National Insurance Contributions (Reduction in Rates) (No.2) Bill

Richard Fuller Excerpts

2nd reading
Wednesday 13th March 2024 Commons Chamber

[Gareth Davies]

My hon. Friend is right to point that out. I would add to those figures: since 2010, we have lifted millions of people across the country, including in Southend West, out of paying any tax at all by doubling the point at which people start paying tax in our country. People can now earn £1,000 a month without paying any tax, and that is a great achievement of a Conservative Government.

Although I welcome the fact that Labour Members will apparently vote for our tax cuts today, I hope that they will forgive me for sounding slightly sceptical about their sudden conversion to the cause of lower taxes for working people. While they do not oppose the measures, they also did not propose them. In fact, Labour has consistently voted against successive Conservative-led tax cuts between 2010 and 2021, which delivered a doubling of the personal allowance, as I mentioned to my hon. Friend the Member for Southend West (Anna Firth). On the one hand, they bemoan the level of taxation, but cannot tell us a single tax that they propose to cut, or what the level of taxation would be under Labour. On the other hand, the shadow Chief Secretary to the Treasury, the hon. Member for Bristol North West (Darren Jones), described our ambitions to remove unfairness in the tax system as “morally abhorrent”. Labour Members still cannot tell us how they will pay for their many spending commitments. They are completely all over the place. It is only the Conservatives who truly believe in reducing taxes on working people.

[Richard Fuller (North East Bedfordshire) (Con)]

The Minister is giving a clear explanation of why the Conservatives want to cut tax, and the economic benefits of cutting taxes for working people. He will know that the origins of national insurance were basically a form of social insurance: having paid national insurance, it would look after us later in life. The Labour party took the insurance out and put the socialism in, which is why we have ended up with a system that is essentially the same as income tax. As we think beyond today’s welcome cuts to what is in the Opposition new clause, has the Minister thought about using any further cuts to go into the compulsory savings of individuals introduced under the coalition Government after 2010—essentially building, in place of a dependency state, a savings state built on Conservative principles?

[Gareth Davies]

Yet again my hon. Friend makes a valuable contribution. I commit to taking his idea away to consider, as we look at reducing the unfairness in the tax system in future and reducing national insurance contributions when it is prudent and responsible to do so.

The Labour party is completely all over the place on this. As a Conservative Government, we have delivered a clear message to the British people, and it is based on the delivery of the lowest personal taxation level since 1975. We have almost doubled the personal allowance, bringing the lowest earners out of paying any tax at all, and we have delivered a thriving jobs market, which is ultimately the best way to ensure that people are brought out of poverty.

--- Later in debate ---

[John Redwood]

No, I do not think that is the main point. I think the two main points are the ones I have made—the covid lockdown and the tax regime affecting the ability to set oneself up. I will meet the hon. Member a little of the way, because I do think that the 2021 reforms in particular put companies off dealing with the self-employed, and the self-employed often need business from other companies, as well as directly from the public, and that has been a problem. If he and his party are seriously interested, they should look at the 2017 and 2021 reforms, which I think they supported, to understand how they have backfired. That is a good example of the OBR and the Treasury thinking that they can get more money out of the self-employed by forcing more of them to be employed but ending up with a far less successful economy with far fewer people working.

[Richard Fuller]

It is an absolute pleasure to listen to my right hon. Friend. I want to reinforce his point about IR35 so that our colleagues on the Government Front Bench are clear about how important this is. He talked about how Labour in the past supported those measures, but does he share my concern that perhaps Labour has now recognised that those changes to IR35 have backfired and that it would be disastrous for the Conservative party to go into the next election not having made those changes while the Labour party is offering to do so?

[John Redwood]

I will not join my hon. Friend in suggesting that it could be disastrous to go into the election—I hope that, when we get to the election, it will be looking rather better. But I do agree that it would be great to have sorted out the IR35 taxation mess before we get to the election—after all, there could still be many months of happy Conservative Government ahead if that is the Government’s wish—as that would be a much better outcome. Failing that, it would be good to put it in the manifesto, but the self-employed would be quite right to say to the Conservatives, “If you have now got to the point of putting it in the manifesto because you think it needs changing, why didn’t you just fix it?”

Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 6th February 2024 Commons Chamber

[Nigel Huddleston]

Over the past few years, we have helped to support our high streets by freezing multipliers and, importantly, targeting further relief at the retail, hospitality and leisure sector. Frequent revaluations are now par for the course, because of the recent changes we have made.

[Richard Fuller (North East Bedfordshire) (Con)]

Last July, following a debanking scandal, I wrote to the Economic Secretary to the Treasury about the risks of implementing so-called diversity, equity and inclusion policies. Far from being inclusive, their implementation has often been divisive, yet Labour put such policies at the heart of its financing and growth strategy just last week. Will my hon. Friend assure us that he will give clear direction to the Prudential Regulation Authority and the Financial Conduct Authority to avoid all the risks of so-called DEI policies?

[Bim Afolami]

I thank my hon. Friend for his question. I am studying those policies carefully. I am concerned about certain aspects of what is proposed, and I will be discussing the matter with the PRA and the FCA to make sure that we have sensible policies on this matter.

Finance Bill

Richard Fuller Excerpts

Report stage
Monday 5th February 2024 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

In speaking to new clause 6, which relates to permanent full expensing, I remind the House of the context in which this Finance Bill was published. It followed the Chancellor’s statement on 22 November last year, in which he claimed that he was delivering an “autumn statement for growth”. Members will remember, however, that the same day, the Office for Budget Responsibility confirmed that growth forecasts had been cut by more than half for the coming year, cut again for the year after that, and cut yet again for the year after that. Independent analysts confirmed that even after all the changes that the Government had announced, personal taxes would still rise. They are set to rise by £1,200 per household by 2028-29, with the tax burden on track to be the highest since the second world war.

That was the context in which this Bill was published: flatlining wages, higher taxes, higher mortgage payments and worsening public services—all the product of 14 years of Conservative economic failure. Our country needs change. A critical part of making that change will be to get our country’s growth rate up. We need a plan for growth, to make people across Britain better off, and to ensure sustainable funding for our public services. Labour has been developing our plan for growth by working hand in hand with businesses across the country and across the economy.

