Budget Resolutions

Richard Thomson Excerpts

Tuesday 12th March 2024 Commons Chamber

[Richard Thomson (Gordon) (SNP)]

I can say without fear of contradiction that the UK faces three big challenges economically and socially: we have an energy security crisis, we have a climate crisis and we still have a cost of living crisis that needs to be tackled. This Budget barely changed course on any of those three measures.

Since 2010, the Conservative party has adopted 11 different economic strategies and had seven Business Secretaries, seven Chancellors of the Exchequer and five Prime Ministers, sometimes within weeks of each other. After 14 years of Conservative government, it is laughable that the present incumbents would present this as a Budget that will encourage investment and create long-term growth.

The fact is that the UK has long had a productivity problem. Figures show that the UK’s productivity is around 20% lower than that of France or Germany. UK workers work some of the longest hours in Europe, and return some of the lowest levels of productivity. A number of very lazy assumptions are made, often on the centre right of politics, around what contributes to productivity or the lack of it. Who could forget the wisdom of the right hon. Members for Spelthorne (Kwasi Kwarteng) and for South West Norfolk (Elizabeth Truss) in the book “Britannia Unchained”? They said that

“the British are among the worst idlers in the world. We work among the lowest hours, we retire early and our productivity is poor. Whereas Indian children aspire to be doctors or businessmen, the British are more interested in football and pop music.”

Those lazy prejudices, with the idea that everybody should work harder and enjoy fewer protections in the workplace, seem to underpin a worldview about how we get to productivity. However, the simple truth is that the only way to make a genuine improvement in productivity is to improve the quality of physical and human capital by investing in people. The Government have a massive, pivotal role to play in that. It is not good enough for the Government just to say that they want to tackle productivity issues; they have to put in place the long-term policies to do so. Despite it being nearly an article of faith in some sections of the House that cutting tax is the way to get there, if that comes at the expense of public investment and investment in social services, we will not achieve productivity.

The Chancellor has opted to use £20 billion of potential headroom by cutting national insurance by 4p in the last few months. Yet the Institute for Fiscal Studies has said that the Chancellor’s Budget will leave public services facing savage cuts equivalent to £20 billion a year by 2028. As the ISF director, Paul Johnson, has warned, there is almost “a conspiracy of silence” around the billions of pounds in tax cuts that the UK Government have prioritised and the consequences of them.

We know from the shadow Chancellor, who is no longer in her place, that if Labour is to alter course on that, either taxes or borrowing will have to go up, or spending will have to be cut in different places. I take issue with the Labour Front-Bench spokesperson on that subject. I am proud that the party of which I am a member is in government in Scotland. It has ensured that taxes are lower for over half the people in Scotland than they would be if they lived anywhere else in the UK, putting money back into the pockets of hard-working people who need it most. I am proud of that. If that is where the Labour party wishes to draw the battle lines for the election, bring it on. I am very happy with the choices we are making.

If those tax cuts are to be reversed—the hon. Member for Bristol North West (Darren Jones) was nodding away gleefully, implying that they were—then the question must go back to his colleagues in the Scottish Parliament, or perhaps he can help us out—[Interruption.] He is nodding again, which is good. I look forward to some answers, and I will happily take an intervention. What parts of the enhanced social settlement in Scotland would the Labour party seek to take away? Is it people’s bus passes? Michael Marra MSP threatened to introduce tuition fees again. Would Labour reverse the Scottish child payment that is taking over 100,000 Scottish children out poverty? [Interruption.] I, too, was looking for an intervention, but I am clearly not getting one. The hon. Member for Bristol North West is chuntering, but would he like to intervene?

[Darren Jones]

I am happy to be welcomed to intervene, but the debate is about the Conservative Budget here in Westminster. If the SNP has questions to answer about its performance in Government, it should do so in Scotland.

[Richard Thomson]

That was absolutely ridiculous—a complete waste of time. The reason I brought it up was that the hon. Gentleman brought it up; clearly his memory is very short.

Scotland needed much more money for investment in infrastructure, the public sector and public services, but the UK Government have let us down again in this Budget. Any attempt at boosting productivity—that is the subject of this debate, although I did not hear a great deal of mention of productivity from either Front Bencher—will run headlong into the effects of the austerity that has been prevalent since the financial crisis of 2008.

We know from first hand the impact that austerity has had on public services across the UK. As a result of those spending choices, investment levels in the UK remain the lowest of any country in the G7. Research by the UK in a Changing Europe group has found that investment is 10% lower than it would have been if we had remained in the EU. and that our GDP is already 5% lower. If the Government want to increase productivity and drive investment, it is clear that they to do more to recognise the vital role they have to play through their capital expenditure.

Capital expenditure is what maintains our infrastructure. It is what builds houses, replaces hospitals and schools, maintains roads and, crucially, drives and encourages private investment. It is utterly bizarre that as a consequence of their spending decisions here, the UK Government will be cutting the Scottish Government’s capital budget in real terms by 10% over the next five years.

Another key area where the Budget does nothing to shift the dial is research and development, as I have said before. The UK lags behind our European competitors when it comes to overall levels of investment in research and development, but London and the south-east are taking the lion’s share of even that reduced amount. Wales and the north of England lag behind. Scotland holds its own, but if the Government genuinely want to level up—not words we hear paired with each other terribly often these days—they need to shift the dial and start to address inequalities inherent in the way the Government carry out business as usual.

Let me turn to energy. The decision to continue the energy profits levy can only be described as a slap in the face for all the bold and brave Scottish Conservative politicians who were boasting about how they were going to personally oppose it and get rid of it. However, the Labour proposals to increase its level further risks killing the goose that laid the golden egg. I am a big fan of the way the Norwegians have run their oil and gas sector. Scotland and the UK would be in a much better place if we had done the same, but the UK basin is closer to the end of its life than much of the Norwegian basin. Simply saying everything will be alright on the night if we tax at the same level as Norway puts investment decisions on a precipice. I caution the Labour party to think about that carefully if or when it forms the next Government. Increasing taxes beyond their current level in that industry risks putting tens of thousands of jobs on the line.

Finally, we are all quite bored with weak leadership, but does leadership get any weaker than a party taking its one and only identifiable policy—investing £28 billion in renewable energy—and throwing it on the fire because its leader is absolutely terrified of losing political ground to the weakest and worst Conservative Government any of us have the misfortune to remember in our lifetime?

