Income tax (charge)

Wendy Chamberlain Excerpts

Thursday 31st October 2024 Commons Chamber

[Sarah Olney]

I am glad the hon. Gentleman has raised that point. I refer him to our general election manifesto in which, as I have already said, we set out a range of tax-raising measures, including reversing the Conservatives’ tax cuts on big banks and taxing the social media giants. There are plenty of ways that the Government could have raised taxes more fairly than by placing additional burden on small businesses, which will be the engine of economic growth.

Brexit is another reason why our economy is not growing in the way it should. I urge the Government to acknowledge the seriousness of yesterday’s report from the OBR outlining the continual damage that Brexit red tape causes UK businesses, and the OBR finding that weak growth of trading, exacerbated by Brexit, will reduce the overall trade intensity of the UK economy by 15% in the long term. We understand that rebuilding our relationship with Europe is a gradual process. However, we are disappointed that the Government have ruled out joining the single market in the future, even when relationships improve. We urge them to consider the breadth of benefits that a strengthened trading relationship with Europe would bring. The Liberal Democrats want to forge a new partnership with our European neighbours —built on co-operation, not confrontation—and to move to a new comprehensive agreement.

[Wendy Chamberlain (North East Fife) (LD)]

Does my hon. Friend agree that, although the new Government say they want to reset their relationship with Europe, if the No. 1 thing on the European Union’s mind is a youth mobility scheme that the Government are ruling out, they are not going to get very far?

[Sarah Olney]

I am grateful to my hon. Friend for making that point, and she is absolutely right. The first thing we should be doing is negotiating a youth mobility scheme. We owe it to our young people, who are struggling more than most in the current economic environment.

The mismanagement of our economy by the outgoing Conservative Government has left deep challenges, and we understand that undoing that damage will not be easy. Nevertheless, it is not right for the consequences of these decisions and for this burden to be carried by some of the most vulnerable in our society. In July, I urged the Chancellor to remove the two-child limit on social security payments in her first Budget, and we are disappointed that this did not happen. No child should grow up without adequate food, a warm home or security for their future. Currently, 1.6 million children are affected by the two-child benefit cap. Parents subject to these limitations have less available income for childcare costs, and therefore experience barriers to employment. The Liberal Democrats believe that removing this cap is the most cost-effective way of immediately lifting children out of poverty and getting more parents back into the workforce.

I and my Liberal Democrat colleagues have also listened to our constituents and heard from countless pensioners who are worried about how they will afford their energy bills this winter. Since the cut to the winter fuel payments was announced, I have been inundated with expressions of local people’s disappointment at this decision. We will continue to urge the Government to give their full support to measures to boost the uptake of pension credit, and to ensure that all those eligible for pension credit claim both the benefit itself and the winter fuel payments.

For years, the previous Government failed to keep our communities safe from crime. It is vital that the new Government urgently restore the proper community policing that local people deserve. I ask the Government to clarify how and when the Chancellor will fund the thousands of new neighbourhood officers that her Government have promised. The Metropolitan Police Service has drawn on its financial reserves, slashed spending and sold off assets. During the election, our constituencies were promised more community police officers, but the Met has already made cuts and savings of over £1 billion, and next year it is facing a funding gap of over £450 million.

The Liberal Democrats are pleased to see the Chancellor’s goody bag of infrastructure projects, yet I personally was disappointed that this did not extend to funding for Hammersmith bridge. Some 22,000 vehicles a day used to cross the bridge, and those cars are now causing gridlocked traffic throughout my constituency in Mortlake, East Sheen and Barnes. It will cost £250 million to fix Hammersmith bridge, a sum no local authority can afford to pay, so I hope the Government will consider what more they can do to assist with the bridge’s reopening.