We know how highly businesses that are considering investing in the UK rate stability, predictability and a long-term plan. For that reason, we welcome the fact that, as our new clause 6 highlights, the Bill makes full expensing permanent. Permanent full expensing is something we have long called for, as a policy that can support greater business investment and economic growth. Because Labour knows how important stability and predictability are to businesses, the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), announced last week that Labour is committed to maintaining permanent full expensing in the UK tax system, as well as the annual investment allowance, if we win the next general election. The shadow Chancellor has made this commitment to offer businesses certainty for the years ahead. Businesses considering plant and machinery investment across Britain can be confident that the tax treatment of that investment would not change with a Labour Government.

Of course, there is still a general election to face, so I use this opportunity to invite the Minister to put on the record whether the Conservatives will follow our lead by confirming that should they win the general election, they will maintain permanent full expensing. I am sure many businesses would welcome the certainty that would come from knowing both the main parties are going into the election fully committed to keeping permanent full expensing. I urge the Minister, when he responds, to confirm whether that will be his party’s policy going into the general election.

After all the chopping and changing we have seen in capital allowances in recent years, the Minister needs to make the commitment explicit. As I mentioned during earlier stages of the Bill, the annual investment allowance had been temporarily raised to £1 million when this Parliament began; that temporary basis was extended by the Finance Act 2021, again by the Finance Act 2022, and then made permanent by the Finance (No. 2) Act 2023. Meanwhile, over the course of this Parliament, the super-deduction came and went. Last year, full expensing for expenditure on plant and machinery was introduced on a temporary basis for three years. In this Bill, the Government are finally making it permanent. After so much instability, a commitment from Treasury Ministers at the Dispatch Box that the Conservatives, like Labour, will commit to maintaining permanent full expensing feels like the least they can do.

Our new clause 6 would require the Chancellor to publish not only an assessment of the impact of permanent full expensing, but a consideration of what other policies would support its effectiveness. We believe this is important to ensure that business investment is supported as much as possible. The Opposition have begun to set out what some of our policies would be if we won the next general election. As the shadow Chancellor has set out, if we were in government, we would consider the outcome of technical consultations on whether leased assets can be included in full expensing and on simplifying the UK’s capital allowance regime. I would be grateful if the Minister updated us on the progress of those consultations.

Last week, the shadow Chancellor also made clear the commitment that if Labour wins the next general election, we will ask HMRC to produce simple and comprehensive guidance making clear which assets are eligible for each type of capital allowance. That guidance would give businesses clarity over how their investments will be treated, and businesses will be able to use it as a single point of reference when making investment decisions. Will the Minister confirm whether the Government have considered taking such steps, or making such a commitment?

To give further certainty, the Shadow Chancellor has also said that in government, Labour would explore the greater use of rulings and clearances. Under such an approach, businesses would be able to get a written ruling from HMRC about the tax treatment of potential investments, making clear, for instance, whether they qualify for full expensing or other capital allowances. We know that businesses benefit from other countries’ tax administrators being able to provide such rulings and clearances. As certainty is crucial to encourage investment in Britain, I would be grateful if the Minister confirmed whether the Treasury has asked HMRC to consider the greater use of rulings and clearances for investment, and, if so, what its conclusion has been.

Of course, any policies on expensing or other capital allowances sit under the headline rate of corporation tax. It is hard to conclude anything other than that the Conservative party is rather unclear and confused about its approach to corporation tax rates in the UK. For evidence of that, we need look no further than the current Chancellor: in July 2022, during his leadership bid, he pledged to cut the headline rate of corporation tax from 19% to 15%, yet when he became Chancellor just three months later, one of his first acts was to promise to raise the tax instead from 19% to 25%. It is no wonder that businesses, and indeed Conservative Back Benchers, find it so hard to understand the Conservatives’ policy on corporation tax rates.

Let me be clear about the certainty we would offer if we won the next general election. As the shadow Chancellor has set out, we believe the current rate of 25% strikes the right balance between what our public finances need and, as the lowest rate in the G7, keeping our corporation tax competitive in the global economy. That is why we are pledging to cap the headline rate of corporation tax at its current rate of 25% for the whole of the next Parliament. We would take action if tax changes in other advanced economies threaten to undermine UK competitiveness. That choice provides predictability and has a clear rationale. That is the pro-business choice and the pro-growth choice. The promise to cap corporation tax at 25% is clear from us. Again, to offer businesses as much certainty as possible, will the Conservatives follow our lead and also pledge, today, to cap corporation tax at 25% for the next Parliament?

These commitments—to cap corporation tax, to maintain permanent full expensing and to keep the annual investment allowance—will all form part of the road map that we would publish in the first six months of a Labour Government, setting out our tax plans for businesses for the whole of that Parliament. That would put stability, predictability and a long-term plan at the heart of our approach. To give businesses as much certainty as possible, I would be grateful if the Minister confirmed whether a corporation tax cap at 25% and keeping full expensing in place will be in the Conservative party manifesto too.

[Richard Fuller (North East Bedfordshire) (Con)]

I was interested in what the shadow Minister was saying about what would happen if other countries changed their corporation tax. As he will know, Mr Trump, the former President, has said that he would cut US corporation tax, potentially from 21% to 15%. Given such examples, does the hon. Gentleman anticipate that a Labour Government would look to cut the headline rate of corporation tax, as we would be looking at a significant tax cut by the world’s largest economy?

[James Murray]

I thank the hon. Gentleman for his intervention. As we have made clear, we would take action if tax changes in other advanced economies threatened to undermine UK competitiveness, but the headline commitment from us is to cap corporation tax at 25% for the duration of the next Parliament. I recall that in earlier consideration in this debate, he and I had an exchange about permanent full expensing, so I hope he will welcome our commitment to maintaining permanent full expensing if we are in government. Perhaps he will put pressure on his Front-Bench colleagues to join us today in making that a cross-party commitment from the House.

New clause 7 focuses on the multipliers used to calculate higher rates of air passenger duty. As we have discussed at earlier stages of the consideration of this Bill, clause 24 makes no changes to band A rates, while in band B, the reduced, standard and higher rates will increase by £1, £3 and £7 respectively. In band C, the reduced, standard and higher rates will rise by £1, £2 and £6 respectively. In each of those three bands, which cover international travel to a range of destinations, a simple principle is followed: if the duty for passengers on economy flights goes up, the duty for those flying business class and by private jet goes up too. In the domestic band, however, which covers flights within the UK, that simple principle of fairness does not apply. Instead, under the Bill, for domestic UK flights, the reduced rate of APD rises by 50p and the standard rate rises by £1, yet the higher rate is unchanged. Let me be clear what this means in plain English: from 1 April, passengers flying economy and business class within the UK will see their taxes rise, whereas passengers taking exactly the same flights by private jet will enjoy a tax freeze. Although the changes kick in on 1 April, this is no April fools’ day joke, although the Prime Minister may be laughing; it is the result of a hidden loophole that that the Conservatives have introduced. We discussed this matter in Committee, when the Exchequer Secretary tried to provide an explanation for this unfairness. He said that APD rates are

“uprated by a forecast of RPI and those rates are then rounded to the nearest pound.”