It is absolutely vital not just for the country, but particularly for the north-east of Scotland, to get the energy transition right. Labour is absolutely correct to say that it will have a pretty dismal economic inheritance from the current UK Government, but, my goodness, what a dismal legacy Labour will leave for the Government who eventually replace it if it continues on the current path. That is why Scotland needs to be away from both the Labour and Conservative Front-Bench teams and making decisions for ourselves as a fully sovereign independent country.

Tax-free Shopping for International Visitors

Richard Thomson Excerpts

Thursday 7th September 2023 Westminster Hall

[Richard Thomson (Gordon) (SNP)]

It is a pleasure to serve under your chairship, Dr Huq. I take this opportunity to sincerely congratulate the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) not only on securing the debate, but on his persistence on this issue. The first time that he and I spoke at the same time on this issue was in a debate on 10 December 2020. I think he only had three minutes on that particular occasion—it was quite a well-subscribed debate on the future of the high street—so it was a great pleasure to hear him expand those arguments today because I am sorry to say that the essential logic of many of the arguments being made on that day has not changed. In removing tax-free shopping on 1 January 2021, the Treasury seemed to make two key assumptions. The first was that ending tax-free shopping would have no significant impact, or so it thought, on foreign visitor numbers or spend in the UK, whether in terms of choosing to come to the UK or spending once they were in the UK. The second assumption seemed to be that extending tax-free shopping to EU resident visitors would attract few additional visitors to the UK.

There has been lots of logic—not to say economic coherence—missing from some recent budgets, which we are all still paying the price for. However, even taking those Treasury arguments at face value, there is a logical flaw that the presence of tax-free shopping was not always necessarily about attracting additional visitors, although I believe that it does do that, but about not losing them to other areas. The main locations, according to the Treasury, that benefited from it were central London and Bicester Village. It is probably hard to argue with the volume of sales there, but, as has been said, many other locations around the UK benefited too, including many in Scotland. Of course, those were only the areas where sales were recorded, and it does not show the economic activity that otherwise might not have taken place if people had not been attracted here in the first place.

This is of particular significance on a couple of levels to Scotland, but particularly to rural Scotland, where tourism, hospitality, transport and the production of luxury clothing are significant contributors to the local economy. In addition, the whisky and spirit distilling industry is of great significance to not only the locations where it is based and the high-value employment that it creates, but the Treasury’s coffers in terms of the overall duties it pays.

We now have data to set against the Treasury’s theory, and the results are in. The data appears to indicate that lots of pent-up spend was available. US tourists are spending about the same in the UK in 2022 as they were in 2019. The Treasury says that is a sign of success in terms of tax receipts, but US visitors are now spending three times more in Spain, Italy and France than they were in 2019. The Treasury also forecast that only 50,000 additional EU visitors might be tempted to come to the UK if they could shop tax free, yet 170,000 UK citizens were claiming tax back from the EU in 2022, which is likely to rise to almost 400,000 in the current year. If we take that figure pro rata and apply it to the EU population, that 50,000 would be 2 million in 2023—we are missing out on 40 times the Treasury’s forecast in terms of people coming to the UK to spend. That real-life data seems to undermine the forecasts.

The impact is on not only retailers, but hospitality, travel and indigenous producers who manufacture the goods being sold in the first place. The usual reaction of many tourists on getting a VAT rebate is to go and spend it immediately where they are—I find that hard to believe, but who am I to argue with observed human behaviour in the real world? So there would be a double benefit, in that the Treasury would get most of it back. The result would be a double-whammy—not just to the Treasury, but to the retailers and producers of these goods. What we are really doing is simply exporting those sales to other countries; in fact, that seems to be one of the few areas where exports seem to be very much up as a result of the Government’s economic policies.

The hon. Member for The Cotswolds described the return of tax-free shopping as a Brexit bonus, but I part company from him there. As with the Windsor framework in Northern Ireland, it would only bring us back to the situation that we were all collectively in prior to Brexit and the Treasury decision. We could still offer tax-free shopping even as part of the European Union; Brexit ought to neither here nor there.

It is not as if the Prime Minister is unaware of the issue; he was still the Chancellor when the decision was taken. But he has certainly had a reminder during his time as Prime Minister. The firm Burberry was mentioned earlier. Gerry Murphy, the chairman of Burberry, was introducing the Prime Minister at a Business Connect event in April this year. He took the opportunity to deliver a few home truths in warning the Prime Minister of the somewhat perverse decision to remove VAT refunds, and said that that had hurt the economy. He said that it had

“made the UK the least attractive shopping destination in Europe”,

noting that virtually every other major destination still offers VAT refunds and that for Burberry the recovery from the covid-19 pandemic was much stronger in Paris, Milan and Munich—all, like London, prime locations for tourism. He called on the Prime Minister and Chancellor to rethink their spectacular own goal, warning that Brexit was acting in that regard as a drag on growth.

Given that Aberdeen airport is in my constituency, it would be remiss of me not to include a pitch for the impact that the issue has on regional airports. Shopping comprises about 45% on average of the revenues that regional airports take in. That revenue is absolutely vital in keeping airports going and route development for the benefit of the area. Aberdeen is, of course, synonymous with the oil and gas sector, so Aberdeen airport has a strategic importance out of all proportion to the area that it serves simply because of how it serves that location and those key industries.

I speak regularly with management at the airport. Every time I visit, they tell me that they are losing sales hand over fist—to Norway, Spain, the Republic of Ireland and France: all the locations to which Aberdeen has a direct air connection—because of the decision. In actual fact that spend should be taking place, providing employment in my constituency and allowing the airport to develop routes. It should also be allowing us to get an economic benefit that, although not directly connected, is tangentially related to the benefits that come from tax-free shopping, which can allow the economy to develop in so many other areas and enable wider connectivity to Europe and the rest of the world. The policy is very much to the detriment of not only the operation of regional airports such as Aberdeen but the surrounding tourist and business economy.

