Rural Pubs: Fiscal Support

Wera Hobhouse Excerpts

Wednesday 17th June 2026 Westminster Hall

[Wera Hobhouse (in the Chair)]

Order. Can I make sure that we all understand that lots of Members want to speak? If you start debating with the Minister now, we will lose time. Please respect that, and I encourage you to come to the end of your speech.

[Saqib Bhatti]

I will speed up, Mrs Hobhouse, but I encourage the Minister to wait until I have finished. The litany of regulation, such as in the Employment Rights Act 2025, and the taxes that the Government have raised have had a huge impact. Labour is waging war on our rural pubs. Those publicans can feel it, and we can all see it.

I know that we are all looking forward to England’s first world cup game against Croatia this evening, and along with all Members, I wish them the very best. We have some of the highest alcohol duties on a pint of beer. I do not want to broach the subject of the EU but, while I am not a natural fan of closer alignment, it seems that Europe is in a better place on this, so I ask the Minister to comment on that.

In conclusion, Madam Deputy Speaker—[Interruption.] Sorry, Mrs Hobhouse; hopefully you will be Madam Deputy Speaker one day. In conclusion, I say to the Minister that the litany of measures taken by the Government have affected Saturday jobs and had a huge impact on young people. He has shown a lot of passion, but I encourage him to show bravery—and perhaps England fans will chant his name tonight.

[Several hon. Members rose—]

[Wera Hobhouse (in the Chair)]

I encourage everybody who wants to speak to bob. I intend to call the Front Benchers at about 3.28 pm, which gives everybody else an informal time limit of four minutes. If Members do not stick to that, I will have to put on a formal, and shorter, limit, so please respect each other. I thank Saqib Bhatti for sticking very nicely to his time limit.

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[Brian Mathew (Melksham and Devizes) (LD)]

It is a pleasure to serve under your chairship, Mrs Hobhouse. I thank the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this valuable debate.

Rural pubs and breweries across the country are suffering under an excessive tax burden that is stifling investment and employment opportunities. Melksham and Devizes is home to Wadworth, a fantastic local company, which has been brewing beer in Devizes since 1875. In a recent meeting with Toby, Wadworth’s managing director, the severity of the financial situation facing the hospitality industry was made clear. The reduction of the threshold for employer national insurance contributions will cost £750,000 a year across the business, which includes 129 tenanted pubs.

Yesterday, my team spoke to the landlady of one such pub, Sarah of the Three Magpies in Seend, who said that, because of the increase in the minimum wage, rising national insurance contributions and higher training costs, she had to cut back on the number of local youngsters that the pub employs during the busy summer season. To put that in perspective, last year there were 20 members of staff at the Three Magpies over the summer; this year there will be just nine. That is 11 young people missing out on an invaluable opportunity to gain the skills, knowledge and experience to set them up for future careers.

We all saw the Milburn review’s stark warning that one in six young people could be classed as NEET within five years if no action is taken. We urgently need to review the impact of the burden on the hospitality industry on youth employment and ensure that we are not taxing future generations out of employment opportunities.

In addition to the national insurance challenges, UK alcohol duties are the second highest in Europe, pushing up prices for consumers and reducing profit margins for landlords. The Treasury’s current trajectory will suffocate Britain’s proud pub culture, with more choosing to purchase alcohol from the supermarket and drink it at home. That poses increased health risks, because at-home consumption lacks the natural boundaries of a pub setting.

At a time when the cost of utilities has skyrocketed, the Government should surely be doing far more to support the UK hospitality industry, not adding to its woes. Both Toby and Sarah told us that one of the simplest ways to support our pubs would be a VAT reduction for the industry. It would free up capital to invest in either new staff or the business itself. Similarly, duty on alcohol should be reviewed, with the duty paid on a UK pint amounting to 10 times the amount paid in Germany.

We have to recognise the important role that rural pubs play. Socially, they are the beating heart of villages and help to regulate consumption, keeping evenings merry. Economically, they can be engines of growth for rural communities, providing a springboard into employment for many young people and investing in the local area. It is time the Treasury recognised that fact and significantly increased its offering of support to ensure that we can all continue to enjoy a pint down the local.