As for the different rates I highlighted in Committee, he said:

“It largely depends on how they”—

the rates—

are rounded to the nearest pound; the actual rate is determined by whether the figure is rounded down or up.”––[Official Report, Finance Public Bill Committee, 16 January 2024; c. 34-35.]

I know that the Exchequer Secretary always tries to give me a straight answer—let me put it on the record that I genuinely appreciate his efforts to do so—but I fear that his explanation in Committee may have been unintentionally misleading or, at the very least, only partial. Since that Committee stage, the House of Commons Library has given me information confirming that it does not tell the full picture to say that the duty rates are, as the Minister claimed,

“uprated by a forecast of RPI and those rates are then rounded to the nearest pound.”––[Official Report, Finance Public Bill Committee, 16 January 2024; c. 34.]

In fact, my understanding is that the Minister’s statement applied only to the reduced rates of air passenger duty. Those are indeed adjusted each year in line with forecast RPI and rounded to the nearest pound. However, the standard and higher rates are not calculated by separate reference to RPI; rather, they are generally set as multipliers of their respective reduced rates. For instance, the standard and higher rates in band B are set as 2.2 and 6.6 times the band B reduced rate respectively, rounded in both cases to the nearest pound.

--- Later in debate ---

[Richard Fuller]

Can my right hon. Friend tell me if I have got this right? In the commentary ahead of the Budget, we talk about wiggle room and the Office for Budget Responsibility forecast and about £5 billion or £10 billion here and there, but I think I heard him say that this matter was completely out of the control of the those on the Treasury Bench and this Parliament; that the Governor of the Bank of England could unilaterally decide to crystallise losses on whichever extent of bonds he wished to, and then put that loss into the calculations of the Chancellor of the day; and that the Chancellor would then have to work around that in order to work out what the fiscal expenditure, public expenditure and taxation would be. Is that actually the case? It sounds mightily undemocratic to me.

[John Redwood]

That is an interesting point of debate, but my understanding of the constitutional position is that it is not as bad as my hon. Friend is suggesting because all the bonds were acquired with the express permission of the then Chancellor of the Exchequer. The Bank of England’s website says that the bond portfolio is held on behalf of the Treasury. Successive Chancellors of the Exchequer—beginning with the Labour Chancellor who first undertook quantitative easing and carried on by successive Conservative Chancellors—all signed an agreement with the Bank to say that they would indemnify against loss. So, given that the Government and this Parliament empowered the purchase of the bonds and now take responsibility for any losses on them, it seems perfectly reasonable for there to be a proper conversation about whether we want to take the losses.

I see nothing wrong with us here challenging the idea that, uniquely among the big quantitative easing programmes, it is the Bank of England that not only insists on selling the bonds at big losses but gets reimbursed. The ECB does not sell them in the market at big losses. The Federal Reserve Board sells them in the market at big losses but gets no money back; it simply puts on its balance sheet that it has lost a lot of money and takes the view that, as it is a central bank, it does not really matter if it loses a lot of money, because central banks create money and it is therefore not like a normal commercial business. So I hope that Ministers will look at this as part of the general assessment that is being invited by these new clauses.

I hope also that Ministers will look at the expenditure items in the overall accounts covered by new clause 4 on the public finances, because there has been a marked decline in public sector productivity in the years 2020 to 2023. It was quite without precedent in my experience of following public finances over the years, and this very sharp decline represents at least a £30 billion loss to our system, in that it now costs at least £30 billion a year more to run the group of public services covered by these figures than it did before the collapse in productivity. On top of that, there has also been the need for much bigger sums to cover inflation. This is not the inflation figure; this is the real loss figure from the productivity.

We are all sympathetic to the difficulties that lockdown and the transition out of lockdown caused, and there was bound to be disruption. Our public services were badly affected by that, as children could not go to school and hospitals were disrupted by covid, but that is now some time behind us and it seems perplexing that we cannot get those public services back to 2019 levels of productivity. I hear comment that maybe artificial intelligence will do it and that there needs to be a big investment in computers. Well, that should be on top. All that I am saying to the Government is that we can surely get back to 2019 productivity levels using techniques from 2019, which was very much pre-artificial intelligence and before the latest round of computerisation. Again, this is a big area that needs to be looked at as part of any review of the public finances.

The third area, which is also very large and very much in the news today, is that even more people in our country do not feel they can go back to work and that they need help at home because they are no longer able to work. The Government are working on some important programmes, through the Department for Work and Pensions, to show people that through a combination of part-time flexible working and working at home with proper support and training, and maybe with additional financial support to help them, they could go back to work for part of the time and make a contribution. We desperately need them, and I think their lives would be more rewarding. They would also be better off because we now have a benefits system that means it is always better to work. This should be a cross-party matter, because it is a problem that our nation as a whole faces. We can enrich those people’s lives, help to reduce the burden on the taxpayer and improve the net income of those concerned. Again, this involves many billions.

My point in making these three simple points apparent to the House is that there are very large sums of money indeed involved in bond losses and productivity, which we need to review because that would help in the formation of the next Budget. It would create more headroom, both for the tax cuts that we need if we are to promote growth, and for improved public service provision in the areas where the shoe is still pinching. I trust that will be part of any review that might emerge from these new clauses, or from the spirit of these new clauses. I hope that my right hon. Friend the Chancellor is thinking about this, as we will have a Budget hard on the heels of this Finance Bill, which came out of the autumn statement. In these conditions of recovery, and given the need for faster growth, I welcome having more than one Budget a year, and the fact that we may have three fiscal events quite close to each other, if all goes well. They must promote growth and reduce taxes, and this is a good start.

I welcome new clause 5, but can we please have more? Can we please look at the headroom that I think I have helped to identify?