I will draw my remarks to a conclusion, but I say to the Minister that in an earlier exchange this week she undertook to make inquiries about a matter that I raised in the main Chamber. I was very pleased with that response and I hope that, in a similar vein, she will also look very favourably on the very reasonable asks made today by the hon. Member for The Cotswolds to encourage the Treasury to commission research to inform Ministers. That, hopefully, will lead them to a different conclusion about this matter.

[Dr Rupa Huq (in the Chair)]

For His Majesty’s loyal Opposition, I call the shadow Minister, Tanmanjeet Singh Dhesi.

Oral Answers to Questions

Richard Thomson Excerpts

Tuesday 5th September 2023 Commons Chamber

[Andrew Griffith]

My hon. Friend, the Chair of the Treasury Committee, makes a really important point about what is called the advice gap. Treasury officials, the FCA and I are consulting on that, and I will publish an update this autumn.

[Richard Thomson (Gordon) (SNP)]

It has been revealed that Integrated Debt Services, a company set up by the UK Government to recover personal debt, saw its profits increase by a staggering 132% last year. Do Ministers think it is right that this company should be able to profit to that extent out of the misery of the cost of living crisis?

[Victoria Atkins]

The hon. Gentleman is referring to a company that works with the Government’s Crown Commercial Service and that works on debt across central Government. It has to operate within a very specific framework and, indeed, it is regulated by the Financial Conduct Authority. I very much understand the point he has raised, and I will be making inquiries on that point myself.

Oral Answers to Questions

Richard Thomson Excerpts

Tuesday 20th June 2023 Commons Chamber

[Richard Thomson (Gordon) (SNP)]

12. What recent assessment he has made of the potential effects of his policies on inflation on the cost of living.

[The Chancellor of the Exchequer (Jeremy Hunt)]

We know the pain that households up and down the country are going through as a result of the cost of living pressures at the moment, and have announced one of the largest support packages in Europe, worth around £3,300 per household this year and last.

--- Later in debate ---

[Jeremy Hunt]

I am afraid that I do not buy this Brexit narrative from the SNP. Food price inflation has been around 20% in Germany, Sweden, Portugal and Poland in recent times, so this is not a UK-specific issue. We are all dealing with the consequences of Putin’s invasion of Ukraine and the aftermath of the pandemic, and we are all tackling it with one central focus, which is to bring down inflation as our overriding priority.

[Richard Thomson]

The former US Treasury chief said earlier this month that Brexit was a “historic economic error”, and described the UK Government’s economic policy as having been

“substantially flawed for some years”.

Will the Chancellor finally face up to what the rest of the world can see, and admit that leaving the world’s largest single market has not only had a significant impact on inflation, but a deleterious impact on household finances across the country?

Finance Bill

Richard Thomson Excerpts

Committee stage
Wednesday 30th November 2022 Commons Chamber

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I should have reminded colleagues that when we are in Committee I am to be referred to as “Chair” or “Dame Rosie”.

I call the SNP spokesperson.

[Richard Thomson (Gordon) (SNP)]

Thank you, Dame Rosie, for calling me at this point. We are discussing this Finance Bill still against a backdrop of problems with our energy security, the climate crisis and the cost of living crisis. Sadly, despite the rapid turnover in personnel in recent weeks and months at No. 10 and No. 11 Downing Street, there are still no signs in this Bill that the Government have any inclination to go about getting to grips with those three crises and challenges of our age.

Autumn Statement Resolutions

Richard Thomson Excerpts

Monday 21st November 2022 Commons Chamber

[Richard Thomson (Gordon) (SNP)]

Last week saw what I think was the most keenly awaited Budget statement from a UK Chancellor since the last one, a mere six weeks earlier. It is remarkable to think that, throughout 2022, we have gone through not one, not two, not three, but four Chancellors of the Exchequer. It was telling that the latest incumbent, the right hon. Member for South West Surrey (Jeremy Hunt), gave a speech that was notably short on cheer and levity. Nevertheless, he did his level best to welcome colleagues back into the fold of the anti-growth coalition. He spent just under an hour at the Dispatch Box unpicking what remained of the previous Budget statement.

The Chancellor, the Government and the Minister today have been keen to highlight what they refer to as “global headwinds” impeding the progress of the British economy. I would not wish to downplay in any measure the difficulties of some of the global circumstances that are common to all at present, but there seems to be a slightly harder headwind blowing at the UK economy right now, it is fair to say. It is hard to fathom, but in attempting to do so, we can point to a few self-inflicted wounds, and not just from the last Budget.

Let us address the elephant in the room that Brexit certainly has not helped in any way, shape or form. My travel arrangements today mean that I have not been able to keep up with the latest developments on whether there will or will not be a Swiss-style deal; I have no idea whether it is true. Free trade without corresponding freedom of movement sounds a little like measures that were tried before and thoroughly rejected by Conservative Members. The European Union and the Swiss Government seem to be having enough trouble with their own Swiss-style agreement, so the idea that the UK Government, with their track record of negotiations with the EU over the past few years, might even be given the opportunity to ask for and negotiate such a deal seems fanciful, at best.

We can clearly see why the Brexit anti-dividend is biting so hard. It has brought increased trade frictions with our closest trading partners and closed off what was previously a plentiful supply of skilled labour that brought nothing but benefit to our country and economy. From the last Budget, we can see the damage inflicted by the delinquent ideologues, who were out there causing mayhem and supergluing themselves to the economic prescriptions of the Institute of Economic Affairs, at enormous cost to the economy, leaving us with interest rates far higher than they would otherwise be. It means that the Government—I do not envy them—now have to perform a herculean task to rebuild their credibility, not just in the international markets, but among the public at large.

Let us be clear: the last Budget eviscerated the political credibility of the former Prime Minister and her Chancellor, as well as that of her party. It has also almost completely blown up any remaining credibility that the Scottish Conservatives might lay claim to. It might be a little unfair for me to pick them out, but I am going to do it anyway. On 23 September, we saw the mini-Budget and the abolition of the 45p tax rate. On 27 September, the hon. Member for Moray (Douglas Ross), in his capacity as leader of the Scottish Conservatives, was resplendent on ITV Border, calling for that move to be replicated by the Scottish Government. On 29 September, he was quoted in The Times, saying that he was worried about his mortgage, presumably as a result of the Budget. On 3 October, that 45p reversal was itself reversed, leading to a brutal headline in the Scottish edition of The Times:

“Scottish Tories welcome U-turn on tax cut they supported.”