[Wera Hobhouse (in the Chair)]

How about that for timekeeping? I thank every Member for staying so disciplined within the time limit.

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[James Wild (North West Norfolk) (Con)]

I am grateful to my hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) for securing this timely and important debate. I will certainly take him up on that pub crawl offer in the recess. It is fitting that this debate takes place on the day of the British Beer and Pub Association’s annual reception, when we will have the opportunity to speak directly to people in the sector and, of course, about the small matter of the England game later.

The BBPA has set out the challenges. For every £3 spent in a pub, £1 goes straight to the Exchequer. As hon. Members have said, rural pubs are at the heart of our villages as community hubs and gathering places. They play an important role in charity, as my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) set out. That is certainly the case in my constituency, where more than 5,000 jobs are supported by the pubs and hospitality sector. Sadly, thanks to the Chancellor’s choices, rural pubs face ever-growing pressures. When there are economic headwinds, although some are obviously beyond the Government’s control, the Government should act where they can to support our pubs.

That is what the previous Government did when we introduced a new strength-based duty system, including two new reliefs: draught beer duty relief, for which my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) campaigned avidly, and small producer relief. Our support went further. We froze alcohol duty rates in 2023, which we extended in 2024. We also provided a 75% business rates relief scheme for pubs and hospitality businesses, which was a lifeline for thousands of rural pubs that would otherwise have faced higher bills they could not meet.

That record stands in stark contrast to this Government’s. Since the Chancellor’s first Budget in 2024, the Government have added layer upon layer of costs to a sector that operates on tight margins, where a single bad month can put a rural pub out of business. One of the Chancellor’s first decisions on business rates was to halve that 75% relief, increasing the average pub’s business rates bill from £4,000 to £9,500.

Next came the removal of the 40% relief, and then the revaluation. Some pubs are now seeing their rateable value double or triple, with the BBPA warning that 5,000 of the smallest pubs are now facing business rates for the first time. What was the Government’s response? A partial U-turn of a 15% relief after a significant backlash. However, only 6% of hospitality and leisure businesses will benefit, and even then, the average pub will see its rates increase by £5,300 under Labour.

Our commitment is different. The Conservatives would scrap business rates entirely for pubs up to the £110,000 cap, benefiting 250,000 businesses overall. Our cheap energy plan would reduce costs, particularly for rural pubs, and we would not proceed with the regulatory costs in the unemployment Bill, which the Government seem so keen on. Does the Minister really believe that a 15% reduction on a hike is sufficient to help these rural pubs?

Sadly, business rates are only the start. The Government also cut the employer national insurance threshold to £5,000 and hiked the rate to 15%. I know from conversations with landlords in small rural pubs employing four or five people that the extra cost is not a rounding error; it means fewer people employed in those pubs. In February, alcohol duty was increased by the retail prices index—a £400 million cost to the sector, passed on to consumers—which the chief executive of UKHospitality said would be the final straw for some pubs.

Then there is extended producer responsibility. The BBPA has warned that the pub sector will face a hit of about £50 million because glass bottles sold in venues will be considered household waste, even though pubs already pay to have their waste commercially recycled. What is the Minister’s response to that double charging and to the rules that do not reflect how glass bottles in pubs are collected by the vast majority of premises? Taken together, those additional costs create the cumulative impact that my right hon. Friend the Member for Salisbury (John Glen) referred to, which is what matters.

Rural communities feel pub closures differently. A pub closing in a city can be replaced by one around the corner, but when a pub closes in a Norfolk village, it can be lost forever. I am grateful that the Rose and Crown in Harpley, which closed, has been reopened, but that is one positive story. There are other, less positive ones: in the first quarter of this year, 161 pubs closed—a 26% increase on the year before—and we are now on track for 500 pubs to close in the rest of this year.

