National Insurance Contributions (Secondary Class 1 Contributions) Bill

Scott Arthur Excerpts

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

[Gareth Davies]

I find it difficult that the Labour party says that we are irresponsible with public finances, yet when we faced a once-in-a-century pandemic and spent £400 billion or £500 billion to support residents, business and families in Stoke and across the country, we decided that we needed to pay that money back and did not want debt to keep on rising. Yes, we made difficult decisions in the face of a global pandemic. There is no global pandemic today. This is a political choice, and that is the difference.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

The hon. Gentleman is very kind in giving way again so quickly. The point has been made about the billions of pounds that were spent during the pandemic. Can he outline how much of that money went to Tory party mates and donors through dodgy contracts?

[Gareth Davies]

The hon. Gentleman was not here at that time, but those of us who were in Parliament then faced an incredibly challenging time in very difficult circumstances. Billions of pounds went to support businesses in his constituency; if he has a conversation with the average business that benefited from the furlough scheme, I am sure he will correct the record.

The problem is that socialists fundamentally do not understand or care what it means to have an idea, to take a risk or to work hard day in, day out to make a business a reality. That is the problem. They think it is all so easy—that profits just flow in. They think it will all be all right, because Government can step in and take us much tax as they want. That is not the case. If Government Members talk to the average business in their constituencies, they will find this out; if they set up a business, they will see it for themselves.

Perhaps most worrying of all, not only do the Government not understand the private sector, but they have completely overlooked the different ways in which the public sector provides for our communities, as my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) set out. Whether healthcare, childcare or the charity sector, organisation after organisation has warned Ministers that this tax rise will impact the services they provide. That may not have been intended, but the Government have yet to act. That is why we have tabled amendments 13 to 15 and 16 to 18, which seek to protect certain key sectors from both parts of this tax in Great Britain and Northern Ireland respectively.

Finance Bill

Scott Arthur Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[Euan Stainbank (Falkirk) (Lab)]

I will try to confine my remarks to the subject of state education, because the scope of the debate has gone somewhat beyond what I have either the expertise or the time to discuss.

In view of the critical and urgent relevance of state education funding to the parents, pupils and other people of Falkirk, I support the removal of the VAT exemption on private school fees. When Labour entered government in July, we inherited dire public finances and broken public services, which required necessary decisions to be taken to renew the foundations of the country. The guiding principle of the tax decisions taken in the Budget was clear: those with the broadest shoulders should pay their fair share so that we could invest in our public services.

A critical part of investing in the future is investing in state education. I speak from experience as a former local councillor. Through no fault of the brilliant teachers and education officers who deliver state education, local authorities such as SNP-controlled Falkirk council have sought to reduce teacher numbers, close school swimming pools, cut additional support and even reduce valuable initiatives such as music lessons. This broader trend of council underfunding in Scotland, and throughout the United Kingdom, has left schools underfunded, newly qualified teaching posts scarcer and resources overstretched, and has left councils with very little room for manoeuvre. Tomorrow, at a meeting of Falkirk council, there will be a proposal on the table to cut learning hours across the Falkirk district, depriving a child educated in Falkirk of a year of learning time across his or her primary and secondary schooling journey, and leading to the lowest number of school hours anywhere in school. The Falkirk Labour group oppose that proposal, as do I, and they will vote for it to be taken off the table tomorrow.

In stark contrast to this crisis in our state education system, spending per pupil in private schools is nearly 90% higher than in the state sector as of 2022-23, and the gap between private school and state school spending per pupil has more than doubled since 2010. For all the chat about this measure leading to an unworkable hike in fees, its opponents must match their rhetoric with the fact that fees have soared, on average, by 55% in real terms since 2003 for those who choose to pay for their kids’ education. Lifting the VAT exemption on private school fees will raise £1.8 billion annually by 2029-30—funds that will, and should, go directly into state education. This is an essential funding stream that will help to relieve the financial pressures on local authorities’ education budgets, and it is being delivered by this UK Labour Government.