Draft Public Offers and Admissions to Trading Regulations 2023 Draft Securitisation Regulations 2023 Draft Financial Services Act 2021 (Overseas Funds Regime and Recognition of Parts of Schemes) (Amendment and Modification) Regulations 2024 Draft Data Reporting Services Regulations 2023

Richard Fuller Excerpts

Wednesday 17th January 2024 General Committees

[Bim Afolami]

I thank my right hon. Friend for that point, and I shall respond in the following way. Under the smarter regulatory framework, the broad approach is that Parliament—in this instance, this Committee—passes secondary legislation under the auspices of FSMA. Then, the detailed rulebook—which is, believe it or not, more detailed than this statutory instrument—comes in through the operation of the FCA. My right hon. Friend made a point about the consultation process. The consultation process can be long or short. I would expect that, as with various other measures under the Edinburgh reforms, the consultation process for statutory instruments as detailed as these will be quite short. We are looking for it to happen this calendar year. I do not want to be more precise than that, but I expect it to happen this calendar year.

[Richard Fuller (North East Bedfordshire) (Con)]

I want to follow up on the comment from my right hon. Friend the Member for East Yorkshire on the role of the FCA. The Minister will be aware of the concerns of Members on the Government Back Benches about the speed with which regulators perform their duties, how much we pass on to them, and how much we trust them to fulfil the will not just of Parliament but of our representatives. That applies to the FCA. I do not expect the Minister to comment on that directly, but can he assure the Committee that he will use his position to ensure that the FCA is kept on track in implementing the reforms at pace?

[Bim Afolami]

I will surprise my hon. Friend by commenting directly on what he has said. Like him, I have spent a long time thinking carefully about the role of the FCA and other regulators and the speed with which they discharge their duties. We give them a lot of work to do, but we also hope that that work is conducted as quickly as possible. The FCA has made improvements in that regard, but it is my job to ensure that it works as quickly as possible. When it comes to the Edinburgh reforms, under which these reforms sit, the Chancellor has been very clear that one of my key jobs is to deliver: not just to say that we are doing things, but to ensure that those things come into practice. I am very focused on that.

There are three types of DRSPs: first, approved reporting mechanisms, which report details about transactions in financial markets to the FCA on behalf of investment firms; secondly, approved publication arrangements, which publish trade reports to the public; and, thirdly, consolidated tape providers, which collate trading data from a variety of sources and publish it in a single live data stream. The draft regulations establish a new framework for the regulation of DRSPs, under which the FCA will make the detailed requirements in its rulebook, as we have discussed.

The instrument also delivers the Edinburgh reforms’ commitment to establish a regulatory framework for a UK consolidated tape. Currently, there are no consolidated tapes in this country, which means that market participants must go to various sources to get a cross-market view of trade data. That makes it expensive, burdensome and difficult for investors to access the data they need to make informed investment decisions in the UK. That is why, as part of the wholesale markets review, the Government consulted on legislative changes to facilitate the emergence of a consolidated tape in this country. There was broad support for the Government’s proposals, which this instrument delivers. A tape that collates data from multiple sources into one continuous live stream will make it easier for market participants to meet best execution requirements and manage risk. That will make UK markets more attractive and competitive.

The draft Securitisation Regulations 2023 establish a new legislative framework that replaces inherited EU law on securitisation. The introduction of the securitisation regulation in 2019 directly addressed financial stability deficiencies that arose after the global financial crisis. The Treasury conducted a review of the securitisation regulation in 2021. The review aimed to bolster securitisation standards, to increase investor protections, and to develop securitisation markets to facilitate real economy lending. The new framework established by the draft regulations will allow the financial services regulators—the FCA and the Prudential Regulation Authority—to make and further reform the firm-facing rules for securitisation with more agility and proportionality. The regulators will consider taking forward reforms in line with the outcomes of their own consultations and the 2021 Treasury securitisation review, which were received positively by industry.

The instrument also takes forward other reforms identified by the 2021 review. Those reforms include boosting the UK securitisation market’s competitiveness by no longer subjecting certain overseas firms to UK requirements when investing in UK securitisation. That will make overseas firms’ requirements more proportionate and increase their incentives to invest in UK securitisations, while also removing extraterritorial supervision issues for the regulators. I want the Committee to be clear on that point. The instrument also facilitates UK firms’ participation in international securitisation markets, which should benefit our industry.

The draft Public Offers and Admissions to Trading Regulations 2023 deliver a key recommendation—perhaps the key recommendation—from Lord Hill’s listings review to fundamentally overhaul the prospectus regime, and they mark a significant step in the Government’s reforms to make our capital markets more competitive. The current prospectus regulation, as outlined by Lord Hill and industry at length in his review, is inflexible and slows the raising of capital, which is the purpose of our capital markets. The instrument creates a new framework that requires companies raising capital to publish information that is relevant and useful for investors, while removing unnecessary barriers to such information. The new regime will mean that companies raising capital are required to publish a prospectus, except where they meet a series of exceptions—for example, where a security is traded on an exchange, or where the offer of securities is fewer than 150 investors. That means that, in practice, we are removing the need for a prospectus to be published in many situations. Just so that colleagues appreciate this, the purpose of that is absolutely not to reduce information for investors but to ensure that the right level of information is appropriate for the right type of investors for the right businesses.

The instrument also establishes a new regime for securities “admitted to trading’” on a regulated market or a multilateral trading facility, and creates a new regulated activity of operating an electronic system for public offers of certain securities that are above £5 million. By removing the €8 million threshold for a prospectus, which effectively acted as a blockage for certain private-capital raising, firms can raise larger amounts of capital more easily and more quickly.

That will allow firms raising money outside of capital markets—for example, through crowdfunding platforms, which has grown in popularity over recent years—to continue to do so, but do so in a more targeted way. The FCA will be given new rule-making responsibilities to set rules that apply directly to firms, such as when a prospectus is required. That will create a simpler and more effective regime.

I will now turn to the final instrument, the draft Financial Services Act 2021 (Overseas Funds Regime and Recognition of Parts of Schemes) (Amendment and Modification) Regulations 2024—I will take away from this the need to perhaps shorten the length of the names of such regulations.

This instrument amends the statute book to support the implementation of the overseas funds regime, which is a new route allowing overseas funds from equivalent countries or territories to be recognised for the purposes of marketing participation in such funds to UK retail investors. This instrument ensures that, where appropriate, funds recognised under the overseas funds regime are treated in the same way as other recognised funds. These changes are technical, but they are necessary to allow the overseas funds regime to operate as policy intends, ahead of the first funds being recognised under it. This will be critical to continue to support a competitive funds sector for UK investors.