A survey of 20,000 hospitality businesses—the people taking the risks; the people employing other people—tells a story: 64% plan to cut jobs and 42% will reduce their trading hours. UKHospitality and the BBPA said it together:

“Hospitality’s tax burden….is suffocating the sector…more lost jobs, less investment and business closures.”

Who is paying the heaviest price? It is young people. Youth unemployment is now at 16%. For generations, a job at the local was their first job—the first foot on the ladder.

As Conservatives, we want to see those opportunities given to young people who are out of work, instead of us rejoining the single market and importing people to come and take those jobs. The Government are kicking that ladder away. National insurance hikes, business rates hikes, duty rises, EPR fees, above inflation wage rises and a potential lowering of the drink drive limit, which particularly affects rural pubs—I could go on. With this Buckaroo effect, the Government are presiding over the accelerated loss of a British institution, which is felt particularly acutely in our rural communities.

As a first step, I urge the Minister to join the all-party parliamentary beer group—he will get the same fine tie that I am wearing if he does—where he will hear about these concerns. He will hear how rising costs mean that a third of venues are running at a loss and how the Government need to change course. When we were in government, we proved that targeted support works. Rather than load on more costs, the Government should support pubs with the decisive fiscal relief that the Conservatives have committed to.

[Wera Hobhouse (in the Chair)]

Before I call the Minister, I remind him to leave a couple of minutes at the end for the Member in charge to wind up.

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[Ben Lake (Ceredigion Preseli) (PC)]

Building on what the Minister said about employment costs, we have heard about the pressures that many hospitality businesses, particularly pubs, are feeling following the reduction to the threshold on the increase of the rates. As part of the work that the Minister is undertaking to review things in the round, could he focus on the possibility of increasing the employment allowance for smaller businesses in the sector? That could be a very welcome relief for them.

[Wera Hobhouse (in the Chair)]

Minister, please watch the time.

[Dan Tomlinson]

Thank you, Mrs Hobhouse. We continue to look at the impact of tax policies across sectors. The Chancellor and I will keep tax policy under review in the run-up to the Budget later this year. Let me make a couple more points before wrapping up in sufficient time for the hon. Member for Meriden and Solihull East to conclude.

We want to make sure that we cut the stifling red tape that is holding our pubs back across the country. At the Budget, we announced the first iteration of the national licensing policy framework. That does not sound very exciting, but it is very interesting. I have been pushing colleagues across Government on it, so that we can provide more clarity in our licensing framework to give pubs that want to open in certain ways or do certain things the flexibility to do so, to support their growth and wider economic growth.

There is the world cup game tonight, and pubs across England and Wales can soon benefit from extensions to licensing hours, as we are letting pubs stay open later for home nation games in the knockout stages. It is encouraging that Scotland did well the other day; hopefully, both teams will make it through to the knockout stages.

We are also backing pavement pints, with a commitment to make it easier for pubs to serve food and drink outside by cutting unnecessary bureaucracy. At present, many businesses are forced to reapply repeatedly for pavement licences to continue serving customers outdoors. That process can cost up to £350 each time, creating an avoidable and costly burden for businesses. I hope that the reforms we have announced will bring that to an end. Finally, in January, the Chancellor announced a £10 million package of funding for hospitality support over three years, up from £1.5 million for one year announced last April.

We understand the need to make sure that we do all we can to support pubs and our hospitality sector, particularly in vital rural communities. I thank Members for their contributions, which I will take back with me to the Treasury in the weeks and, I should hope, months to come.

[Wera Hobhouse (in the Chair)]

After this debate, we all feel very thirsty for an ice-cold lemonade.

Oral Answers to Questions

Wera Hobhouse Excerpts

Tuesday 10th March 2026 Commons Chamber

[Torsten Bell]

I am glad to hear that my hon. Friend is organising events to drive pension credit take-up, as he did last year. I know that Members on both sides of the House will be doing that throughout the year.