As one leadership vacuum is at least partially filled in London, it is inevitable that attention will turn to the vacuity of the leadership of that party in Scotland.

The fact that the autumn statement represents a complete reversal and repudiation of Trussonomics will come as little comfort to those worst affected. The measures might have been reversed, but just as it is impossible to put toothpaste back in the tube once it is out, the damage that has been done over the last few weeks simply cannot be undone. The OBR forecasts that disposable household income is set to fall by 7% over the next two years, representing the worst fall in living standards since records began. If those are the figures coming out of the OBR with what we are invited to believe was a more sensible and balanced Budget, goodness only knows what figures it had prepared for the Budget that is now being unpicked. And all that after 15 years of stagnation and underperformance at the hands of successive UK Governments. Over that time, the gap between the haves and the hardworking have-nots has grown ever wider, and it is impossible to avoid the conclusion that a Scottish Government, with the full economic powers of independence, could have managed a much better and fairer job of it.

The OBR forecast warns that the UK economy will shrink by 2% as a result of a lengthy recession. It notes that

“Brexit has had a significant adverse impact on UK trade”

and forecasts that

“Brexit will result in the UK’s trade intensity being 15 per cent lower in the long run than if the UK had remained in the EU.”

It further notes:

“The medium-term fiscal outlook has materially worsened since our March forecast due to a weaker economy, higher interest rates, and higher inflation”.

As we would expect, it comments on the strange circumstances surrounding September’s mini-Budget, for which it was not asked to prepare a forecast. It states that the process ahead of Thursday’s forecast

“has been unusual in both the time it took to produce and the process leading to its publication.”

That comes after the Bank of England Governor, Andrew Bailey, told the Treasury Committee on Wednesday that the UK has suffered a dramatically worse recovery than the US or the EU: he noted the “striking” difference in the UK’s post-pandemic economic performance from that of the US and the EU.

The overwhelming response to the detail of the Chancellor’s announcement last week, not just from me and my party but from people the length and breadth of Scotland, has been one of disappointment. Anyone who woke up on Thursday morning worried about how they would pay their bills and find their way through the cost of living crisis over the next few months and years will have been left wondering exactly the same thing after the Chancellor sat down. For all the cash-terms increases in spending that he announced, the fundamental fact is that they are mostly eclipsed by the inflation rate, which is at a 41-year high. There may be some increases in cash terms, but there are very few in real terms. In most cases, the purchasing power of any money that the Chancellor is announcing is being more than eroded as a result of cost inflation and demand inflation.

The Chief Secretary mentioned the Barnett consequent-ials arising from the autumn statement, which will lead to the Scottish Government being allocated an additional £1.5 billion. I am happy to be corrected if I am wrong, but I think he missed out the fact that that £1.5 billion will apply over two years, not a single financial year. To set that figure in context for hon. Members, it is less than the £1.7 billion by which the purchasing power of the Scottish Government’s existing budget, which was set last December, has already been eroded as a result of cost and demand inflation.

Although I accept that many of the measures that have been announced are better than nothing at all, in most cases they represent only a partial mitigation of people’s increased costs. To take a pertinent example that applies in my constituency and across parts of rural Scotland, England, Wales and Northern Ireland, the alternative fuel allowance has increased from £100 to £200, but that is still well below the £500 that in many places is the minimum cost of a delivery of heating oil. With the energy cap rising to £3,000, households will have to contend with higher bills next spring, which will be unaffordable for many. As Adam Scorer, chief executive of National Energy Action, comments:

“Sadly, this means there is now no end in sight to the energy crisis for struggling households.”

There are a few measures that the Chancellor could have taken if he were genuine and sincere in his desire for what he terms fiscal consolidation—the burden of increased taxation—to be placed on the shoulders of those best able to bear it. One such measure would have been expanding the windfall tax beyond energy companies to hit big retailers and ensure that they pay a fair share of their current excess profits. Another possible measure, which I accept might not have made the Chancellor terribly popular with his next-door neighbour, would have been to tax non-doms: closing that loophole would have raised an extra £3.2 billion that is not currently in the scope of the statement. Another option, as the IPPR has highlighted, would have been to tax company share buy-backs. Some companies have been channelling record profits through that mechanism; taxing it appropriately could have raised a further £11 billion. There is £55 billion of “consolidation”, but we can straightaway see more than £15 billion that could have been in scope, but was not. It could have been used to put more money in people’s pockets or reduce the tax burden on the people least able to afford it, but it simply was not. The Chancellor had the opportunity to make those choices, but he made the choice not to.

The price increases as a result of inflation are really hammering families. More needed to be done to put money in their pockets. More needed to be done to tackle the cost of energy, which is hitting not just household budgets but businesses’ input costs. Breaking the link between gas and electricity prices would have been one way of doing so. Another way to funnel money directly to people would have been for the Chancellor to follow the lead of the Scottish Government and to match progressive policies such as the increase in the Scottish child payment.

Finally, I think we can all agree that it is not some great revelation that we need greater growth in our economy to achieve the outcomes we want and to earn the social democracy we should all want. However, again, the Government are completely missing the target. Investing in the dead end of nuclear power, this is a Government who seem to oppose socialism in all its forms, except when it comes to corporate welfare and bailing out energy multinationals to make their books balance. Furthermore, our research and development spend, despite the increase, will still lag significantly behind that of major competitor economies such as Germany. We should also not underestimate the impact that real-terms cuts will have on local authority capital budgets and the private sector activity that benefits greatly from them.

To paraphrase the right hon. Member for West Suffolk (Matt Hancock), people in Scotland will have looked at this Budget and this Government and said not, “I’m a celebrity. Get me out of here,” but, “This is a calamity. Get us out of here.”

Health and Social Care Levy (Repeal) Bill

Richard Thomson Excerpts

2nd reading
Tuesday 11th October 2022 Commons Chamber

[Richard Thomson (Gordon) (SNP)]

It was a little over a year ago that the then Chief Secretary to the Treasury told the House that this health and social care levy

“will enable the Government to tackle the backlog in the NHS. It will provide a new permanent way to pay for the Government’s reforms”.—[Official Report, 14 September 2021; Vol. 700, c. 845.]