I welcome the Scottish Government’s commitment to spend all the consequential funding that will flow from this UK Labour Government’s decision on education, and I also welcome the tepid and understated support of SNP colleagues. I note that, again, no SNP Members are in the Chamber. It is predictable but disappointing that the Opposition say this measure sacrifices aspiration.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

I apologise for interrupting my hon. Friend in mid-flow. Is he surprised that SNP MPs are not here, given the absolutely shocking record in Scotland on education?

[Euan Stainbank]

I am surprised that our SNP colleagues are not here, but, again, I welcome their eventual and tepid support for this measure during the general election campaign—something that they have tried to distance themselves from.

I was proudly educated at two Falkirk state schools: Ladeside primary and Larbert high. Neither I nor the 94% of young people in the UK who are educated at state schools should ever feel like our parents or our teachers lacked aspiration for us. From my conversations with parents, pupils and teachers in Falkirk about their concerns about our state education system, I know that their overwhelming opinion is that we must now invest in our state education system as a priority.

If today’s decision is between billions of pounds going into state education annually and having £1.5 billion to £1.8 billion less for state education by maintaining a tax exemption for fee-paying institutions, I know what the people of Falkirk’s preference is. Falkirk does not need tax breaks for institutions that largely serve the wealthiest. Falkirk does need well-funded state schools.

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[Munira Wilson]

I remind the right hon. Gentleman that it was his Government who negotiated the Brexit deal. I want to put that on the record.

Colleagues from across the House have spoken frequently in recent months about the crisis facing SEND provision in this country, and we have heard so many stories of struggling families fighting within a failing system to get their children the education they deserve. After years of Conservative neglect, the system is on its knees. Just this week, we have heard from the Institute for Fiscal Studies about the scale of the problem. Once again, its report laid out clearly the huge costs that have left local councils on the brink, while failing to deliver better outcomes for children. Two out of every three special schools are oversubscribed. Just half of education, health and care plans are granted within the statutory 20-week limit, and 98% of those rejected are granted on appeal when parents go to tribunal.

It is clear that the system is failing families and our vulnerable young people, so is it any wonder that parents who feel that their children’s needs cannot be met in the state system are turning to the independent sector if they can just about manage it? Small schools of less than 100 pupils make up some 40% of the independent sector. In so many cases, those are the schools that struggle and strive each day to provide desperately needed support for SEND pupils—support that, sadly, is all too often unavailable in their local state school. Those are the schools that will be punished under this measure, and the families who will need to bear the load. The Government have said that pupils who have been placed by a local authority in an independent school to fulfil the terms of their EHCP will be exempt from the VAT hike. Taken in isolation, that is a welcome mitigation to this damaging policy, but there are a whopping 100,000 SEND pupils in the independent sector who do not have an EHCP, and their families will be saddled with this VAT hike.

One such family came to see me in my surgery a few weeks ago. The parents were in tears in front of me. Their son has autism and various other needs. When he was in an excellent local state primary school, he was at risk of exclusion because of the behaviours that were manifesting as a result of his additional needs, which could not be supported in that state primary school. Those parents made the difficult decision to remove him and put him in a local private school, where he is thriving. He is coping well and his conditions are being well managed. His parents are not just paying the basic school fees; they are paying an extra £18,000 a year on top of the school fees for the additional support their child needs. All of that will be subject to VAT, which is why they were in my office in tears. They do not know how they are going to meet those costs to keep their child, who was at threat of being excluded from a state school, thriving. That is the individual human reality of this policy, which the Minister just waves away with numbers, as if these statistics do not have human stories and faces behind them.

[Dr Arthur]

The hon. Member is doing a fantastic job representing her constituents, but she is describing a failed system where people with money can get access to better treatment for their children. No one envies a parent put in that position, but my hope and expectation is that through this policy we can improve outcomes for all children. I expect that she shares that objective, but we cannot do it by defending the existing system at all costs. This measure will raise income to solve the very problem that she describes.

[Munira Wilson]

The hon. Gentleman says that I am describing a failed system, and I am; I set that out. The SEND system is failing many children across this country, but I say to him gently—I made this point to the Minister in a similar debate a few weeks ago—that I do not think the level of investment that this measure will make in our state SEND system will fix that system. That will take many years and many billions of pounds, which I suspect that the Chancellor of the Exchequer does not have, and I do not think the answer to that is to penalise those who have scrimped and saved to be able to offer their children opportunity.