In closing, the first three of these SIs replace key parts of assimilated EU law, putting in place new frameworks tailored to the UK as the Government deliver a smarter regulatory framework in financial services. The final instrument, as I have outlined, makes technical changes across the statute book to support the effective implementation of the overseas funds regime and the functioning of fund recognition. I hope that the Committee will join me in supporting these regulations, and I commend them to the House.

Finance Bill

Richard Fuller Excerpts

Committee of the whole House
Wednesday 10th January 2024 Commons Chamber

[The Financial Secretary to the Treasury (Nigel Huddleston)]

This Government’s aim is to grow the economy for the good of everyone by removing barriers to private sector investment and delivering a tax system that is supportive of business. At the spring Budget 2023, the Chancellor set out his approach for a highly competitive tax regime. By announcing a package of generous tax incentives, combined with a rate of corporation tax that remains the lowest in the G7, this Government have ensured that the UK continues to be one of the best places in the world for businesses to grow and invest.

The Bill marks our next step in making the UK one of the most competitive tax systems among major economies by enhancing the support that the corporation tax system provides to businesses that drive growth by making long-term investments. It meets the Government’s commitment to introduce permanent full expensing, as announced at the autumn statement, solidifying our international competitiveness and creating the certainty that businesses have told us they need in order to confidently invest. The Bill will also drive UK business innovation by merging the existing research and development expenditure credit scheme with the small and medium enterprise scheme. Merging those schemes will simplify and improve the system for supporting cutting-edge research and development.

Turning first to clause 1, at spring Budget 2023, the Government introduced two new temporary first-year capital allowances for qualifying expenditure on plant or machinery. The first was a 100% first-year allowance for so-called main rate expenditure, known as full expensing, which allows companies to write off the full cost of plant and machinery in the year that the cost is incurred. The second was a 50% first-year allowance for expenditure on special-rate assets such as lighting systems, thermal insulation and long-life assets, allowing companies to write off half the cost of an asset in the year that it is incurred, with the remaining balance written down at 6% in every year afterwards.

The Chancellor was clear that his long-term ambition was to make those new reliefs permanent once the fiscal and economic conditions allowed, and at the autumn statement he confirmed that he was able to do just that. Clause 1 delivers that ambition, making both full expensing and the 50% first-year allowance permanent by removing the end date of 31 March 2026. That means that companies will be able to permanently benefit from full expensing. It solidifies our position as joint top of the rankings of OECD countries with regard to plant and machinery capital allowances, and means we are the only major economy with permanent full expensing.

The change will give companies the certainty they need to make long-term investments, and responds to calls from the CBI, Make UK, Energy UK and 200 other business groups and leaders, and from companies including BT Openreach, Siemens and Bosch, which have said that making the policy permanent would be the single most transformational thing the Government could do for business investment and growth. According to the Office for Budget Responsibility, it will generate almost £3 billion of additional business investment each year and £14 billion over the course of the next five years. The forecast is that GDP will be 0.1% higher by the end of the forecast period and slightly below 0.2% higher in the long term as a result.

[Richard Fuller (North East Bedfordshire) (Con)]

I applaud the Government’s initiative to make full expensing permanent, but of course we know there will be a general election within the next 12 months. Has my hon. Friend heard from the Opposition whether, if they were to be in Government, they would maintain it?

[Nigel Huddleston]

My hon. Friend is incredibly knowledgeable about this area through some of his previous business and ministerial experience, and that is a question I am intrigued to hear answered by the Opposition shortly. I believe it is vitally important, because the whole point is to give businesses the confidence to invest in the long term, and certainty is key to the investment decisions being made.

--- Later in debate ---

[Richard Fuller]

Further to that point, does my hon. Friend not think, as I do, that it is an aspect of a responsible Opposition to be clear, right now as we are debating this in this House, what they would do were they to be in Government?

[Nigel Huddleston]

I think my hon. Friend is kicking off what is likely to be a long debate over the course of the next year, but an important one for our constituents and businesses. The economy will play a pivotal part in discussions this year. It is very clear what we are doing: we are implementing vital changes, asked for by business and in response to business, to provide that business certainty and an environment in which they and therefore our constituents can thrive. I do not think any of us want to put that at risk. However, without the clarification and confidence from the Opposition about what they might do, these issues will be raised and the uncertainty can persist. We on the Government side of the House are committed to this, and my hon. Friend is right to make that clear.

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[James Murray (Ealing North) (Lab/Co-op)]

Let me start by briefly considering the context in which we are debating clauses 1 and 2. As we know, the Bill follows the Chancellor’s statement on 22 November last year, in which he claimed that he was delivering an “autumn statement for growth”. As the Committee may remember, the Office for Budget Responsibility confirmed on the same day that growth forecasts had been cut by more than half for the coming year, cut again for the year after that, and cut yet again for the year after that. Independent analysts confirmed that, even after all the changes the Government had announced, personal taxes would still rise. In fact, personal taxes are now set to rise by £1,200 per household by 2028-29, with the tax burden on track to be the highest since the second world war. Despite people across the country paying so much in tax, public services are collapsing, the NHS is on its knees, and more and more families are struggling to make ends meet.

That was the context in which we considered the Bill on Second Reading just before Christmas: 13 years of Conservative economic failure had left people across Britain worse off. The only thing to have changed since then is that we now face 14 years of Conservative economic failure. It may be a new year, but those in the governing party face the same cold truth: nothing they can say or do now can repair the damage that they have done to our economy.

People in businesses across Britain deserve so much better. As a foundation of better management of the economy, our country needs and deserves stability, certainty and a long-term plan. It is for that reason that, although we welcome the fact that clause 1 makes full expensing permanent, which we have long called for, it simply cannot make up for the years of uncertainty that businesses have faced. Businesses need stability and predictability to help them plan for growth, and their long-term planning has been held back because the Government have been chopping and changing business taxes and reliefs year after year, with no evidence of anything resembling a long-term strategy.

[Richard Fuller]

I was very pleased to hear the shadow Minister say that the Opposition welcome the full expensing. That helps, but maybe he can go further to clarify. In new clause 6, tabled in his name, the Opposition are calling for a review of all business taxes and reliefs, which would include full expensing. He will know, as will the hon. Member for Mid Bedfordshire (Alistair Strathern) who is sitting behind him, that there is a particular potential investment decision in our county. Will the shadow Minister make it explicit that the Labour party’s intention is to include in its manifesto for the next election a commitment to maintaining full expensing?