That was quite a spectacular U-turn on the Conservative party’s 2019 manifesto. Page 2, signed by the then Prime Minister, made a solemn pledge:

“We will not raise the rate of income tax, VAT or National Insurance.”

To be back here, just over a year later, seeing a reversal is really quite something. Describing it as a U-turn does not do it justice. An antisocial driver doing donuts in the car park of the local supermarket is the best analogy for how out of control this approach seems to be.

The UK Government published a health and social care levy policy paper when the levy was introduced, and I distinctly remember this quote:

“This levy provides a UK-wide approach which enables us to pool and share risks and resources across the UK”.

It was therefore highly enjoyable to listen to the current Chief Secretary to the Treasury claiming that, now the levy is being repealed, the reverse also happens to be true, in terms of the UK-wide approach to pooling and sharing.

I spoke in the debate when the levy was introduced, and I recall that there was a sparsity of Back Benchers prepared to provide political cover for their Government’s change of heart. Quite clearly, an awful lot has changed since then. We have a new Prime Minister, who makes much of the fact that she is prepared to be unpopular, which is probably just as well in the light of recent events. She also tells us, and the Chief Secretary repeated it today, that there is apparently a sinister grouping at work outside this place—the anti-growth coalition. I will not go through all the groups that supposedly comprise this coalition, but it seems to be anyone who has the temerity or the audacity to disagree with the Prime Minister, so it probably includes about half the Cabinet and most Conservative Back Benchers.

[Hywel Williams]

I am grateful to the hon. Gentleman for raising the Government’s assault with such frivolity. Does he know how one joins this anti-growth coalition? When does it meet? Does it provide lunch? Does one have to apply through the currently absent Minister? Is there a form on the internet, as there is for everything else?

[Richard Thomson]

I am sorry to disappoint the hon. Gentleman, but I do not have any answers. From a Marxist perspective—a Groucho Marxist perspective—I would not want to be part of any club that would have me as a member. I am sure the T-shirts are being printed and will be available very soon.

The Government Benches were rather sparse in our previous debate on the levy. Judging by some of the contributions and the exceptionally well-targeted friendly fire, the Government clearly have some way to go to persuade their Members on not only the sincerity of their commitments on health and social care, but their broader approach to managing the economy.

Scottish National party Members had concerns about the levy at the time as a means of achieving the policy objectives outlined. In our view, it was unclear what the additional resource would be used for, other than in the broadest of terms. The near £13 billion levy seemed to us to be an arbitrary amount, unconnected to any clear plan for how the funds might be used to tackle the pressures in the NHS—far less for how that resource, and how much of it, would end up being passported through to meet the challenges in the care sector. We also remarked that there was no sign of the accompanying reforms that would be necessary to get better outcomes on integrating health and social care services in England, as has been done in Scotland and as will be built on through the establishment of a national care service by the end of the current Scottish parliamentary term. The levy was also introduced, and is now being withdrawn, without our having had any indication from the OBR—although we believe the work has been done—of the impact not just of this but all the other fiscal choices that now sit around it.

To say that the UK Government are in complete disarray in their approach not just to health and social care but to managing the economy, would be a kindness and an understatement. They are abandoning the national insurance rise in favour of increased borrowing, just as the Chancellor’s limited fiscal event has resulted in borrowing growing considerably more expensive. They are introducing tax cuts, which are intended to be funded in part by cuts to public expenditure, and those will inevitably feed through to pressures on the health and social care sectors that the levy was supposed to be bolstering. With the rampant inflation we now see in our economy, any resource that makes it through to the health and social care sectors will not travel as far as it would have done—those pounds will buy less. The huge post-pandemic health and social care problems that we face in common across these islands have also been made that much worse by the botched nature of the mini-Budget.

John Appleby, the director of research and chief economist at the health think tank the Nuffield Trust, is surely correct when he warns that the funding ball is now back in the Government’s court, saying:

“They will have to fund the commitment through some combination of borrowing and deprioritising other public spending”.

Let us be realistic about this: that is a far more likely set of outcomes than seeing the commitment being met through ambitions for growth, no matter how loudly and repeatedly they are stated.

To be clear, SNP Members never believed that a levy on national insurance was the way to achieve the objectives of meeting those challenges. It is tempting to go back to what was said on 24 March, when Paul Johnson, the director of the Institute for Fiscal Studies, called the Government to account in The Times newspaper, saying:

“Why promise to spend billions cutting the basic rate of income tax whilst going ahead with an increase in NI rates? That will make the tax system both less equitable and less efficient. It will increase the wedge between higher taxes on earnings and lower taxes on pensions and unearned incomes. And wouldn’t that money have been better spent sooner helping those most in need?”

That was an excellent question then and it remains so today.

Let us be clear that the funding challenge goes beyond the challenges of the economy, to meeting the parallel challenge presented by the growing and complex demands of an ageing population. In meeting that challenge, it is important that we are able to meet the demands and needs of patients, service users and staff with dignity and compassion, while making sure that the responsibility for contributing towards that financially is a burden shared fairly and equitably.

In financial terms, that is going to be met through a combination of revenue spend and capital spend. The way in which that cost is shared will come down to political choices over how much is to be borrowed and how the tax system is to be balanced over the longer term. We certainly wait with a mixture of bated breath and nervousness as to what the Chancellor will finally bring forward later this month. I make no apology for repeating this point: it must be fairer, as a general principle, to spread the burden by increasing income taxes across the board on both earned and unearned income, as well as to look again at areas such as inheritance taxes and capital gains, so that the totality of the wealth right across the nations of these islands can be taken into consideration when sharing that burden.

Instead, we seem to have a piecemeal and incoherent approach to reform from this Government, allied to an equally piecemeal and incoherent approach to taxation and the wider economy. It is often said of a person’s character that, when someone shows you who they are, you should believe them. My goodness, haven’t we in the past three weeks seen exactly what the essential character of this Government is when it comes to their priorities? We have seen that instinct revealed in the decision to unapologetically lift the cap on bankers’ bonuses. We see it in the attempts to cut taxes for the richest, to give least to those who need it most and to hack back on the public services that enable people to live the best lives they possibly can, irrespective of their personal circumstances. We see it in the resulting economic chaos and the fiction that out of that chaos growth will emerge, which somehow makes all of this additional borrowing affordable.