If I may, I will give the hon. Gentleman an example of another constituent who emailed me. She remortgaged her home, cashed in her pension plan and is struggling to be able to send her children to a local independent school after the local state school could not meet her children’s special needs. She said something that I think partly echoes what he is saying:

“Is this fair when other children with the same difficulties as mine are not able to access the same level of help? No. Definitely not. Believe me, I would never have chosen this route but I have been left with no choice. Is it fair to punish us further financially for the failings of the state education system? No!”

So I think the hon. Gentleman and I are in agreement, but I do not think the state SEND system is going to be fixed quickly or adequately enough, and I do not think the answer to that is to level down everybody’s opportunities. We need to level up opportunities for all and not penalise the parents who have made the often very difficult choice to ensure that their child has the opportunity that they wish to give them.

Finance Bill

Scott Arthur Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[Dave Doogan]

To my great regret, I am not entirely sure what the hon. Member is talking about. If she would like, I am very happy to catch up with her afterwards. We can find out exactly what is concerning her, and I will make sure she has all the facts she needs.

Just when mortgage payers thought things were going to stabilise and that the worst of the last UK Government’s fiscal incompetence was over, the major banks have been talking since the Budget about an increase in the rates they are able to offer.

Many hon. Members have talked about what was said before the election, and what has come to pass after it, but during the election the Prime Minister promised that there would be a £300 reduction in energy prices. We have seen that that is not the case, and that energy prices are £149 higher and will go up by £21 in January. There is a £470 honesty tax on energy bills across the United Kingdom as a result of what people were told was going to happen before the election, and what has come to pass at the hands of this Labour Government.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

The hon. Gentleman talks about honesty. It sounds like he has read our manifesto, so did we say that we would reduce energy prices by November 2024? Did we say that we would raise the minimum wage, and did we do it?

[Dave Doogan]

I am pleased with the hon. Gentleman’s intervention. I can only assume he was a used car salesman in a previous life. We need to read the small print from Labour: “We will reduce your energy bill by £300. Terms and conditions apply.” Honestly, you couldn’t make it up—[Interruption.] I think they are probably speaking to the hon. Gentleman, rather than me, Madam Deputy Speaker.

Things do not end with the honesty tax I mentioned. This is a serious point, because 900,000 pensioners in Scotland will be stripped of their winter fuel payment in the coldest part of these islands, without so much as a by your leave to the Scottish Government—

[Dr Arthur]

Will the hon. Gentleman give way?

[Dave Doogan]

No, I will not—we have touched on a number of issues there. In closing, earnings are set to grow by just 1.6% in real terms over this Parliament as a result of the Bill and the Budget that goes with it, and that will extend the UK’s long pay stagnation. The Resolution Foundation has found that

“By 2028, average weekly earnings are set to be just £13 higher than they were in 2008.”

Furthermore, the Institute for Fiscal Studies states:

“Labour’s spending plans after 2025-26 are unlikely to survive contact with reality”

Those are—[Interruption.] I will take an intervention from the hon. Member for Edinburgh South West (Dr Arthur) because he has goaded me.

[Dr Arthur]

The Government have taken the difficult decision to means-test the winter fuel allowance and protect the poorest pensioners, but my understanding is that that is a devolved power in Scotland. The Scottish Government could have made the decision to use the resources they have, perhaps from wind as was discussed, to extend the allowance to more pensioners in Scotland, but they did not. They decided to enforce that cut in Scotland when they could have taken a different path, particularly given the additional uplift of money that has come from this Budget.

[Dave Doogan]

I do not know the hon. Gentleman. I have never set eyes on him, but I will make the assumption that he is a Scottish Labour MP. I do not know who he is, because he has only just appeared in the Chamber, despite the fact that we are two and a half hours into the debate—[Interruption.] We have heard a lot from the hon. Member for Barking (Nesil Caliskan) as well. The hon. Gentleman asks me what the Scottish Government will do about the winter fuel payment, so let me tell him for the next time he is an apologist for the United Kingdom. The Labour Government devolved control over the winter fuel payment, and then effectively took the budget away by cutting it for pensioners elsewhere in the United Kingdom. That is the trap of devolution. He does not want to see it, but I can see it fine. I do not know it, so I do not know how he knows what the Scottish Government will do regarding the winter fuel payment, and what targeted support they will provide in the winter ahead. One thing for sure, however, is that whoever in Scotland is standing up for pensioners, it certainly will not be the Labour party.

