UKPOL.CO.UK

Category: Economy

  • Peter Gibson – 2022 Speech on the Finance Bill

    Peter Gibson – 2022 Speech on the Finance Bill

    The speech made by Peter Gibson, the Conservative MP for Darlington, in the House of Commons on 28 November 2022.

    It is a pleasure to be called so early in the debate. At the outset, I want to put on record Darlington’s thanks for the £250 million that came to us during covid.

    In the autumn statement, we saw increased spending on education, health and social care; the largest ever increase in the living wage, to £10.42, putting us within pennies of our ambition to reach £10.50 in this Parliament; the triple lock guaranteed for pensioners; virtually all benefits, and the benefits cap, increased in line with inflation; and support for those struggling to meet energy costs. The autumn statement and the Bill continue our commitment to deliver for those on the lowest income.

    We all know that these are challenging times. We also know that inflation makes us all poorer. However, the challenges of inflation, energy prices and interest rates can all be tracked back to Putin’s illegal invasion of Ukraine. I know the Chancellor has had to make some difficult decisions, but I believe that he has been fair and done much to restore economic stability, while continuing to invest in vital services and infrastructure.

    Prior to being elected to this place I was an employer running a small business, and I know that businesses will warmly welcome the news in the autumn statement, particularly those on our high streets facing a much needed reduction in rateable value, and therefore a lower rates bill. That reduction would ordinarily be phased in over three years, so the fact that they will receive the benefit immediately is welcome indeed. That is something that I have been pushing for and that I was delighted to see. In addition, the current 50% discount available to hospitality and retail businesses will now be increased to a 75% reduction, with no impact on income for our local authorities. The Government really are on the side of small businesses.

    When the Chancellor comes to visit the Darlington economic campus, where my right hon. Friend the Prime Minister was working from on Friday—just as my hon. Friend the Exchequer Secretary to the Treasury did last week—I look forward to taking him to see some of our amazing local businesses, such Origins Home, Leggs Fashion and The Art Shop, and the transformation taking place in the Darlington yards thanks to investment from the towns fund.

    We all know that talent and ability are spread throughout the country, but opportunities have not been. The north-east has lagged behind for too long, under Governments of all colours, but this Government’s ambitious levelling-up agenda is already paying dividends to communities such as mine in Darlington. As such, I welcome the Chancellor’s commitment to infrastructure spending, with continued support for key infrastructure projects, and the protection of the £1.7 billion levelling-up fund. I am keeping my fingers crossed for the forthcoming announcement on levelling-up fund round 2, to which Darlington has submitted an excellent bid.

    In Darlington we are already ticking boxes on levelling up: £139 million at Bank Top station, delivering three extra platforms and improving regional connectivity; £35 million invested in our rail heritage quarter, delivering on our commitment to heritage and driving more visitors to Darlington; and £23.3 million invested in our town centre, seeing real change in the High Row yards, Northgate and Victoria Road. I could also point to investment in green technology at Cummins and investment in life sciences, so key to our vaccine success, at the Centre for Process Innovation, together with investment in Darlington College. It would be remiss of me to not mention the fantastic job opportunities afforded to local people through the creation of the northern economic campus, ensuring that people in Darlington can stay local but go far.

    Darlington said goodbye to its Labour council in 2019, ending a 28-year period of decline, and it is now going from strength to strength with the Conservatives at the helm, working hand in hand with our Tees Valley Mayor, Ben Houchen. However, the Chancellor knows that my council, the third smallest unitary in the country, faces economic challenges because of a funding formula that disadvantages areas like mine. That is long overdue for reform, and I hope that he will pay that issue close attention. I know that the Exchequer Secretary is making notes, so I hope he is listening too as he works on local government settlements.

    The cost of living support payments that have been distributed by the Government over the course of the last year and into this year have already totalled in excess of £39 million for the people of Darlington, and the announcements in the autumn statement amount to a further £18 million for them. At its heart, the autumn statement set out a compassionate plan, meeting the real challenges faced by our public services and the fears of people facing increased energy costs, and continues our commitment to our ambitious levelling-up agenda, including delivering real improvements on business rates for the nation’s high streets. This Finance Bill is good for the country and good for the people of Darlington.

  • Claudia Webbe – 2022 Speech on the Finance Bill

    Claudia Webbe – 2022 Speech on the Finance Bill

    The speech made by Claudia Webbe, the Independent MP for Leicester East, in the House of Commons on 28 November 2022.