In some kind of conclusion, it is clear that the problems that led to this levy being identified as a solution in health and social care have not disappeared, even if the levy itself is about to. The Chief Secretary repeated the Prime Minister’s lamentable jibe about the “anti-growth coalition”. As the chaos that has emerged from the mini-Budget shows, the solutions to the myriad problems we face are not going to be found among the dangerous, disruptive ideologues who cause mayhem by supergluing themselves to the policy prescriptions of the Institute of Economic Affairs. They can be found only by building long-term value in the economy and making sure that the burden for doing so is shared equitably among all people and all businesses that can make the contribution that they need to.

The Growth Plan

Richard Thomson Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

It is nice to see the hon. Gentleman in his place on the Opposition Benches, in splendid isolation. I remind him that the measures relating to national insurance and the basic rate help the vast number of constituents of Members on both sides of the House.

[Richard Thomson (Gordon) (SNP)]

I wonder what it says about the Government that at the height of a cost of living crisis we appear to have a Chancellor putting pressure on the Governor of the Bank of England to increase interest rates—presumably on the basis that he considers that there are too many people right now with too much money in their pockets. What does it say about the Government’s priorities, I wonder, that of all the groups they have rushed furthest to help it is bankers suffering the indignity and privations of only being able to qualify for bonuses that are double their salary? We have an economic historian for a Chancellor; will the legacy of today’s statement not be that for tens of millions of households the length and breadth of the UK any notion of a fair economy will be history?

[Kwasi Kwarteng]

Any cursory look at the history of this country shows that the way to deal with debt and cost of living issues is to grow the economy. That is why we are 100% focused on that.

Alcohol Taxation

Richard Thomson Excerpts

Thursday 7th July 2022 Commons Chamber

[Richard Thomson (Gordon) (SNP)]

Let me first say what a pleasure it is to speak in the debate, and congratulate the right hon. Member for Vale of Glamorgan (Alun Cairns) on securing it. Let me also declare my membership of the Scotch whisky all-party parliamentary group, and say how pleased I am to see that, after a day of turmoil, the Minister is still in her place. I am going to have to get to grips with two other Ministers whom I shadow, so it is nice to see some continuity in at least one area of my responsibilities on the APPG.

Alcohol duty has been ripe for review for a considerable time, on the grounds of complexity and economic impacts, but also on the grounds of the social and health impacts that it may have in influencing behaviour. I think—indeed, I know—that this could have been done at any time. Contrasting levels of duty are applied across the European Union, and the UK was towards the higher end of that, but many other countries had considerably lower rates, so it is certainly not a Brexit benefit that the UK Government are now able to turn their attention to this matter.

The former Chancellor clearly had an agenda to simplify the duty regime. It is perhaps understandable that the current Chancellor has not had a chance to share his thoughts with us. Of course, he may not even be Chancellor past the autumn; it will depend on how the cards fall. In any event, I think that this is the right moment for us to have this debate and reopen some of these issues.

Ideally, to my mind, what any Government ought to be looking for is a regime that supports domestic innovation—product innovation and technological innovation, of which there is a great deal in the alcohol-producing sector—along with investment and production, while also keeping the social and health impacts of alcohol consumption in mind. On that measure, in terms of the review of the parameters that have been set out so far, I have always taken a dim view of the apparent bias against stronger alcohols such as whisky, vodka and gin, and I will go on to explain why.

As I have said, I am a member of the all-party parliamentary group on Scotch whisky, and in my constituency in the north-east of Scotland there are three significant distilleries. The Glendronach distillery is near the village of Forgue, and the Ardmore distillery is near the railway at Kennethmont. The third is Glen Garioch and, unusually for a Scottish distillery, it sits not in the middle of an iconic natural landscape but slap bang in the middle of the town of Oldmeldrum. If you drive through Oldmeldrum, you drive through the different buildings of the distillery, depending on the route you take, and it really is quite remarkable. If you are in the north-east of Scotland, I would encourage you to visit it. Give me a shout and I’ll come along with you—it would be great to be able to show off such a distillery.

As well as producing excellent products, those distilleries are right at the heart of our visitor economy. Together with the rest of the whisky sector, they make an enormous contribution to Treasury revenues and to the UK balance of payments. It is not just the whisky that is important; many distillery sites in Scotland also produce the spirits needed to make vodka or gin. In Aberdeenshire there is a burgeoning sector of craft gin manufacturers and those who produce the botanicals to go along with that. There is real innovation there, and while I would not wish to overstate this, it seems iniquitous that we are taxing that domestic product at such a high rate and as a consequence perhaps influencing consumer behaviour to prefer other forms of drink that are not produced domestically.

Those levels of duty are disproportionate, and that is harmful on a number of levels. For one thing—I know from my discussions with the industry how significant this is—it becomes very hard when trying to strike trade deals, which the Government are obviously trying their best to do at the moment, to encourage other jurisdictions to bring down the sometimes punitive rates of duty that they apply to these products. There is also the inhibition that that, as well as some tariffs, puts on the bourbon sector. People might think that bourbon is a competitor product, but in many ways it is a complementary product due to the nature of the ownership of the distilling industry. Quite often the multinational companies trying to sell bourbon in these markets are also investing heavily in new production and new practices in the Scotch whisky industry, so it is all interlinked. The high level of taxation that we put on that product on the shelf is not very helpful.

Finally, let me say something about minimum unit pricing. This policy was introduced in Scotland, and I think it is fair to say that it was quite controversial at the time. It was attacked for a number of reasons, some good and some not so good. We have now experienced the policy in action for some time, and I can happily report that there have not been the predicted traffic jams at the border on the A1 at Berwick or on the M74 at Carlisle due to people doing booze runs. That did not happen. The most valid criticism of that policy approach was not so much about the increase in price as about the fact that the benefit of the increase did not go to the Government to invest in health measures but instead rested with the retailer. That was a fair criticism. I think it is fair to say that if any Scottish Government had had control over the range of duties applied to various drinks, they might have had a minimum price in mind, but they would have used duty as a mechanism rather than imposing that on the retailers.

[Wayne David (Caerphilly) (Lab)]

Minimum unit pricing has also been introduced in Wales, and the feedback there has also been very positive.

