increases would raise only nominal funds, and the pain would be felt by residents on a huge scale. How will Salford pay for its social care, and what support will the Chancellor provide to mitigate the impact on those who cannot afford council tax increases?
Jeremy Hunt
The hon. Lady is right to raise those concerns. Flexibility on council tax is only part of the way we are funding the £4.7 billion increase in the social care budget. Part of it is coming from the delay in the Dilnot reforms, and part of it—£1 billion and then £1.7 billion—is coming from central Government coffers. We recognise those concerns. This package is designed in its entirety to give maximum possible support to the most vulnerable people, and I hope it will be welcomed in her constituency.
Economic Update
Rebecca Long Bailey Excerpts(1 year, 6 months ago)
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Jeremy Hunt
I can accept that the hon. Member and I are different in that I am totally emotionally committed to the Union and it is part of my identity, and he feels differently about that, but what I cannot accept is that it would be anything other than madness for every household in Scotland to want to leave the United Kingdom, which would make them much worse off.
Rebecca Long Bailey (Salford and Eccles) (Lab)
The Chancellor spoke of cuts, albeit shrouded in compassionate conservativism—a paradox if ever there was one—but surely he must realise how serious things are in public services at the moment. In Salford alone, the council is sitting on a £16 million shortfall due to soaring energy costs. That is on top of slashing its previous budget in half and slashing its staff rotas by over half. How can he possibly put forward compassionate cuts to services that are barely able to function at the moment?
Jeremy Hunt
It is because I want to be able to invest in public services like the ones the hon. Member talks about that I think it is so important to take tough economic decisions at times like this. All I would say is that, while she and I have a different viewpoint on many issues, her party has supported the decisions I have taken today, and I think that was the right thing.
Economic Situation
Rebecca Long Bailey Excerpts(1 year, 6 months ago)
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Rebecca Long Bailey (Salford and Eccles) (Lab)
The Joseph Rowntree Foundation has commented on reports that the Government plan to increase benefits only in line with earnings instead of CPI September inflation, stating that this would amount to the biggest
“permanent deliberate real-terms cut to the basic rate of benefits”
ever made in a single year. Can the Chief Secretary assure my frightened constituents today that, first, these reports are not true and, secondly, that he will uprate benefits in line with CPI inflation in September?
Chris Philp
I have already explained, as I think I said yesterday, that there is a statutory process that happens every single year when these decisions get taken. No decision has been taken on the question yet; indeed, the September CPI figure, which is relevant, has not even been published yet. When the decisions are taken, Ministers will of course have regard to the cost of living pressures and high inflation that we and many other countries are experiencing, although of course the energy intervention will make that inflation lower than it would otherwise be. We also, of course, must pay due regard to hard-working taxpayers who ultimately have to pay the benefit bills, and we will take all of that into account when we make the decisions.
New Wealth Taxes
Rebecca Long Bailey Excerpts(1 year, 10 months ago)
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Rebecca Long Bailey (Salford and Eccles) (Lab)
It is a pleasure to serve under your chairmanship, Sir Edward. I thank my hon. Friend Member for Leeds East (Richard Burgon) for securing this important debate.
I shall start by reading an excerpt from a letter to Klaus Schwab, the Executive Chairman of the World Economic Forum. It reads:
“The scandalous rise in the cost of living across the globe is not an unfortunate accident. It is the result of dogged commitment, from governments all over the world, to preserving the power and wealth of a tiny minority over the needs of their voting publics. It is a stunning commitment to failure and a constant suppressant on our economic and social prosperity…We must face it. People do not trust democracy because the prevailing global oligarchy is rendering it pointless. No matter how many people vote, if governments continue to listen to wealth over sense, the votes and voices of everyday people are not heard.
If you want to defend democracy you have to face facts. The divide between the very rich and the rest must close. The rich must be taxed.”
People might think that those are the words of a social justice movement or a left-wing political activist, but nothing could be further from the truth. The letter was actually written by millionaires themselves—specifically, a non-party political network of millionaires advocating action on economic inequality and higher taxes on themselves. They include groups such as Patriotic Millionaires, the “Tax me now” initiative, Millionaires for Humanity and 99%-Initiative, who recognise that hard work and entrepreneurship should be celebrated, rewarded and encouraged, but that we cannot do that effectively in a broken economic system that fails to address the gross divide between those with extreme wealth and the majority of everyday people.