In closing, it is no surprise that the Bill and the Budget hold nothing but pain for communities, services and business in Scotland. Labour takes Scotland for granted. The Labour Government even ignore representations from their Westminster apologists with Scottish constituencies who sit on their own Benches. This is another tragic Budget for Scotland, and another push factor inexorably moving us closer to independence—at least the Budget is good for one thing.

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[Harriet Cross (Gordon and Buchan) (Con)]

I will speak about the impact of the Government’s changes to the energy profits levy on people and businesses in my constituency, and on the UK as a whole, in terms of the energy security the Government are meant to ensure and the Government’s ever-more ambitious decarbonisation targets, which are being put at risk.

The Chancellor’s decision to increase the EPL rate to 38% and extend it to 2030, while also removing investment allowances, demonstrates a fundamental misunderstanding of our energy sector—indeed, the global energy sector—and the communities here that depend on it. According to Aberdeen and Grampian chamber of commerce, 100,000 energy-related jobs across the UK, but disproportionately in Aberdeen and Aberdeenshire, are being put at risk because of the changes. The OBR’s figures project that capital expenditure will fall by 26%, with oil production down 6.3% and gas production down 9.2%. For businesses across my constituency, that means fewer contracts, reduced investment and diminishing opportunities. Or to put it another way: fewer jobs, fewer prospects and more redundancies.

What is incomprehensible about the changes to the EPL is that they make no economic sense. Studies by Offshore Energies UK show that the changes will cost the Treasury £12 billion in lost tax revenue—£12 billion. If the Chancellor is so convinced that she is in a hole, maybe not digging deeper would be a good idea. The OEUK put that down to a rapid decline in production due to under-investment. While we are still going to use oil and gas for years to come, the Government are therefore choosing to take it from overseas producers where there are low environmental credentials and worse employment standards, rather than from the UK where we will be able to increase employment, secure employment, help our tax revenues and secure our economic growth both locally and nationally.

Labour’s changes in the Budget will see a wholly punitive regime, with the effective tax rate being 78% on oil and gas companies—the highest of any comparable off-sea mature basin. What other industry in the UK would be expected to deliver something as fundamental as our heating, lighting or transport fuel—indeed, energy to ensure the NHS can operate and schools can run—while also being taxed to such an extent that the Government are driving away investment in a sector so crucial to our national security?

What is particularly concerning about the EPL is the impact on home-grown energy businesses. These are not global multinationals that are often used as examples of the energy giants who make massive profits; companies that can and do buffer the impacts of EPL by increasing their overseas investments and reducing their investments in the North sea. Instead, this policy hits hardest the companies that have emerged and grown out of north-east Scotland, employing local people, supporting local supply chains and helping our local economies.

[Dr Arthur]

I thank the hon. Lady for giving way. In January 2023 the Conservative Chancellor increased the energy profit levy by 10%, from 25% to 35%. What was the impact of that change on North sea jobs and the economy?

[Harriet Cross]

I thank the hon. Gentleman for his question. We must remember that investment allowances have now been reduced and taken away. Increasing the EPL by a further 3% while decreasing investment allowances makes the North sea a really difficult place to invest in.

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[Jerome Mayhew]

My hon. Friend is absolutely right, and there is a point worth making here. Since covid, the private sector has improved productivity by about 6%. Productivity in the public sector has yet to improve, although before the general election it was starting to do that.

[Dr Arthur]

Will the hon. Gentleman give way?

[Jerome Mayhew]

I will not. I want to make some progress because I have been quite generous in giving way.

The OBR says that more than 50,000 jobs will be actively lost as a direct result of the decisions Members on the Labour Benches are about to take. I think that is an underestimate. I have been talking to businesses in my constituency of Broadland and Fakenham over the past few weeks and, as a former entrepreneur, I have been taken aback by quite how badly the tax and spend decisions of the Labour party have gone down with my small and medium-sized employers. Their accounts to me suggest that those choices are affecting their decisions on employment, and particularly on employing young people.