We all agree that we need economic growth and a stable economy after the chaos caused by the last Government. We know that this dire economic situation requires tough decisions. I welcome many of the steps that the Chancellor announced yesterday, but the Government must ensure that this does not come at the expense of the most vulnerable. I ask the Government to set out a timeline for the delivery of their proposals for investment, and I urge them to act with the urgency required to ensure that people can access the services they need when they need them. The cost of living crisis will not be solved by hitting families, pensioners, family farms and struggling small businesses, and our economy will not grow strongly again unless we repair our broken relationship with Europe.

--- Later in debate ---

[Wendy Chamberlain (North East Fife) (LD)]

One thing that we always feel after a Budget is a sense of relief, because we at least know that we are going to get some answers. It feels that when we are talking, campaigning and raising issues, we are always told to wait for the Budget. I was additionally relieved yesterday because my son managed to pass his driving test theory. [Hon. Members: “Hear, hear.”] Thank you.

I do not think the Government need any help in talking about the economic legacy left by the previous Government, but we do have to acknowledge that the funding structures put in place by the previous Government have created a legacy, as well as expectations. I want to talk about those that most directly impact North East Fife, starting with infrastructure funding.

I was pleased to hear the city deal announcement in relation to Argyll and Bute, given that I have an Argyllshire father, but I want to highlight the opportunities within existing city deals to add value and to make up some of the increased costs we have seen in recent years. The town of Newburgh in North East Fife has been cut off from the railway for almost 70 years. It has a line running through it that transports 38 trains a day and for the last 13 years there has been a campaign to rebuild a train station and reconnect it to the line. That makes sense from a number of perspectives: a train station takes cars off the road; it allows investment into the town; it can bring tourists to places such as the Lindores Abbey distillery; and it shortens journey times for those travelling beyond for NHS or other treatments. However, the only mention of railway infrastructure is in relation to the city region sustainable transport settlements, which are for England only. I acknowledge that transport is devolved, but there are ways in which the UK Government could look to work with the Scottish Government in order to help those communities where additional funding could make a difference.

The other element of transport infrastructure is Access for All, which is a UK scheme although the Scottish Government play a part in determining which stations receive support. I want to make an additional call for funding for Leuchars station, which serves St Andrews—although it is one of the best-known parts of my constituency, it does not have a station. It sometimes feels that we have fallen into the cracks between Westminster and Holyrood on that. On disability and on Access for All, we need to do more at all levels to ensure that we deliver the funding.

Returning to the impact of the different funds and schemes that were put in place post following our departure from the EU, and the need to replace EU structural funding, I want to touch on the community ownership fund and the shared prosperity fund. I and other Fife MPs—I see two of them in their places—recently met Fife council to talk about the future of the shared prosperity fund, which is due to end in March 2025. I am pleased by the commitment to continue it for another year, although we need to move away from year-to-year funding. I am sure we all meet third-sector organisations and others who talk about the uncertainty that short-term funding brings to the services that they provide. We also have to acknowledge that the Budget— the relevant passage is very short—will mean that Fife council, for example, will see a cut of about a third in shared prosperity funding, which has delivered programmes such as Kingdom Works, an employability service that has supported over 8,000 people. The Government said in the Budget that they want to reform funding, and I urge them to do so quickly so that we get certainty.

The Liberal Democrats have talked a lot about health and social care. Others have spoken about the fact that we need to focus on social care, because without fixing it, we will not fix the NHS. Again, the NHS is devolved in Scotland. I welcome the significant increase in funding for Scotland; it is now over to the SNP-led Scottish Government to deliver on that. I am pleased, too, that we will see support for public sector organisations in relation to the national insurance increase. However, there is no doubt that the NHS in Scotland is in a dire state. In Fife, there is no NHS dentist currently taking patients, and in my constituency we are seeing further cuts and closures in dental services.

The other thing that I want to say about what I think the Scottish Government should be doing relates to the business rates changes that the UK Government have brought forward. Let me quote one of my constituents, who was reported in today’s Courier newspaper saying about rates relief:

“We don’t have the cliff edge in Scotland. We’ve been paying full rates ever since last summer.”