Those millionaires and, I suspect, many more decent people like them recognise that something skewed has been happening in our economy over recent years, and they are right. “Taxing Extreme Wealth”, a recent report by Oxfam, Patriotic Millionaires, the Institute for Policy Studies and Fight Inequality, found that in the UK alone,
“Between 2016 and 2021, the number of individuals with wealth over $50 million increased from 4,375 to 5,330”.
The report also found that there were 56 billionaires in the UK, with wealth totalling $204.9 billion, and that throughout the pandemic, while many people struggled, the wealth of British billionaires actually increased by $41.06 billion. Indeed, the five richest billionaires have the same amount of wealth as the bottom 40% of British society.
That phenomenon has not happened overnight. The global free market race for the most competitive national tax rate has seen the top rates of personal income tax and capital income tax rates decline since the 1980s in leading industrial nations, and the income share of the top 1% has significantly increased. On top of all that, the tax system in the UK is littered with loopholes that allow tax avoidance, and there is little resource for Her Majesty’s Revenue and Customs to clamp down on tax avoidance or evasion. There are a number of inherent structural flaws, such as the absurdity that income from wealth is taxed at a lower rate than income from salary.
As we have heard today, the sad fact is that it does not need to be like this. We can take steps to reform our broken taxation system, and a wealth tax is one option to try to create such economic balance. Of course, there are many permutations as to how a wealth tax could be constructed: it could be an annual tax in tandem with wider, much-needed reform of our taxation system to address existing loopholes and structural flaws; alternatively, it could be a one-off tax in response to the covid pandemic and the cost of living crisis. Such detail requires deeper discussion than time will allow today, but I hope that it will be the next step after today’s debate.
Even millionaires are warning us against the injustices that they plainly see in our economic system. Further, they are warning us to take seriously the threat that rising inequality poses to democracy. It is up to all of us, whatever our political stripes, to embrace tax changes that would limit inequality and give our constituents the quality of life they deserve.
The Financial Secretary to the Treasury (Lucy Frazer)
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Leeds East (Richard Burgon) on securing today’s important debate. I know that he and others feel passionately about it, particularly—as many have mentioned—at a time when households up and down the country are struggling.
I propose to start my response by talking about the tax system and the degree to which wealthier individuals already pay a significant—and proportionately significantly greater—amount in tax. However, before I do, I want to recognise the important contribution that many wealthy individuals make to the UK economy. The Conservative party—this Government—supports entrepreneurship; we support wealth creation and we support ensuring that successful businesses in our constituencies contribute to our local and national economies. However, we also understand the importance of ensuring that wealthy individuals make a fair contribution and pay the tax that is owed.
That is not just our thinking of the moment; it is the way we have dealt with this issue for a number of years. We already have a very progressive income tax system, with the top 5% projected to pay nearly half of all income tax in 2021-22. The hon. Member for Leeds East mentioned the top 1%, and he may know that they will be paying more than 28% of all income tax.
The hon. Member for Hemsworth (Jon Trickett) mentioned other taxes, and the principles I have set out apply well beyond income tax, with several other taxes on wealth across many different economic activities, including the acquisition, holding, transfer and disposal of assets and income derived from assets. Those all generate significant revenue for the public purse. For instance, for this tax year—2022-23—the OBR estimates that there will be inheritance tax revenues of £6.7 billion, capital gains tax revenues of £15 billion and property transactions taxes of £17.1 billion.
The Wealth Tax Commission’s July 2020 report found that, taking the narrowest definition of a tax on wealth—that is, inheritance, estate and gift taxes—UK taxes on wealth were about average compared with other G7 countries. At the same time, Government policy is, and will continue to be, highly redistributive in the round. In 2024-25, on average, households in the lowest income 10% will receive more than £4 in public spending for every £1 they pay in tax.