One employer said to me just two weeks ago that 18-year-olds are harder to employ than, say, 25 or 26-year-olds because overall more of them will fail in their job as they get used to the working environment. Employing 18-year-olds used to be worthwhile because the national minimum wage was lower and national insurance contributions did not have to be paid on the first £9,200 of their employment. That advantage has been removed and it is now disproportionately more expensive to employ an 18-year-old than older members of staff. That is a real-life case, where the employer told me they will stop employing young people in their business. Is that really what Labour Members wanted to achieve? That is what is happening already.

[Dr Arthur]

I am not quite clear what the hon. Gentleman is saying. Is he advising businesses in his constituency not to employ 18-year-olds, or is he telling 18-year-olds in his constituency that he wants them to be paid less?

[Jerome Mayhew]

I am not telling anyone anything; I am reporting what businesses are telling me. As a direct consequence of the actions of the Members on the Labour Benches, young people are not being employed who otherwise would have been. The OBR says that will lead to more than 50,000 jobs being lost. Time will tell, but I think that is an underestimate.

We have a reduction in recruitment, a reduction in the employment of young staff, a reduction in investment and, as a result, we will have a reduction in growth over the course of the forecast period. But worse than that, we will have a reduction in living standards. This cost of living crisis, which has now been caused by Labour, will reduce living standards by 1.25% by 2029. That reduction is a direct result of the Budget, so if Labour Members vote for this Bill, they will be voting for increasing the cost of living crisis by 1.25%.

None the less, we have seen some increases: debt costs are increasing; inflation is increasing, which will exacerbate the cost of living crisis; and mortgage costs are increasing.

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[Josh Simons]

I absolutely agree with my hon. Friend that those who kept this nation going, who kept teaching our children and who kept looking after those who were sick and dying deserve every penny of the pay rise that this Government awarded them.

Since the subject of the pandemic has come up, I would add that the moral credibility of Conservative Members to ever use the sacrifices that our nation made during the covid pandemic as a rebuttal to anything that this Government do was lost the moment the Prime Minister told the nation to stay at home while he invited his colleagues to a booze-up in No. 10 Downing Street.

[Dr Arthur]

My hon. Friend mentioned partygate, but it goes far beyond that. We have to remember that the dodgy contracts that went to mates and donors brought our country into utter disrepute. In this Finance Bill debate, does he recognise the financial impact of that on the country?

[Madam Deputy Speaker (Judith Cummins)]

Order. I once again remind Members that interventions should be on what is in front of us: the Second Reading of the Finance Bill.

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[Adrian Ramsay]

Perhaps the right hon. Gentleman would let me make a little more progress first, please.

A wealth tax would go a long way towards funding the public services that our economy relies on and to delivering nature and climate-friendly policies that will benefit us all. For example, by maintaining the winter fuel allowance for pensioners, while investing in the roll-out of the street-by-street insulation programme, we could bring down household bills and carbon emissions and at the same time support the most vulnerable households with energy bills over the winter months, preventing hundreds of avoidable deaths. There are also nature-based solutions that would help to protect against the flooding chaos and misery caused, for example, by Storm Bert recently. Preparedness or adaptation is often neglected when it comes to climate action, yet this week has demonstrated what a difference it can make.

A wealth tax could see charities and not-for-profit health and social care providers, for example, exempted from the planned increases in national insurance contributions for employers, in recognition of the significant work they do in our communities and the significant further strain that this planned change will put them under. As Community Action Suffolk has warned, this financial challenge may be a step too far for some organisations that

“deliver vital services keeping Suffolk residents safe and well”,

and reduce pressure on other public sector systems, including the NHS.

The Government have taken, or have sought to take, some steps towards taxing wealth in addressing the real problem of very wealthy people investing in farmland to avoid paying inheritance tax. However, the way in which they have gone about doing so is resulting in huge problems. It is clumsy because it is impacting on small farms that may, on paper, have assets worth several million, but if the farmer is not actually earning any income, or very little, they never actually see the benefit of that.