[Richard Thomson]

I thank the hon. Member for that intervention. It has indeed been introduced in Wales, and the evidence is that it has been a very positive thing in both jurisdictions.

We also need to look at promotions. Minimum pricing and other associated policies ended the practice of supermarkets using cheap, below-cost-price alcohol as a loss leader to draw people through the doors. Today’s evaluation of minimum unit pricing in Scotland—I am sure there will be similar evaluations in Wales—shows that, in the 12 months following its introduction before the pandemic, there was a 2% reduction in off-trade alcohol sales and, more significantly, a 10% decline in alcohol-specific deaths in 2019. With more alcohol being drunk at home and with the changes in behaviour we saw throughout the pandemic, it is still reasonable to conclude that minimum unit pricing is contributing to a lower level of harm and adverse health, crime and social outcomes than might otherwise be the case.

All of this has been part of an initial suite of measures to try to change the relationship we sadly have with alcohol in Scotland. We can have an incredibly positive relationship with alcohol, but we cannot be blind to the impacts it can have. I am pleased that the Scottish Government are reviewing the effectiveness of the current system of alcohol brief interventions where people have exhibited problem behaviours, and are reviewing how the product is marketed and presented to consumers, as part of delivering those improved public health outcomes. I believe a review of where we are on duties is a ripe opportunity to do that, and I would be failing in my duty as an SNP spokesperson if I did not say that this would all be better if it were devolved.

[Mike Wood]

On a point of order, Mr Deputy Speaker. I should have drawn the House’s attention to my entry in the Register of Members’ Financial Interests relating to the hospitality I have received from, appropriately, the hospitality sector. Can you advise on how I may put that on the record?

--- Later in debate ---

[Lucy Frazer]

There are many laws in the EU, as the hon. Lady will know, that have dictated our laws for many years. Those are the regulations and directives that we are changing, not only in this area, but in many others.

Coming back to the system we are producing, we ran a consultation from after the autumn Budget until January this year and Treasury officials have met many stakeholders from across industries and public health groups. The hon. Lady said that we need to consult more, but I can assure her that Treasury Ministers, largely the former Exchequer Secretary to the Treasury, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), who was responsible for this area, have met colleagues from across the parties. We have spoken to and visited businesses, from the smallest to the largest, welcomed representations from many of the most important trade bodies and sat down with the Australian high commissioner, all to ensure that at the Treasury we have heard all points of view on the reforms. I can assure the hon. Lady and others that we are listening.

I will come on to the points that hon. Members have made. We have heard from industries, businesses and colleagues about their concerns, and we will continue to listen to the feedback. The comments made in this debate will form part of that listening. We are actively thinking about how we can reduce burdens on businesses while still preserving the many benefits of the system, not least the clear and obvious public health benefits of taxing products by their alcohol strength.

Many hon. Members have talked about issues with keg size, including my right hon. Friend the Member for Vale of Glamorgan, my hon. Friends the Members for Meon Valley and for Dudley South (Mike Wood), and the hon. Member for St Albans (Daisy Cooper). I want to assure them that, while I cannot make any announcements today, we are listening to that point. My right hon. Friend the Member for Vale of Glamorgan, my hon. Friend the Member for Dudley South and others talked about how small producers’ relief is too complicated. I reassure them that we are determined to get rid of the cliff edge to support the growth of small brewers.

Other hon. Members talked about the duty charges on wine. I have spoken to the former Exchequer Secretary, who told me how she has been engaging with the sector on this very issue. The hon. Member for St Albans mentioned that she had visited the Wine Society and heard its views, and I know the Treasury is looking at ways to reduce the administrative burdens.

The hon. Lady also talked about fortified wines; she will know that we are reforming the duty on fortified wines to ensure that those products pay a consistent rate of duty per unit with still and sparkling wines and high-strength beers. We are increasing the duty on fortified wines to equal the duty on spirit-based liqueurs such as Baileys, because both drinks are made using spirits and we think it is right in those circumstances that they pay the same rates.

My hon. Friends the Members for Weston-super-Mare (John Penrose) and for Meon Valley talked about cider, as did others, and I hear what they are saying. They will know that ciders will benefit from new reduced rates for lower ABV ciders below 3.5% ABV, and as part of our new draught relief we will cut duty rates on draught fruit ciders by 20% to equalise them with beer, cutting 13p off a pint. Nobody has mentioned this today, but I would like to reiterate that we announced in the 2021 autumn Budget that we were freezing cider duty for the fourth consecutive year.

The hon. Member for Gordon (Richard Thomson) talked about Scotch and other spirits. I remind him that at the Budget the Government froze spirits duty, saving 52p off a bottle of Scotch compared with what it would have been if duty had risen with inflation. Because of the decisions that we have made, spirits duty rates are at their lowest level since at least 1918. It is a really important industry for us and we have an exceptionally competitive environment for Scotch to succeed. Domestic whisky volumes have expanded year on year, including throughout the pandemic, to reach their highest levels since 2013, growing by 11% over the past two years.

[Richard Thomson]

I am looking at a graphic that shows that when duty on a shot of whisky in the UK was 46p, duty on the same measure of whisky in Spain would have been the equivalent of only 12p. I wonder what Brexit benefit it might be that has resulted in that differential staying there even with whisky duties being frozen.

[Lucy Frazer]

The hon. Member will know that the benefit of Brexit is that we can now make these decisions ourselves, reflecting our own industries and what we want to do as a Government going forward.

We have heard many positive responses to the changes we have made, welcoming the substantial benefits that they will bring to businesses. Respondents to the consultation said that they

“wholeheartedly welcome the direction of the proposals.”

Many hon. Members have mentioned positive features of the proposals, which have been called a “genuinely significant achievement”. Crucially to a country that puts its people first, a public health group described the reforms as

“the largest and most positive shift from the perspective of public health in contemporary alcohol policy.”

I thank all colleagues who have contributed to this important and insightful debate. We will soon confirm details of the reforms and publish the draft legislation for consultation, alongside the Government’s response. We have before us a once-in-a-generation opportunity to reform and improve an outdated system, with new incentives for producers to diversify and innovate, while introducing a direct boost for pubs. The reforms are more rational, they are fair, and they are better aligned to public health goals and consumer preferences. They support the great British pub and small producers producing fantastic, world-leading products. Our reforms spell exciting times for alcohol businesses in this country and will protect our brilliant heritage in alcohol production and trade.