On my hon. Friend’s question about the failure of Safe Hands, he is a powerful advocate for his constituents. He will know that the Serious Fraud Office has recently announced that two individuals have been charged in relation to the case, and there are live criminal proceedings ongoing, but I know that my hon. and learned Friend the Economic Secretary, who is responsible for this matter, is always happy to meet him.

[Wera Hobhouse (Bath) (LD)]

Nearly half a million pensioners living abroad will miss out on the state pension increase because we do not have reciprocal agreements with countries such as Canada and Australia. Several former Bath constituents have raised this issue with me. What discussions has the Minister had with departmental colleagues to rectify this injustice?

[Torsten Bell]

The hon. Member will know that it is a long-standing Government policy that the uprating of pensions is prioritised for residents in the UK, not least because the uprating levels reflect the path of earnings and prices in the UK. She will know that that was the Government’s policy under the Liberal Democrat-Conservative coalition Government, and it remains the case today.

Women’s Safety: Walking, Wheeling, Cycling and Running

Wera Hobhouse Excerpts

Tuesday 27th January 2026 Westminster Hall

[Wera Hobhouse (Bath) (LD)]

It is a pleasure to serve with you in the Chair, Ms Jardine.

I am a cyclist. I love cycling; I have always cycled, ever since I cycled to school as a six-year-old. I have cycled throughout my life, including as a university student, and I still cycle today. I see cycling as a means of transport. For me, it is not a sporting activity; it is very much my choice of transport.

However, recently in Bath I was about to cross a road, turning to the right, and I stopped, and the driver next to me pulled down his window and commented on my skirt. Me? I mean—I am a 65-year-old woman, and he was commenting on my skirt. I was so shocked that I wanted to get away, and then I nearly went into a car—I made that mistake because I was so shocked. Cycling is not a very safe mode of transport anyway, but being harassed makes it even less safe.

Women want to cycle, yet today only one in four cycling trips are made by women. That is not because women do not want to cycle. Almost 60% of women limit how much they cycle because of safety concerns. As we have heard today, one in five women have stopped cycling altogether after feeling intimidated by drivers, just as I felt intimidated by that driver in Bath. This is clearly more than just a personal issue; it is a public policy issue.

We must build the infrastructure that makes women feel safe, visible and supported on the road. Too often, women are forced to choose between two unsafe options: dark, isolated roads, or busy roads without protection. If we had built well-lit, segregated and visible routes, especially for evening and night-time travel, far more women would feel sufficiently safe and confident to cycle.

Cycling UK’s “My ride. Our right.” campaign calls for women’s safety to be embedded in all transport and safety strategies, including the upcoming cycling and walking investment strategy, and I echo that call today. The new cycling and walking strategy must include measurable targets that improve women’s safety, including clear goals to increase the proportion of cycling trips made by women. The draft strategy already recognises that investment in well-lit, safe and high-quality walking and cycling routes increases people’s feelings of personal safety. Of course, that includes the personal safety of men and boys, and of all children, but it is particularly important for women.

Such improvements support the Government’s work to tackle violence against women and girls. Cycling UK urges the Government and Active Travel England to update design guidance LTN 1/20, strengthening standards for lighting and night-time safety, and introducing gender-responsive safety audits for all new active travel schemes. I very much hope to see those measures in the final cycling and walking investment strategy.

Right now, the UK lags behind many of our European neighbours, and I would say that includes the number of children who are allowed to cycle at an early age to school. There are a lot of things that we can do to encourage young people at school to take up cycling; I myself became a lifelong cyclist because I started early. However, in Britain fewer than one in five people walk, wheel or cycle on an average day, compared with more than one in four people across Europe. Now is the time to change that.

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

It is a pleasure to serve under you, Ms Jardine. I thank my hon. Friend the Member for Lowestoft (Jess Asato) for introducing the debate in such a compassionate way. As a wannabe runner—I cannot claim to be a runner—on behalf of myself and also my son and daughter, who are both keen runners, I want to thank all the people who have been talking about running.