The Exchequer Secretary is back in the Chamber, and I would ask him whether, in considering the agricultural property relief—I know it is planned for a further year’s Budget, so there is time for the Government to look at this—he will look at the work of tax analyst Dan Neidle. Dan Neidle has highlighted that the Government’s own intentions of rightly clamping down on tax avoidance will not be met under the current plans, which will impact far more small, ordinary farms than the Government have admitted. His proposals include an alternative suggestion for meeting the Government’s stated aim of clamping down on tax avoidance, not affecting ordinary farmers.

[Dr Arthur]

Too often we find that the Greens talk a good game, but when it comes to making decisions, whether on pylons or inheritance tax, they begin to get a little bit nervous, so I would be interested to know the hon. Gentleman’s view. While he may have concerns about the threshold that has been set for inheritance tax for farms, where does he think it should be set?

[Adrian Ramsay]

First, I have welcomed the measures in this Budget on non-doms and capital gains tax, and I have argued for the Government to go much further and be much bolder with a genuine wealth tax on the very richest. I am very happy to set out the measures I want, which are bolder than the Government’s, to raise capital. On farms, as I say, I would urge the hon. Member and the Minister to look at the work of people such as Dan Neidle, which suggests ways in which the Government could better achieve their own stated aim of rightly preventing people who often have no interest in farming from investing in farmland in order to avoid inheritance tax.

I spoke to many farmers last week, as I am sure did Members across the Chamber, and those with ordinary farms in my constituency told me that typical Suffolk farms of 320 acres may be worth £3 million to £5 million on paper, but if they are always in the family—if they are never sold and those farmers are earning very little income—they are not realising the benefit of that. The farmers I spoke to were extremely distressed about how much pressure they are under for generating very little income, with all the work they do and want to do for our natural environment. We need to look at the detail of what is being proposed, while welcoming the main aim of clamping down on tax avoidance that the Government are setting out.

I make these points conscious that the Government chose to table an income tax charge motion on Budget day, thereby restricting scope for amendments to the Bill today. I wish to put on record my disappointment at that decision, because an “amendment of the law” motion would have demonstrated a commitment to a much broader debate, greater scrutiny, and a healthy willingness to engage with alterative views. I expected better on that, as I know did my constituents. Although I will seek to amend the Bill to take account of the compelling case for a wealth tax, the scope for doing so has been deliberately and unnecessarily constrained by the Government in what Ruth Fox of the Hansard Society called a decision to prioritise

“ministerial control and convenience over robust parliamentary scrutiny.”

Before concluding my remarks, I wish to mention one other aspect of the Bill that relates to the urgent climate action we need to take. That must be about scaling up renewables, but it is also about the transition away from fossil fuels. Hidden in the Bill and the Budget is the Government’s intension to subsidise carbon capture and storage—a fig leaf for new fossil fuel projects—and failing to end the obscene subsidies, including tax reliefs, that are handed out to the oil and gas sector. I hope to pick that up further, and for it to get more scrutiny as the Bill progresses.

Fiscal Rules

Scott Arthur Excerpts

Monday 28th October 2024 Commons Chamber

[Darren Jones]

I share my hon. Friend’s commitment to wanting to tackle child poverty in this country—this party had a proud record on that when we were in government previously. That is why we have set up the child poverty taskforce, which reported last week, and our ambition is to reduce child poverty over the course of this Parliament. We will set out further measures in the Budget on Wednesday on how we intend to deliver that.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

I thank the Minister for his statement. Residents and businesses in my constituency absolutely share our ambition to get the country back on track, and acknowledge that the mission-led focus of the Government and the fiscal rules are at the core of that. They contrast that with 14 years of drift under the Conservatives, punctuated only by 49 days of utter chaos. However, residents and businesses in my area want to be reassured that they can be confident about our level of ambition, so will the Minister update us on how investors are responding to our focus and the maturity that we bring to the debate around the economy?

[Darren Jones]

I point my hon. Friend to our very successful international investment summit only a couple of weeks ago, when it was very clear from investors that bringing stability back to our politics and our economy has been long wanted. That is why we were able to commit to £63 billion of investment in the country at the summit, followed by another £10 billion of investment announced only a few days after. We intend to raise much more to invest in this country and to bring growth back to the economy.