[James Murray]

As I have said, we have long been calling for full expensing, and we welcome the fact that it is being made permanent. I do not mean to sound jokey in my response—I am deadly serious when I say this—but if the hon. Gentleman wants to know what a Labour Government would do if we got into office, there is one way to see that eventuality come about: we could have a general election sooner rather than later, instead of dragging things on throughout the course of 2024.

Frankly, the country needs to move on from the current Government. Just look at their record on capital allowances since the last general election. The hon. Member for North East Bedfordshire (Richard Fuller) spoke about certainty and the need for stability, but let us look at the changes that have happened to capital allowances over the past four or five years. As I mentioned on Second Reading, back at the beginning of this Parliament, the annual investment had been raised to £1 million on a temporary basis. That temporary basis was extended by the Finance Act 2021, extended again by the Finance Act 2022, and then made permanent by the Finance (No. 2) Act 2023. Meanwhile, over the course of this Parliament, the super-deduction came and went entirely. Last year, full expensing for expenditure on plant or machinery was introduced but only on a temporary basis for three years.

Now, of course, Treasury Ministers are amending what their predecessors announced last year by making full expensing permanent. Although we welcome that policy, I wonder how long it will last. Frankly, I wonder how long any policy can be expected to last under this Government, when they are led—in the loosest possible sense of that word—by such a weak Prime Minister. If we accept clause 1 at face value, we welcome its principle of making full expensing permanent, as that is something that we have long called for. I will focus the rest of my questions on some of the specifics of the Government’s approach.

As ever, I am grateful to the excellent team at the Chartered Institute of Taxation for all their thoughts on the detail of what the Government have proposed in this clause and others. I know that one matter of interest to the chartered institute was the fact that, at the autumn statement, the Government said that they would publish a technical consultation on leased assets. I would be grateful if the Minister told us when that will be published.

Furthermore, both the Chartered Institute of Taxation and the Association of Taxation Technicians—to which I am also grateful for its thoughts on the detail of the Bill—have queried which companies and assets are eligible for full expensing. I would be grateful if the Minister clarified which assets are outside the scope of full expensing, and whether the Treasury will publish a detailed list of what does and does not count as plant and machinery. I would also be grateful if he told us how many firms will not be eligible for full expensing because they are partnerships. I know that many who take an interest in this matter would welcome clarity on that.

In clause 2, the Government propose changes to the system of tax credits for research and development. As with their approach to business taxation and capital allowances, the Government have failed to deliver any sense of stability when it comes to R&D tax credits, despite certainty and predictability being so crucial to businesses that are making investment decisions. That much is clear when looking at the list of changes that we have debated in Finance Bills over the course of the current Parliament alone: the Finance Act 2020 changed the rate of R&D expenditure credit; the Finance Act 2021 changed how much R&D tax relief small and medium-sized enterprises could claim; the Finance Act 2023 again changed the rates of R&D tax relief; the Finance (No. 2) Act 2023 changed further how the relief operates; and now, the Finance Bill before us changes the system of reliefs yet again. We accept, of course, that some change is necessary and important to enable legislation to function well, but that does not seem to be what we have seen. What we have seen is a Government incapable of providing stability, predictability, and the long-term plan that businesses need to invest and grow. It is clear that after 14 years in office, the Conservatives are incapable of providing that crucial foundation for our economic success.

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As I have made clear, we will not be opposing the clauses being considered in this debate, but I look forward to the Minister’s response to the detailed questions that I have raised in relation to them.

[Richard Fuller]

I wish to raise just a couple of points. Let me turn to the issues of pillar 2 and the moving forward of the Government’s policy on that in clause 21 and schedule 12. Obviously, that relates to changing the decision maker on the taxation rates for multinationals operating in this country from the British Government, elected by the British people, to the determinations of an international organisation through treaty.

As we move forward, it is important to be aware of the changing context. Hon. Members, particularly those from the Conservative Benches, have raised in the past the issue of who else is coming along to this particular minimum tax global party. We already know that China, one of the major economic actors in the world, is not part of the OECD, will not be complying with us and will not be part of these regulations. First, I am interested in any updates the Minister may have on those views about China. Secondly, it is clear that there will be an election in the United States later this year and that there is a significant difference in opinion between the Republican party and the Democrats about whether they will enact the US’s part in the taxation policies of pillars 1 and 2—particularly in pillar 2. Given that there is a reasonable chance—some say it is better than a 50:50 chance—that there may be a change in Administration in November and the United States could then withdraw from participation in the OECD process, can the Minister, in his summing up, give some reassurance to those Conservative Members who, although always supportive of the Prime Minister, may just want to make sure that we have clarity on what we would do in the eventuality that neither of the two major economies in the world—the United States and China—are taking part in this particular global minimum tax from multinationals.

I would also be interested to hear from the Minister—perhaps not from the Dispatch Box today, but separately with the taxation Minister—where the definition of certain words is moving in the Treasury and HMRC when it comes to tax avoidance and tax evasion. I recall that, many years ago, the difference was that tax evasion was illegal and that tax avoidance, while perhaps not what the HMRC wanted to happen, was legal. We see in the Finance Bill references to tax avoidance that imply that it is illegal. I worry that there is insufficient clarity, from HMRC’s perspective, on the difference between tax evasion, which is illegal, and tax avoidance, which is legal but perhaps not desirable. Perhaps the Minister could give some clarity on that.

All those on the Treasury Bench will be aware of the persistence of the concerns about the loan charge and other aspects of tax avoidance schemes, which HMRC has gone to court over, winning in certain actions and then deciding to apply blanket solutions to cases where there has never been a finding of fact in a court regarding the particular schemes. My specific question—I hope that this is within scope, Dame Rosie; you will tell me if it is not—is why we have not brought HMRC’s approach on tackling the loan charge to a conclusion. People have been pursued for far too long in an area that is far too grey. It would be interesting if the Minister had an update on that.

Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 19th December 2023 Commons Chamber

[Richard Fuller (North East Bedfordshire) (Con)]

Will the Chancellor update the House on how he plans to move forward with some of the key recommendations from Lord Harrington’s review into foreign direct investment in the UK?

[Jeremy Hunt]

I am happy to do that. In fact, I hosted a reception for Lord Harrington and the people responsible for that review last week. We will start by increasing the budget of the Office for Investment so that it can give a more bespoke service to potential overseas investors.