The hon. Member for Christchurch (Sir Christopher Chope) made some interesting points about the downside of higher taxes. That is why we are committed to ensuring that we are a low-tax economy.
The hon. Member for Leeds East mentioned the Wealth Tax Commission’s report. That was an important piece of work, which set out a significant amount of detail. The hon. Member for Salford and Eccles (Rebecca Long Bailey) suggested an annual wealth tax, but she may be aware that the commission rejected the idea of an ongoing wealth tax, charged on an annual basis, for a range of reasons. It is true that it saw some potential merit in a one-off wealth tax, as the hon. Member for Leeds East said, but that does not provide long-term revenues for the future.
Rebecca Long Bailey
Is the Minister aware that the report did discount an annual wealth tax, and looked at exploring the possibility of an annual wealth tax if it was done in tandem with overall reform of our taxation system? Does she agree that our taxation system is long overdue an overhaul?
Lucy Frazer
The Government are making changes to the tax system, including through a number of measures to ensure that those on the lowest pay are paying fewer taxes. The Wealth Tax Commission identified that there would be some advantages to a one-off tax, but it acknowledged:
“although one can point to entirely new taxes introduced within the recent past, there are none on this scale.”
This is not a matter of lack of political will, as the hon. Member for Brighton, Pavilion (Caroline Lucas) suggested. This is not a measure that we would bring forward, for a variety of good reasons. Denis Healey, a Labour Chancellor of the Exchequer, came to understand that later in life, when he wrote of his time in office in the 1970s:
“We had committed ourselves to a wealth tax; but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.”
Tackling Short-term and Long-term Cost of Living Increases
Rebecca Long Bailey Excerpts(1 year, 11 months ago)
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Rebecca Long Bailey (Salford and Eccles) (Lab)
It is often said that a nation’s greatness is measured by how it treats its most vulnerable, but sadly we saw no such measures of greatness in the Gracious Speech. As the Child Poverty Action Group states, it was
“a legislative agenda that risks leaving increased levels of child poverty—currently at almost 4 million and expected to rise further—as its only real legacy.”
What were the Government’s priorities, if not to help those in need? We saw ideological flights of fancy, such as forcing through the privatisation of Channel 4, which does not cost the taxpayer a penny and does not need to be privatised, and the British Bill of Rights, which is understood to be a back-door vehicle to undermine the Human Rights Act.
On workers’ rights, there was no employment rights Bill, despite years of promises from the Government. In its place was the Brexit freedoms Bill, which many fear will cut safety regulations, environmental protections and workers’ rights. People are right to be worried, because despite the Government’s warm fluffy protestations to the contrary, some of the Secretaries of State responsible for drafting the Bill wrote a book arguing that Britain needs to adopt a far-reaching form of free market economics with fewer employment rights.
In the meantime, our communities are suffering through the cost of living crisis and the Government seem blinkered to their despair. They hiked national insurance contributions for working people; cut universal credit and pensions by offering only a 3.1% increase when inflation is predicted to reach 10%; and sat back as oil and gas companies sit on record profits while people struggle to pay their bills.
It is clear to everyone—even the CBI and Sir John Major —that the Government must issue an emergency Budget. That means increasing universal credit, legacy benefits and state pensions in line with actual inflation; scrapping the punitive aspects of the universal credit system, such as the five-week wait, the two-child limit, the benefits cap, and no recourse to public funds; increasing the minimum wage to a real living wage, with a pathway, including business support, towards £15 an hour; and a real-terms public sector pay increase.
We also need an extension of the warm home discount, a street-by-street national home insulation programme and a windfall tax on fossil fuel companies. As Greenpeace suggested, the Government could increase the tax level on oil and gas producer profits to 70% as an absolute minimum, which would simply be in line with the global average and would generate an additional £13.4 billion for the Exchequer that could be used to bring down bills and invest in energy efficiency.
Fundamentally, however, for the longer term, we must recognise that although horrific global events are a significant factor in the cost of living crisis, it is the structural issues in our economy and energy system that have left us most vulnerable to global price fluctuations. Closing our main energy storage facility in 2017 without replacing it was a monumental error, but worse still are the long-term structural failures that the privatisation of our energy market has caused. It is undeniable that public ownership is central to addressing the costs and energy security crisis that we face.