In Edinburgh the gold standard for active travel routes were our canal path and converted railway tracks. Across the city, converted railway tracks offer routes away from busy roads and are used for thousands of journeys every year. In my constituency, a national cycle route runs alongside the Water of Leith—the route that used to be the Balerno branch line—and provides a space for active travellers to enjoy a quiet and beautiful route away from traffic. I use the route regularly and feel incredibly lucky to be able to enjoy it as I travel through my constituency. It is one of the things that defines my constituency.

I said the routes were the gold standard. That is because in 2021, the brutal death of Sarah Everard so far away from Edinburgh heightened an ongoing conversation about women’s safety in public spaces. In Edinburgh, the safety of our active travel routes came to the forefront. At this point I have to thank Councillor Mandy Watt, who showed amazing leadership and quite quickly allocated around £500,000 to light some of the routes through our parks. Routes along old railway lines and canal paths that offer enjoyable, smooth, green and quiet routes during the day change in the darkness. Even with lighting, without the passive surveillance found in busier public areas, I know that women often feel unable to use those routes, or feel unsafe when they do so. You, Ms Jardine, will know that from Roseburn path in your constituency.

During the winter when it is dark, often from around 3 pm to 9 am in Edinburgh, those routes become less accessible. This has a significant impact for those who rely on them to travel to work or for leisure. The last Edinburgh walking and cycling index showed a 7% difference in the perception of safety between men and women, with women feeling much less safe. In many cases this prevents women from integrating active travel into their daily lives—we have heard about that from other speakers. But it also pushes women who had previously walked or cycled to stop, and that is not good for them and not good for us or our economy. It is worth pointing out that all of us want to live in a town, city or village where more people walk, run or cycle. It is a tragedy that often these investments and changes can be so controversial, because it is something we all aspire to. It is about how we do it.

Too many women face harassment. One study in Edinburgh showed that around 20% of women cyclists stop after experiencing a single event of harassment. Unsafe routes decrease women’s ability to travel easily around the city, and no doubt reduce the mental and physical benefits that come with active travel. Ensuring safe routes in busier areas through the creation of separate, well-maintained cycle lanes on roads, for example, are one way to ensure that those who feel unsafe using our canals and former railway tracks are still able to actively travel during the winter months and at night. I want to thank the InfraSisters in Edinburgh who have run a fantastic campaign over many years—I am sure you are aware of their work, Ms Jardine.

As walking and cycling routes reach the city centre, it is vital that we have the correct architecture and infrastructure to ensure women’s safety in busier areas as they travel home or to work. In a public consultation in 2023, up to 80% of women who responded stated that they had experienced harassment, abuse or violence in public spaces in Edinburgh. Some people might think 80% is an exaggeration—I did when I first read that stat—but when we speak to women we find that it is absolutely not. I was ashamed to hear some of their experiences.

[Wera Hobhouse]

Is the hon. Member not absolutely shocked at how much this behaviour is normalised, and that we accept it as normal? When my male partner’s sons do not realise what happens, we continue to normalise it. Is it not time that we stopped?

Oral Answers to Questions

Wera Hobhouse Excerpts

Tuesday 27th January 2026 Commons Chamber

[Lucy Rigby]

My hon. Friend is a tireless champion of businesses in Bassetlaw, and I wish her a happy birthday for yesterday. In the recent spending review, the Government extended the growth guarantee scheme, enabling £5 billion-worth of loans over the next four years. This will support businesses like the one she mentioned, and I would be more than happy to meet her to talk about how her constituent might access that support.

[Wera Hobhouse (Bath) (LD)]

First-of-a-kind technologies such as DRIFT Energy in Bath face serious investment challenges and difficulties in accessing grant funding from any Government Department. DRIFT is a groundbreaking renewable energy innovator that could rapidly scale and contribute to the UK’s energy independence. What are the Government doing to ensure that first-in-kind technologies in particular receive the support that they need here in the UK, rather than being forced to go abroad?

[Lucy Rigby]

The hon. Member may well know that, at the spending review, we increased the financial capacity of the British Business Bank to £25.6 billion. There are a number of ways in which the British Business Bank will support companies like the one she referred to.