Autumn Statement Resolutions

Richard Fuller Excerpts

Wednesday 22nd November 2023 Commons Chamber

[Richard Fuller (North East Bedfordshire) (Con)]

You tempt me in the wrong direction, Madam Deputy Speaker. I am sure that, in a few minutes, those on the Government Front Bench will wish that I had had fewer minutes.

It is a great pleasure to follow the right hon. Member for East Antrim (Sammy Wilson). He always speaks a lot of sense in the House, and I listened with interest to what he said. It is also a pleasure to welcome the Economic Secretary to the Treasury, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), to his place. I am sure he will do a fantastic job in the Treasury, as will the rest of the team.

I congratulate the Chancellor, because at the start of this debate the Opposition were struggling to have anything to say about what was in his statement. They talked about things that the Chancellor was not doing, and then they tried desperately not to sound too enthusiastic about the things that he was doing. That is part of the success of the Chancellor’s statement. I therefore congratulate him on making a reasonable and good start, but we have a very long way to go to get back to Conservative principles in public financing.

I want to draw attention to three charts that the Institute for Fiscal Studies prepared. The first shows public spending increases in real terms, going back all the way to 1985-86. As one gets older, one likes looking at longer-term trends in things. The chart shows that in this Parliament there was a significant increase in public expenditure in two fiscal years. As Ministers have said, those were caused by exceptional items: the covid response and the consequences of Russia’s invasion of Ukraine.

Those one-off increases should have been followed by significant real reductions in public expenditure, to get it back to where it was. If we have real increases, we are then at a higher level, and we get back to where we were before the one-offs only if we have real reductions. There was nothing in the announcements today that indicated that the Government have got to grips with that essential point about public spending.

The second chart from the IFS looks at tax rises across Parliaments. I do not want to get into the nitty-gritty, although it is true that, at the moment, this is the largest tax-raising Parliament of any, and that will be extremely difficult for me to explain to my constituents, but if we look over the longer term, four of the six Parliaments from 1970 to 1997 were tax-cutting Parliaments, and only two were tax-increasing. Of the seven Parliaments since 1997, five have increased taxes and only two have reduced them. We have a political-class problem: whichever party is in power, we are biased towards increasing the burden on taxpayers to increase the state. That is not a Conservative approach to the economy.

Thirdly, the IFS looked at the proportion of taxpayers now captured in the higher and additional rate. Lots of sensible words have been said by Members in all parts of the House about thresholds and the drag. When this rate was brought in, 4% of adults paid that higher rate. With measures not reversed today—it is important that we say to the Treasury, “You did not reverse this today”—that number will rise to 16% by 2027-28. That is not 16% of taxpayers, but 16% of all adults and so it includes people who are not working and it includes pensioners. The actual number will be nearly one in four taxpayers paying the higher rate of tax. That is not a Conservative way to run the economy.

There are some specific hopes in what the Government have put in. I particularly welcome some of the measures, including those set out in paragraphs 5.95, 5.96 and 5.97 in the Green Book, which form part of the Chancellor’s 110 measures. They seek to strengthen economic regulation and impose, or introduce, a growth duty on Ofwat, Ofcom and Ofgem. Those important measures will stimulate growth, but my point would be: is that it? Regulators cover 25% of the productive part of our economy. Members in all parts of the House have pointed out numerous times the failures of our regulators to manage their sectors effectively, be it water or energy. What on earth are the Government doing to make regulators make more effort to stimulate growth? I ask the regulators, please, not only to stick with current efforts but to do more of what they can. I know that my hon. Friend the Economic Secretary feels similarly.

The Financial Secretary is not here, but he has responsibility for His Majesty’s Revenue and Customs. The Green Book contains an interesting item at paragraph 5.57, which is heroically called:

“Investment in HMRC debt management capability”.

I have a background in venture capital and this measure, for £163 million, promises an annual return of more than £1 billion. We put £163 million of extra resources into HMRC to chase on this issue and we get £1 billion back, according to the Government’s numbers. How does that happen? It is because this measure

“will allow HMRC to better distinguish between those who can afford to settle their tax debts, but choose not to, from those who are temporarily unable to pay and need support.”

That is a massive extension of the roles and responsibility of HMRC into the personal finances or the corporate finances of small businesses. Clearly, that may be a good measure, whereby we can close the tax gap. I worry, however, that HMRC is extending itself a little too far and not focusing on the bread and butter issues, such as picking up the phone and answering the inquiries of taxpayers day to day.

The Chancellor was right to introduce productivity targets for the public, as it is clear that since the pandemic the private sector has roared ahead with productivity improvements and the public sector has done absolutely nothing to improve productivity. But why go for 0.5%? What institution cannot achieve more than a 0.5% improvement in productivity year on year? The Chancellor should look at strengthening that target. While he is at it, why does he not go through all the capital projects that do not have a positive benefit-to-cost ratio, on proper discounted cash-flow terms, and cancel the lot of them? If they are going to waste public money, let us not spend the public money in the first place.

Unlike some Opposition Members, I welcome the triple lock and the living wage increase. Those long-term Conservative policies have been put in place and year on year they have done so much to take working people and many pensioners out of poverty. Those measures are expensive for the state—of course, we need to understand that—but they are crucial parts of making our society more equal. I have one point to raise: I do not think anyone in this House is confident about introducing a regional living wage, as there are lots of problems with that. However, we must note that the living wage is rising to £11.44 and that is nearly 80% of median wages in Wales. There becomes an issue in certain regions as to whether this very strong push on the national living wage will have a distributional effect on unemployment.

Although I may not sound it, I am pleased that the Chancellor has announced these measures. It is clear we live in a world where forecasters now have the whip hand—how on earth we got here, I do not know. One year there is no headroom, but then they spin the forecast around and a year later there is. Who knows where this will end? Whatever that headroom has been, the Chancellor has pointed the ship of state in the right direction and I wish him full speed ahead.

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[Richard Fuller]

The hon. Lady is exactly right on that. We have to have the courage to understand that there are different pressures in labour markets. As we push forward the national living wage increases, we need to take those pressures into account if we are to get the right balance for employment.

[Catherine West]

As you will know with your lifetime of experience in social care and other sorts of public services, Madam Deputy Speaker, the good councils—I have to say they are mainly Labour councils—have introduced the living wage for all their contracting and subcontracting. That makes an enormous difference in the local economy. I challenge every single council to try to push for more from its procurement pound.