So at the very least our communities deserve an emergency Budget before millions suffer possibly the worst economic crisis that they will ever see in their lifetime. At best, we need to reform our economy and energy system so that they protect people from the crisis that we are seeing today.
National Insurance Contributions Increase
Rebecca Long Bailey Excerpts(2 years, 1 month ago)
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Rebecca Long Bailey (Salford and Eccles) (Lab)
The Institute for Fiscal Studies and the Resolution Foundation have both said that the NI rise is disproportionately loaded on to younger and lower-paid workers compared with a rise in income tax. In addition, inflation is expected to hit at least 7.25% in April, council tax is going up in most places and energy prices are expected to rise by a whopping 50%. Of course the Government will say that they have offered support in the form of a £200 energy “discount” that consumers must pay back over the next five years, but that is, in essence, loading even more debt onto cash-strapped households. Labour’s analysis shows that, combined with the £444 increase in energy bills expected next financial year for a household that gets the Chancellor’s loan and council tax scheme, most households will still be more than £1,000 worse off in 2022-23. I must impress on the Minister that it is not just households who will be devastated by this NICs rise; businesses are also warning of the effects it will have on them and on the overall economy. For example, Make UK says:
“The cost burden on business is continuing to escalate and, while some of these increases are due to global events, Government must avoid shooting business in the foot with an entirely self-imposed decision.”
The Federation of Small Businesses says that the Government must reverse this decision and go further, removing all employer contributions for apprentices, which it says will result in more workplace opportunities for young people.
So today’s motion is right: the Government must cancel their planned NICs rise, because it is clear that these reforms are illogical and unfair. On unfairness, for those paid a wage above the NICs threshold, which is due to be £9,880 from April, the Government will ask for an extra 2.5% of wages towards the costs of social care, because the 1.25 percentage point increase to both employee and employer NICs will each come out of workers’ take-home pay in the end. Those who are self-employed and paid in dividends have been asked to contribute an extra 1.25 percentage points from their wages, but if a person’s income is derived from interest payments, rents, capital gains or pension annuity, they will not see any increase at all. Happy days for them.
It is clear that our social care system needs urgent reform and investment, but raising national insurance contributions at just the time when our communities and businesses need to be shielded from the cost of living crisis they face is not the answer. At the very least, the Government must cut the rate of VAT for household energy bills as soon as possible and must levy a long-overdue windfall tax on oil and gas companies to generate an income stream. They must expand and increase the warm home discount, prevent the cost of supplier failure from going on to bills and significantly increase universal credit to offset soaring inflation. They must also increase public sector pay and the living wage.
The Government must address the long-term structural failures that the privatisation of our energy market has caused by recognising that public ownership is central to addressing the costs and energy security crisis that our energy system faces and would also create a revenue stream, just like the revenue streams created by countries such as France with their own publicly owned energy companies.
We are long overdue a frank discussion and examination of fairness in the tax and social security system. We must look at taxing income from wealth—such as interest, rent and capital gains—on a basis comparable with that for earnings from work. As the New Economics Foundation has suggested, the Government should examine the idea of a living income, which would link social security payments to a decent minimum income guarantee.
This is the time for the Government to wrap their arms around households and businesses, not to hit them with an illogical tax hike. Only when households and businesses are supported will they be able to emerge from this cost of living crisis stronger and more buoyant than they were before.
Household Energy Bills: VAT
Rebecca Long Bailey Excerpts(2 years, 3 months ago)
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Rebecca Long Bailey (Salford and Eccles) (Lab)
Thank you, Mr Deputy Speaker.
Annual fuel bills are expected to rise not by a little bit but by a whopping 50% when the current energy price cap is raised in April. This motion is right. To provide some temporary relief, the Government must cut VAT on household bills as soon as possible. Beyond that, the longer-term problems must be addressed.
We could see this crisis coming for a long time. Closing the UK’s largest gas storage plant in 2017 without a plan to replace it was illogical, and the Government were repeatedly warned at the time that the country faced more volatile winter gas prices and was becoming too dependent on energy imports, but they ignored all advice.