I accept that that potentially is not covered by the block grant, but given that the whole UK is a tourism destination, the Scottish Government need to look at how they best support hospitality and tourism, because there is a real difference between what is happening in other parts of the UK and what is happening in Scotland.

I should declare an interest at this point: I am chair of the all-party parliamentary group for Scotch whisky and worked for Diageo for four years before my election. At the start of the debate, the Chancellor of the Duchy of Lancaster talked about choices. For me, the other aspect of choices is managing expectations. That is where the real issues that I have with the Budget come to the fore.

Mark Kent, the chief executive of the Scotch Whisky Association, said in The Scotsman today that the decision to increase rates on Scotch whisky

“not only flies in the face of the commitment to back the industry as a core element of the government’s ‘Brand Scotland’ concept, it also serves no economic purpose.”

The Conservatives’ 10.1% increase in alcohol duty was deeply damaging to the whisky industry. In the 12 months since it came into force, revenues from the tax have actually fallen by £298 million, so it is clearly not delivering increased revenue to the Treasury. What we saw from the Government yesterday will continue to hurt the industry, which is so important for Scotland. The Chancellor offered support to breweries through the cut in duty on draught products, but that will do nothing to support responsible drinking. Taxing based on strength of alcohol is not the right way to go about it; it is about alcohol being alcohol and how it is consumed. I might not represent the most whisky distilleries in Scotland by number, but I probably do by volume, with the Diageo distillery and bottling plant in Leven.

Returning to the point about promises and expectations, we come to farming and the issue of the inheritance tax changes. The National Farmers Union Scotland said on its blog today that it is pleased to see the roll-over of the agricultural funding, although that has gone into the Scottish Government’s block grant, so, again, it is over to the Scottish Government to ensure that they deliver for farmers. We need farmers for our food production and security, for our climate and nature recovery, which is more vital than ever, and for rural growth and support.

[Dr Roz Savage (South Cotswolds) (LD)]

The Budget is subtitled “Fixing the foundations” but I was saddened that it contained no mention of the most important foundation of everything in Britain: our natural world. Does she agree that more resources need to be dedicated to the restoration of nature and to supporting our farmers, both of which are crucial to food security?

[Wendy Chamberlain]

I absolutely agree. Whenever I have that discussion with farmers, they want to support climate and nature—they want to do the right thing—but they need support to do so.

As I say, the overall funding envelope for farmers is for the Scottish Government to deliver, and I am confident that my Scottish Liberal Democrat colleagues in Holyrood will be making the case for them to do so. In his intervention on the Chair of the Public Accounts Committee, the hon. Member for Leeds Central and Headingley (Alex Sobel) talked about how the number of farms affected will be small, but the issue is that the Government promised last year not to do anything in relation to agricultural property relief, yet that is what is happening. I am already being contacted by local farmers who fear that this will be the death of their and other families’ farms. It is important that we remember that it is not just about those farmers; it is also about the infrastructure and the wider communities that they support, such as vets and other facilities.

We should not forget tenant farmers, either, because they are some of our most vulnerable. I know that because I worked with some of them prior to the election in relation to the roll-out of universal credit. That system is not fit for purpose for farmers. The Work and Pensions Secretary is no longer in her place, but I will be coming back to her on that issue. We need to ensure that we provide that support.

Until very recently, I wore multiple hats, because I had far fewer colleagues. Now that I have more of them, I have given up my Department for Work and Pensions hat, but I welcome the changes to carer’s allowance. I would like some clarity about the carer support payment in Scotland, which is a devolved benefit that is currently being rolled out. I have not seen it in the notes that I have looked at so far, but perhaps it will become clear in the coming days whether that is included in the block grant that is coming to Scotland, or whether there will be additional consequentials.

To conclude, there are things in this Budget that I absolutely welcome, but, as always, there are unintended consequences, on which I hope the Government will listen to us.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call Gregor Poynton to make his maiden speech.