Funeral Plan Industry

Richard Thomson Excerpts

Thursday 26th May 2022 Westminster Hall

[Richard Thomson (Gordon) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Cummins. I congratulate the hon. Member for Telford (Lucy Allan) not only on securing this debate, but on the manner in which she has pursued this issue on behalf of her—and all of our—constituents.

Funeral plans are something that I have always tried to avoid considering, in the normal run of things. We have heard all about the hard sell that can go on, whether through the glossy brochures or the sales patter. However, the soft sell can be every bit as pernicious. Without being flippant, I gave an interview to a TV company that is, it is fair to say, a considerable way down the electronic programme guide from the BBC or ITV. While I was waiting to see when I would come on, it seemed that just about every other advert between programmes was for burial or cremation.

Clearly, an awful lot of marketing effort was going into that, and it was going straight into people’s homes uninvited. I was struck by the techniques—the soothing music, the images of sunsets and the reassuring voices talking about giving you and your loved ones peace of mind. Every heartstring was pulled about the inevitability of requiring a funeral, the reassurance that you would give your loved ones by taking responsibility in this way—you would be taking the worry out of things for yourself and your family—and the fact that it was all so incredibly easy, if only you phoned the 0800 number scrolling along the bottom of the screen. Clearly, that works; as we have heard, the industry is worth £4 billion.

I would like to dwell a little on the scandal of Safe Hands, which seems to have operated thoroughly dishonestly, exploiting that desire among very vulnerable people who did not wish to be a burden. Safe Hands had 47,000 customers and was supposedly operating a ringfenced trust fund in order to protect customer investments and guarantee that paid funeral whenever the time came. Instead, it has seen funds misappropriated, with a £2 million surplus being paid out to the company and another £2 million paid in shareholder dividends, in one particularly egregious set of transactions. I can only begin to imagine the distress that the collapse of this company has caused, not only to those who had invested their money in this plan and expected their family to have those end-of-life burdens eased, but also to those who had invested in similar, more reputable schemes.

The hon. Member for Telford has already filleted that company’s accounts far more cleanly than I could ever hope to, but I think it is worth dwelling on the fact that the private equity bank company used two fund managers to invest customers’ money, one of which has gone into liquidation. It has about £4 million in cash, as well as shares listed in UK firms, which can be sold. A significant proportion of that money went into high-risk investments—often offshore—and some £60 million of the trust assets were in those high-risk investments. Now the administrator, FRP Advisory, is saying that a more reasonable valuation would be somewhere between £10.6 million and £16.1 million, which means that customers might only expect to get, at tops, about one fifth of their investments back. That means that with the average cost of a funeral hitting about £3,000, customers may only get about £600 back.

From 29 July, the industry is to be regulated—in a financial sense, at least—by the Financial Conduct Authority. That is a very welcome and long-overdue measure. As has been said, a funeral plan is not in itself necessary to pay for a funeral. It is no more and no less than any other kind of financial savings product, and it ought to be regulated in exactly the same way, with the same level of transparency expected over fees, commissions and how it operates. Those who administer it should have the same amount of accountability, the same amount of due diligence should be expected and we should have the same solvency expectations as we would for any product of a similar nature.

While the regulation from 29 July is highly welcome, there is a danger to it coming in. As we have heard, 75 companies are on the radar, and slightly fewer than half have submitted an application to be authorised that is still current. Some 20 have indicated that they do not intend to apply or have yet to start the process of seeking that authorisation, and 13 have withdrawn from the process entirely. First, we need to make sure that as many as possible come under the umbrella of that regulation from 29 July. We need assurances for people who have funeral plans in those unregulated companies that their investments can be protected and that the products deliver what people were promised when they signed on the dotted line.

We also need to make sure that we are doing something for those who will inevitably be left high and dry. Dignity, one of the UK’s largest undertaking firms, has for the next six months agreed to provide funerals for Safe Hands customers on a not-for-profit basis, and it will thereafter look to offer plans to surviving customers. That is good, but we need to recognise the very real danger of market failure and other providers not stepping up. I am uncomfortable about that. We need to make sure that there is some form of safety net so that those customers are protected as far as is reasonably possible.

The hon. Member for Putney (Fleur Anderson) highlighted eloquently and knowledgably the issues around funeral poverty and how families can be pushed into debt at a time of enormous distress. Such families may, with the best will in the world, not be the most financially savvy, and in that time of grief they are that extra bit vulnerable, especially given the emotional distress and the timeframes involved in arranging a funeral. As a result, they may find themselves being pushed into choosing options that are not the best for them and that they would not take if they had a full gamut of advice available to them. It risks placing them in the hands of the unscrupulous and making poverty deeper than it needs to be.

Over the last few years, the Scottish Government have taken steps to try to assist with funeral poverty. They have been working to help people with funeral costs, including through the funeral support payment, which is one of eight social security benefits that have been devolved. That should be seen in the context of a wider set of actions that have been set out in the Scottish Government’s funeral costs plan, which is designed to reduce funeral poverty and help people to manage and mitigate the overall costs.

Social Security Scotland delivers the funeral support payment. It supports eligible individuals in receipt of low income benefits with a payment to help cover funeral costs. It is a one-off payment that helps to cover any reasonable burial or cremation fees and some travel costs, and it includes a standard flat rate of £1,000 when the client does not have a funeral plan.

That still leaves a great deal to be done. I am very attracted to the idea, which the hon. Member for Putney mentioned, of having a go-to section that does not direct people in any particular way but offers signposts to the various available funeral options. I think that has a great deal of merit, because simply knowing that there is a place where they can go to get information would give people a great deal of comfort in the time of their greatest distress.

This has been a useful and timely debate, but it is one that we will need to revisit, not just in terms of the impact of regulation and the benefits that that will bring, but because we need to consider the impact of companies that, for whatever reason, do not end up under the FCA’s regulation. Beyond the finances, we need to take a close look at a whole range of practices to ensure we protect the most vulnerable people in society, whether they are people taking measures to pay for their funerals in advance or relatives left behind at a time of great distress and vulnerability. I am sure that the hon. Members for Telford and for Putney will continue most ably to focus Members’ attention on that as we move forward.