Oral Answers to Questions

Wera Hobhouse Excerpts

Tuesday 9th December 2025 Commons Chamber

[Sir Julian Smith (Skipton and Ripon) (Con)]

6. What assessment she has made of the potential impact of changes to business rates on the hospitality sector.

[Wera Hobhouse (Bath) (LD)]

20. What steps she is taking through the tax system to help reduce costs for small and medium-sized businesses.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

Small and medium-sized businesses are vital to our economy and our communities, and the Government’s small business strategy, published in July this year, sets out our approach to supporting them. As temporary pandemic business rates relief ends and the new revaluation comes into effect, we are supporting the high street with £4 billion-worth of support through transitional relief and our supporting small business schemes, as well as through our long-term reforms to permanently lower the multipliers for eligible retail, hospitality and leisure properties, and support them with a significant package that will cap most of the increases this year for those who have seen large increases since the pandemic.

[Dan Tomlinson]

If I had a such a charming Member of Parliament, I would also be as happy as his constituents in Skipton. I thank him for his question. We considered the support really carefully in advance of the Budget decisions announced last month. There is a challenge in that the revaluation, which was instigated by the previous Government and is carried out independently by the Valuation Office Agency, means that some businesses have seen their values increase significantly since the pandemic. That is why the Government are putting in £4 billion of support over the coming years, with around half of that coming next year to support businesses. Many will see their increases capped at either £800 or 15%. We think that that support will provide significant help to those businesses, alongside the underlying reform we are making to rebalance the system in favour of the high street.

[Wera Hobhouse]

May I give the Minister another example in which the numbers simply do not stack up? Mr B’s independent bookshop in Bath will see its business rates bill rise by more than 70% after factoring in changes to rateable value. The changes were packaged as a move away from short-term fixes, yet vital discounts have been scrapped and replaced with less-generous support and an unclear transitional relief system. How can he justify such a stark increase in business rates? It is a challenge for Bath’s cherished bookshops—we have three—which we want to support.

[Dan Tomlinson]

It is important that we all communicate to the small businesses in our constituencies, as I was doing this weekend, that there is a difference when it comes to the increase in the rateable value. It may be that the business to which the hon. Lady refers—I like good small independent bookshops myself—has seen a large increase in its value since the pandemic, but precisely because that has happened in some cases, we are implementing a significant support package this year. That will mean that no business that has a rateable value of less than £100,000 will see an increase in its bills of more than either 15% or £800. There is a bit of a technical detail there, which I would be happy to go into with her, but the important thing is that there are significant protections on bills in place this year, even if rateable values have increased significantly since the pandemic.

Office for Budget Responsibility Forecasts

Wera Hobhouse Excerpts

Monday 1st December 2025 Commons Chamber

[James Murray]

As I set out in my earlier remarks, we will be taking forward the recommendations of the report. In particular, as my hon. Friend mentioned, we will be working with the National Cyber Security Centre to take forward the recommendation of a forensic examination of other fiscal events. The truth is that because of the early publication of the EFO last week, it has come to light from the initial analysis of the OBR that that also happened in March, but we do not yet know if it happened at previous fiscal events, including for previous Chancellors.

[Wera Hobhouse (Bath) (LD)]

While the detail of whether the Treasury was dealing with a fiscal black hole or a fiscal lack of headroom will be rather lost on most of my Bath constituents, does the Minister agree that the weeks of speculation leading up to the Budget were very damaging, particularly to businesses, and that his Department could have done more to avoid that?

[James Murray]

I recognise that there was a lot of speculation in the media in the run-up to the Budget. From the Government’s point of view, the Chancellor took a decision to set out her priorities and the challenges going into that Budget on 4 November. We set out the context around the productivity downgrade, the importance of building fiscal headroom, and the importance of cutting NHS waiting lists, cutting the cost of living and cutting Government borrowing.