The bigger issue is the business model of the energy sector as a whole. For years since privatisation, the monopoly grid companies prioritised dividend extraction over upgrading the system for renewable energy. The generators did not really start investing in renewables until public money was put on the table, and the supply market is in complete disarray. Many smaller suppliers are now folding, creating even less competition and leaving huge market shares for the bigger players. In response to that collapse, we see the Government setting aside billions in public funds to prop up firms that are too big to fail, but with that public money comes no change in the broken energy market, no reduction in household bills and none of the benefits of public ownership.
If our energy system were brought into public ownership, such public companies would not be duty bound to prioritise huge returns for shareholders. They could invest in the system and in renewables, and they could use financially buoyant times to build up reserves to protect against the price fluctuations we are seeing. They get this in Germany, where two thirds of electricity is bought from municipally owned energy companies. They get this in France, where two thirds of electricity comes from EDF, which is majority owned by the French state. EDF also runs the French grid and generates most of the electricity. In fact, EDF supplies the UK, yet the Government do not think we are good enough to have our own public energy company.
Until the Government recognise that public ownership is central to addressing the crisis we face in our energy system, our constituents will continue to pay the highest price. Today’s motion would help them, but ultimately the Government have to look at the bigger picture and examine public ownership.
Climate Goals: Wellbeing Economy
Rebecca Long Bailey Excerpts(2 years, 4 months ago)
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Rebecca Long Bailey (Salford and Eccles) (Lab)
It is a pleasure to serve under your chairmanship today, Mr Betts. I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for securing this important debate. I very much agreed with her eloquent and detailed speech.
Members may remember that the renowned author Naomi Klein stated in 2011 in her paper “Capitalism vs the climate” that:
“Climate change is a message, one that is telling us that many of our culture’s most cherished ideas are no longer viable.”
Sadly, 10 years on from Naomi’s groundbreaking paper, not much has changed. We are now faced with more stark messages in the form of covid-19, the social care crisis, an energy crisis and a cost-of-living crisis. We simply do not have an economic system geared up to ensure that everyone flourishes. We see growth prioritised, but rarely do we ever question the real nature of such growth or what its adverse consequences could be. The OECD has stated:
“If ever there was a controversial icon from the statistics world, GDP is it. It measures income, but not equality, it measures growth, but not destruction, and it ignore values like social cohesion and the environment. Yet Governments, businesses and probably most people swear by it.”
Growth means nothing to many families struggling, living in cold, mould-infested homes, wondering if they are ever going to get a lucky break. It means nothing to the pensioners struggling to get the care they need, and it will mean nothing to our children if they have no future because the flawed and relentless pursuit of growth above everything else finally destroys our planet.
The good news is that with real economic and political will, we can develop a system of economic metrics that centres our economy around what should be the most important measure of success for any Government: wellbeing. As Katherine Trebeck from the Wellbeing Economy Alliance explains, that means recognising that
“The economy is a means to an end, not an end in itself. It is an economy which regenerates nature, an economy where collaboration trumps competition, an economy where activities and what organisations do is purposeful, not simply just to make money. In which individuals’ desire to be acknowledged for meaningful contributions with a decent living is not dominated by a motivation of acquiring wealth. And which is financed by a stable, fair and socially useful financial system that serves the real economy for the long term.”
I hope that today’s debate is just the start of a long overdue conversation about what that really means in practice: from finding a new way of measuring the economy’s performance away from the distribution-blind GDP and towards indices of wellbeing, through to ensuring the economy distributes wealth more fairly, provides stable and sufficient incomes, supports socially and environmentally useful enterprise and, importantly, ensures the ownership of economic assets is shared more widely and democratically with workers and communities.
Ultimately, the Government are not a mere economic spectator here. They have the power to implement that change. As such, the debate goes to the very heart of what we think the sole purpose of Government is. Are they the caretaker of a broken economic theory that preserves wealth for the few, at the expense of the many, or are they the engine that drives the economy to deliver health and wellbeing for all? In Salford, we know the answer to that. We say the welfare of the people is the highest law.