In the survey results from all the places that I visited over the summer with my wonderful staff and an ex-BBC journalist who helped me to get the survey right, some 55% felt that their quality of life had deteriorated since the pandemic. The British Red Cross research reports “Life after lockdown” and “Lonely and left behind” found that 41% of UK adults feel lonelier since the start of the initial lockdown. Millions are going a fortnight without having a meaningful conversation. The pandemic showed the importance of tackling loneliness, and it is clear that the Government strategy on loneliness simply is not working. The Red Cross said that

“tackling loneliness should be built into Covid-19 recovery plans”,

and:

“Governments should ensure those most at risk of loneliness are able to access the mental health and emotional support they need to cope and recover from Covid-19.”

These are the very people whom the Chancellor was trying to address when he said that there were increased rates of worklessness in people over the age of 50. I am sure that access to mental health services and emotional support is very much a part of that puzzle.

As well as mental and physical health and wellbeing, we must also consider the impact that grief, bereavement and the economic struggles that people are facing have on people’s sense of wellbeing. Some 51% of respondents to my survey said that they are unable to participate in events because they are online, and that also needs to be looked at, because the digital divide is real and desperately needs to be addressed by local authorities and all Departments. Some 45% said that it was harder to see their GP than before the pandemic. Some 48% said they had experienced a reduction in NHS services, particularly in podiatry, chiropody and physio. Those are crucial services that people need to keep mobile, which reduces the cost to the NHS and the queue of people waiting for care in the NHS.

Before I conclude, I will make one point on the importance of primary care and that relationship with a GP. If individuals are not on the internet and they go to see their GP, eight minutes is not really enough. In some cases, they are not even getting eight minutes every six months. So many people are living without seeing a human being day-to-day. For 13 years now, social care has lacked the funding and attention that it deserves, with £8 billion lost from adult social care budgets. In my constituency, I hear from residents having to pay thousands of pounds for their care or care for a loved one. There are high levels of unmet or under-met care needs. The Association of Directors of Adult Social Services estimated that around 246,000 people were waiting for a care assessment in August 2022.

The final finding from my survey is that 60% of the people I spoke to in all different sorts of care settings said that they felt lonely or isolated, and 34% rarely had visitors. The loneliness strategy simply is not working. It is having a real effect on our economy and on our older folk. I hope that can be addressed as this debate goes forward.

Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 14th November 2023 Commons Chamber

[Nigel Huddleston]

We appreciate the support for taking 3 million of the lowest-paid people out of paying income tax altogether since 2010—an important and significant change. I understand the hon. Gentleman’s comments, but I cannot comment further, especially this close to a fiscal event.

[Richard Fuller (North East Bedfordshire) (Con)]

I welcome my hon. Friend to his new post. Does he share with me the humour that Opposition Back Benchers have proposals for new taxation that the Opposition Front Benchers are trying to bat away, while those of us on the Government Back Benches are telling the Government to cut taxes, and our Front Benchers keep batting that away?

[Nigel Huddleston]

I thank my hon. Friend for his comments. I am afraid that what we are probably seeing is “same old Labour”—we have heard this all before. What they are proposing did not work in the ’70s and it will not work now. We are very proud of our tax record, particularly taking the lowest paid out of income tax.

Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 5th September 2023 Commons Chamber

[Gareth Davies]

Let me welcome my hon. Friend to his place. He has wasted no time whatsoever in advocating for his constituents against a Labour tax that is hitting households and businesses in his constituency and throughout the south-east. It is a massive tax bombshell at a time when families just do not need it. It is simply not right, and we would urge the Leader of the Opposition to tell his Mayor of London to stop it.

[Richard Fuller (North East Bedfordshire) (Con)]

The shadow Chancellor has said that she will not rule out mandating the use of pension fund money for the pet schemes that the Labour party thinks will achieve net zero, putting at risk the savings of many pensioners in this country. What does my hon. Friend think the impact of that will be on the British economy?

[Gareth Davies]

Pension funds have a fiduciary responsibility to deliver a financial return but also to be mindful of the values of their pensioners. I have every confidence that pension funds will continue to invest in line with the risk that is presented by climate.

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[Jeremy Hunt]

Capital spending at the Department for Education went up 16% in real terms in that review. Is the difference not that, with the fastest recovery in Europe, the Conservatives build an economy that can pay for our schools and hospitals, and Labour runs out of money?

[Richard Fuller (North East Bedfordshire) (Con)]

T2. For months, we have had the Labour economics team running down British businesses, berating them for not growing fast enough and ignoring the fact that the OECD shows that the British economy has grown faster since 2010 than Germany, Italy, Spain or France. With the recently announced Office for National Statistics upgrade that the Chancellor just referred to, what is his more hopeful message to British businesses?

[Jeremy Hunt]

It is very simply this: since 2010, we have become the strongest economy in Europe in film and television, life sciences and technology, and the opportunities are great with a Conservative Government.

Public Sector Pay

Richard Fuller Excerpts

Thursday 13th July 2023 Commons Chamber

[John Glen]

I thank the hon. Gentleman for his questions. I think we can agree to disagree on some of that. What we have to understand is that if we look at the growth levels over the past two years in the G7, this economy and this country have performed well. He makes a number of points. People are getting weary of this constant refrain around Brexit. There are people who voted for Brexit and people who did not; it has happened, and we will now take every step we can to maximise the benefits and opportunities and the greater discretion that we have consequential of that decision.

With respect to the specific questions about visa fees, I am sure that my colleagues in the Home Office will publish those in due course. This is a carefully calibrated decision; it is not motivated by political dogma. It is a clear decision to take necessary steps to avoid additional borrowing, and to meet the outcomes and the numbers that derive from the PRBs, which give evidence-based advice to the Government. This is a careful set of judgments. Clearly they will not please everyone, but we have to make decisions in the interests of the whole economy at this time.

[Richard Fuller (North East Bedfordshire) (Con)]

It was revealing that the shadow Chief Secretary, the right hon. Member for Wolverhampton South East (Mr McFadden) could not tell the House whether Labour was in favour of the pay awards or against them. Perhaps he is not sure whether Labour Members will be joining strikers who are stopping my constituents from receiving healthcare or their children from getting to school. My right hon. Friend is absolutely right that constituents have a right to expect productivity improvements to match these pay increases. Can he explain to the House a bit more about what the next steps with the productivity review will be?