Living Standards: East of England

Wera Hobhouse Excerpts

Wednesday 3rd September 2025 Westminster Hall

[Wera Hobhouse (in the Chair)]

I will call Clive Lewis to move the motion, and I will then call the Minister to respond. I remind other Members that they may make a speech only with prior permission from the Member in charge of the debate and the Minister. There will not be an opportunity for the Member in charge to wind up, as is the convention for 30-minute debates. A Liberal Democrat Member has just requested to make a speech. I am happy with that. Minister, are you happy with that as well?

[The Economic Secretary to the Treasury (Emma Reynolds)]

indicated assent.

Retail Investment

Wera Hobhouse Excerpts

Tuesday 22nd April 2025 Westminster Hall

[Callum Anderson]

As I have mentioned ad nauseam since I was elected, my mum works for Morrisons, so I know the impact that various structures of ownership can have on workers and customers. My hon. Friend is right that that is one of the many factors that we should consider as policymakers.

A £100 investment in Government gilts in 1900 would have returned around £463 by 2019. The same investment in UK equities would have yielded £35,000. Despite that, many Britons still keep the bulk of their money in cash. In the G7, only the citizens of Germany and Japan hold more of their national wealth in cash than we do. Inflation, even at modest levels, steadily eats away at its value. I believe that we must do more to help people feel confident in making smart, informed, long-term choices, and that starts with awareness, the right tools and advice, and trust.

Let us take ISAs, the most commonly known product, as an example. In the 2022-23 financial year, the latest for which official statistics are known, more than 12 million adult ISA accounts were active, yet nearly two thirds of the total value—almost £290 billion—was held in cash. That is more than £290 billion earning very little return indeed. Some major high street banks, which I will decline to name, are at the moment offering as little as 1.35% interest on cash ISAs, yet we know that inflation has consistently outpaced that rate for the past four years; indeed, it has sometimes reached double figures.

Many financial experts and advisers will rightly recommend keeping three, six or nine months of living expenses in cash savings. I know from my early career in financial inclusion charities that, for many households, possessing even £500 in emergency savings can often be out of reach. Let me be clear again: this debate is not about replacing or discouraging cash savings—far from it. It is about showing that even small investments—£10, £20 or £50 per month—can make a real difference over time.

If more people invest, our economy will be stronger in the long run. Imagine if we could shift just 10% or 20% of that £290 billion towards more productive, growth-inducing assets. That would mean more companies starting, growing and scaling right here in the United Kingdom and, therefore, more jobs, better pay and more people gaining that crucial bit of additional disposable income to invest for themselves or, perhaps just as importantly, to enjoy life with their families. That is the virtuous cycle that I believe we all agree that we need to build.

How can we—Parliament, Government, regulators and the industry itself—go about working towards that together? Ultimately, I believe that the UK would greatly benefit from a long-term retail investment strategy invested in by Parliament, Government, regulators and the industry. For the purpose of this debate, I think there are four immediate priorities.

First, we need to simplify the ISA framework and reform it to better support British investment. There are four types of ISAs, each with slightly different rules. For many, that is simply confusing and, I think, off-putting. Why not consolidate those products into a single ISA, with stocks and shares ISAs the default but, crucially, people can still hold cash if they choose?

The Government might also wish to consider reviewing the stamp duty framework on share purchases. Currently, it is cheaper for an individual investor to buy shares in Illumina than in Oxford Nanopore, in Lockheed Martin than in BAE Systems, and in Tesla than in Rolls-Royce. Is it time for us to ask ourselves whether we want to continue making it more expensive for Britons to buy British?

Finally on this point, we should ensure that ISA tax exemptions align much better with the needs of the UK economy as a whole. Today, someone can put £20,000 in a tax-free wrapper that invests in companies that create no jobs in the UK, pay nothing into our Exchequer, generate no domestic growth and contribute no intellectual property or research and development. Should we as legislators be asking ourselves whether that is a good use of taxpayer subsidy? Is it time to look again at the original PEP—personal equity plan—model introduced by Nigel Lawson in the 1980s, which required at least 50% of the ISA allowance to be directed towards UK-focused assets? That could strike a better balance between supporting investment freedoms and choice, and the national interest.

