Business and the Economy

Sarah Olney Excerpts

Wednesday 21st May 2025 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

I share the bemusement of my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) that we on these Benches are being called the “other Government”. I puzzled over that for a little while, but perhaps, based on recent opinion polls, the shadow Minister was reflecting how the Liberal Democrats are now more likely to form the next Government than the Conservatives. The stones being thrown from the very fragile glasshouse of the Conservative party are astonishing, given its appalling mismanagement of the economy and the dismal inheritance that it left behind. Its record is a dispiriting picture of low growth, high interest rates and a record fall in living standards.

For years the Conservative party took people for granted. Our constituents saw this reflected in their mortgage payments, the hike in their energy bills, and the prices they paid for their weekly shop. Under the last Administration, public services were left crumbling, and the Tories’ pitiful Brexit negotiations saw reams of red tape introduced, causing untold damage to businesses across the country.

We know that the Labour Government have inherited a mess, and we know that the cause of that mess is a legacy of reckless economic mismanagement left behind by the previous Government. But that cannot be allowed to serve as cover for measures that damage business or cause suffering for the vulnerable in our society.

Labour’s autumn Budget has not worked. The national insurance jobs tax will damage small businesses and lower people’s living standards, and it undermines the Government’s own ambitions for growth. People endured years of Conservative mismanagement, which is why this new Government should be doing far more to grow our economy, create new jobs and improve living standards.

We know that the Government had tough decisions to make, but instead of hiking national insurance, cutting disability benefits and squeezing departmental budgets even more, they should be showing far more ambition in growing our economy, which is the best way to raise tax revenue and boost living standards. That is exactly why we have been urging Ministers to ignore the naysayers in the Conservative and Reform parties and to urgently negotiate a new, bespoke UK-EU customs union.

When it comes to taxation, the Government should look to raise revenue in much fairer ways, such as asking social media giants and online gambling firms to pay their fair share. That is the right way to repair our public finances and boost public services—not short-sighted cuts that make things worse for people.

--- Later in debate ---

[Sarah Dyke]

Excuse me, Madam Deputy Speaker. Does my hon. Friend agree that we need a fundamental overhaul of the harmful business rates system so that small businesses in rural areas can survive and succeed?

[Sarah Olney]

My hon. Friend is exactly right; there are so many things currently holding our small businesses back. The Conservatives failed to reform business rates. We are now looking to the Labour Government to bring forward measures that make it easier for people to set up businesses in their local communities.

Let me be clear: stripping support from many of the poorest pensioners while energy bills are still sky high was the wrong thing to do. I and my Liberal Democrat colleagues have listened to our constituents and have heard from countless pensioners who have been affected by the cut. We have heard warning calls from sector representatives including Age UK and Disability Rights UK, and indeed from many pensioners themselves, regarding the huge damage that the cuts have done. Some pensioners have been put in the position of having to choose between heating and eating.

Back in December last year, the Government admitted that their changes to the winter fuel payments will result in an additional 100,000 pensioners being pushed into poverty.

[Dr Caroline Johnson]

The hon. Lady is talking about the effect of the Government’s winter fuel payment cuts. Does she agree that the cuts were not just cruel and unpleasant for the elderly people who have suffered, but economically illiterate because of the increased cost to the NHS from individuals becoming sick as a result of being cold?

[Sarah Olney]

I am grateful to the hon. Lady for her intervention. I have engaged the Minister directly on this point and shown him examples of how the cuts have directly impacted on pensioners in my constituency very harshly.

The Liberal Democrats voted against the removal of the winter fuel payment to prevent millions of the most vulnerable in our society from losing out on vital support. Following the Prime Minister’s comments earlier today, we continue to call on the Government to reverse the cut in full, to guarantee that it will not be in place by next winter and to ensure that all pensioners who need support will receive it. I ask the Minister for full details of the proposed changes as soon as he is able to give them.

It is not just in their cuts that we hope to see a change of direction from the Government. After the last Government did so much damage to our high street businesses, the Labour Government’s national insurance jobs tax has made things even harder for businesses and their workers. The changes to employer national insurance contributions announced in the autumn Budget are an unfair jobs tax that will hit small businesses, social care providers and GPs. SMEs are the beating heart of our economy. They are at the centre of our local communities and create the jobs that we all rely on. Raising the employment allowance will shield only the very smallest employers, while thousands of local businesses will still feel the damaging impact of the changes. The Liberal Democrats voted against the changes to employer NICs at every opportunity, and I once again urge the Government to scrap these measures.

Even more damaging for our small businesses is our broken trading relationship with Europe. The Conservatives’ botched Brexit deal has been a complete disaster for our country, especially for small businesses, which are held back by reams of red tape and new barriers to trade, costing our economy billions in lost exports. The dismal picture of the financial impact of their terrible Brexit trade deal is becoming increasingly clear. While the Conservative party’s motion notes that

“over 200,000 businesses have closed since Labour took office”,

it was under its Administration, in the years 2020 to 2024, that the rate of small business closures in this country started to outpace the rate of new businesses starting up. Since 2019, there has been an average business closure rate of over 12%, outstripping the rate of businesses opening.

A recent survey of 10,000 UK businesses found that 33% of currently trading enterprises experienced

“extra costs directly related to changes in export regulations due to the end of the EU transition period”.

Small businesses have been particularly badly affected, with 20,000 small firms stopping all exports to the EU. Another recent study found that goods exports have fallen by 6.4% since the trade deal came into force in 2021.

I welcome the actions taken by the Government at Monday’s UK-EU summit—particularly the impact they will have on our seed potato trade—but I urge the Government to recognise that the deal should only be a first step toward negotiating a new UK-EU customs union, which would ease the pressure felt by so many businesses and boost the economy as a whole.

More broadly, we continue to call on the Government to introduce vital reform to the business rates system. Business rates are harmful for the economy because they directly tax capital investment in structures and equipment rather than profits or the fixed stock of land. Liberal Democrats would abolish the broken business rates system and replace it with a commercial landowner levy. We believe that we need to see a fundamental overhaul—not just tinkering around the edges or sticking-plaster solutions. We are disappointed that, yet again, serious reform of the system has been kicked down the road. We need fundamental reform of business rates if we wish to boost small businesses and high streets and to stop penalising productive investment.

The Liberal Democrats acknowledge that the Government inherited a dire economic landscape, compounded by the challenges posed by an aggressive Russia and an unreliable US Administration, but that cannot be an excuse for the mistakes they are making. People are still struggling with the cost of living crisis, just as small businesses are struggling with the cost of doing business, as energy prices soar, food costs keep going up and mortgage bills remain sky high. The Government must take bold action to boost our economy. We urge Ministers to U-turn on the winter fuel payment cut, scrap the national insurance jobs tax and row back on removing support for disabled people, many of whom need that support to stay in work.

[Sarah Dyke]

My hon. Friend talks about U-turns. Does she agree that the Government should also reverse the family farm tax?

[Sarah Olney]

I thank my hon. Friend for making that point—her constituency is more rural than mine, I admit. She is right that we would also like to see the Government urgently U-turn on the family farm tax, because it is creating such difficulty in our rural communities.

We are calling for bolder, more ambitious and fairer measures. We want the Government to replace business rates with a fair new system to boost high streets and town centres, and to negotiate a new customs union with the EU, which would cut red tape for small business and boost our economy as a whole.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

We now have the pleasure of hearing from Chris Vince.