Secondly, we must boost, embed and entrench the virtues of financial education, because if people do not understand how investing works, they simply will not do it. I welcome the Government’s continued support for the Financial Conduct Authority’s review of the boundary between financial advice and guidance. It is really important that people can get timely and affordable help when making big financial decisions so that they can make the most of their money, but I think there is scope for us—for Britain—to go further.

Let us be honest: as I said in my opening remarks, kids from wealthier backgrounds are more likely than those from less wealthy families to hear about compound interest, investment portfolios and ISAs at the dinner table. That is why financial education should form a part of everyone’s life, from school right through to retirement, so that people feel confident and well informed at every stage of their life. That means recommitting ourselves to properly implementing age-appropriate financial education throughout our school system, from basic budgeting and saving at a young age, to more sophisticated learning about investment, risk and long-term planning in later school years. This is not just about economics; it is about equity and fairness.

Thirdly, we need to make it easier for citizens to engage with the companies they invest in. I believe that primarily means finishing the work of Sir Douglas Flint’s Digitisation Taskforce at pace, ending paper share certificates and creating a fully transparent modern shareholding system. However, it is also about access to information: right now, only the big top-tier institutions get first-class research; retail investors get patchy websites filled with jargon, if they get anything at all. The UK should be developing high-quality and accessible investment information, especially for those smaller UK firms that have the potential to be the Googles and Nvidias of tomorrow.

Fourthly and finally, we must fundamentally shift the British culture and mindset into individual investing. Too many of our constituents still see investing as something that other people do—something for the wealthy, or the experts, or the lucky to do. We must challenge that mistaken perception head-on. Why not launch a modern, compelling and inclusive public awareness campaign—perhaps a 21st-century version of “Tell Sid”? It should focus on real people, real lives, and real, genuine, tangible benefits that people can see in their local community. It should be visible, too, in universities, in jobcentres, in community places and in our workplaces, because this is not just a personal finance issue; it is a national opportunity.

I think that the case for retail investment is clear and I believe that this Labour Government have the chance to fuse their democratic socialism with a modern brand of democratic capitalism. By helping more people to invest in their own economy, we empower citizens, grow our companies and build a more prosperous country for everyone. I believe that capital markets can and should serve everyone, and that it is our job in this place to make that a reality.

[Wera Hobhouse (in the Chair)]

I remind Members that they should bob if they wish to be called to speak.

Oral Answers to Questions

Wera Hobhouse Excerpts

Tuesday 8th April 2025 Commons Chamber

[Wera Hobhouse (Bath) (LD)]

Ineffective energy trading with the EU is a major barrier for global investors. According to Energy UK, we are losing out on £30 billion of investment in interconnectors alone. What will the Government do to improve our energy trading with the EU to unlock this vital opportunity?

[James Murray]

The Prime Minister’s plan for change sets out our ambitious but achievable target of clean power by 2030. The clean power action plan demonstrates the significant investment requirements to reach that target, including in renewable infrastructure, and the actions that we will take to facilitate that. We have already taken action to remove the de facto ban on onshore wind in England, approved major solar projects and delivered a record-breaking renewables auction.

Oral Answers to Questions

Wera Hobhouse Excerpts

Tuesday 4th March 2025 Commons Chamber

[Rachel Reeves]

It is absolutely right that we increased and stepped up the sanctions last week. Also, under the loan agreement we made with Ukraine last week, the loan will be repaid with the profits on foreign sovereign Russian assets. Russia should pay for the damage it has done.

[Wera Hobhouse (Bath) (LD)]

My constituent is one of hundreds of people who suffered from the collapse of Collateral. While the Financial Conduct Authority has apologised to investors for failing to act faster to stop Collateral’s fraudulent activities, I am concerned that, without internal changes, the FCA will make similar mistakes again. Should there not be an investigation into the FCA’s handling of the case?

[Emma Reynolds]

I am happy to meet the hon. Lady and look at the case she mentions, because I need to get more detail.