    Contrary to what we have heard, the Bill is not about growth. It goes nowhere near what is needed. It is not fair, and it is not just.

    The median annual pay per person in my Leicester East constituency is, at £20,300, the lowest in the country according to the latest figures from His Majesty’s Revenue and Customs, which were published in April 2022. The national average for the same period was £31,461, meaning that the people of Leicester East are lagging £11,000 behind the national average, and are losing a third of their income to inequality. People in Leicester East are also paid less than the comparable figure for the east midlands region, which was £24,700. Child poverty in my constituency runs at a horrific 42%, perpetuating and deepening the disadvantages that our children already face. Furthermore, people in constituencies such as mine face a life expectancy 10 years shorter than that of the better-off.

    Ordinary people in this country are already struggling after a decade of ideological cuts and conscious cruelty by successive Conservative Governments. Now, their situation is being compounded. The reality is that we face the longest recession ever, coupled with skyrocketing costs of living. That crisis is driven by corporate greed and Government mismanagement, through which the biggest burdens—rampant inflation, soaring interest rates and public spending cuts—are placed on the shoulders of those least able to carry them.

    I do not think “cruelty” and “malice” are too strong a set of words for what is being done. What else should we call it when this Government have hunted for ways to make workers and communities pay for the so-called cost of living crisis, instead of getting the billionaires and millionaires, who have flourished and profited during the crisis, to pay up? The mere existence and normalisation of billionaires and millionaires in society and high office shows a broken political and economic system that can never work for everyone in society.

    In my Leicester East constituency, people are no longer able to make choices between eating or heating. That choice is no longer meaningful because they are destitute and relying on food banks and warm banks. They need help right now. In communities such as mine the lowest-paid workers are being punished by this Conservative Government. Workers are turning up to Victorian sweatshops and being sent home without work or pay, having been denied their rights. Their contracts are not worth the paper they are written on. My community has been at the epicentre of wage exploitation for decades. There is nothing in this Finance Bill to address that.

    The local authority in Leicester is already on its knees. It is still recovering from 12 years of austerity, which saw central Government grant funding cut from £289 million in 2010 to £171 million in 2019, with the shortfall in the current financial year expected to be around £50 million. The council has long since closed all its youth clubs, meaning that not only the people working in public services but the people using them suffer.

    The Finance Bill does nothing to address the fact that, according to the Office for Budget Responsibility, the Chancellor’s autumn statement means that household disposable income will fall by a further 7%. The Chancellor claims that his mission is to sort out the cost of living crisis, but in reality the Finance Bill is turning the screw on many of the poorest and most vulnerable. Wealth is not meaningfully taxed and fortunes are simply left sitting around idle, enabling a class of people who never have to work for a living to live off interest, rents and dividends now and for the next 1,000 years, while the poorest go under.

    This is not a plan for growth. The Office for Budget Responsibility does not forecast any growth for at least another half a decade. It predicts that the autumn statement will deliver economic stagnation, not growth. That means that, under this Government, wages and investment will suffer. In reality, the Chancellor has announced austerity 2.0, with real-terms cuts to public spending, cuts to international aid and cuts to capital spending on infrastructure—[Interruption.] Yes, cuts to capital spending on infrastructure. He is also freezing the threshold for paying income tax and national insurance. Thus, the Finance Bill increases taxes for people on low incomes, whose wages are already falling in real terms. This is a stealth tax in all but name, but the Chancellor has barely even bothered to disguise that fact.

    The autumn statement is austerity, and the Finance Bill is its delivery tool. It will cause substantial hardship and lengthen the recession, while protecting the wealth of the 1% and allowing corporations to get away with massive profits. At the same time, working people and the vulnerable will suffer.

    Uprating pensions and benefits by 10.1% in line with inflation for the first time since 2016, but not backdating that change, just scratches the surface and will not protect struggling families. The standard out-of-work benefit is now worth just 13% of the average weekly wage. The UK state pension lags far behind the average EU pension and is worth just a quarter of earnings, compared with 63% for the average EU pension.

    Where is the equality impact statement that should have been published alongside this Finance Bill or the autumn statement? That would have made clear the impact on low-income households and those from African, Asian, Caribbean and other racialised groups, as well as on women and disabled people.

    The autumn statement and this Finance Bill do nothing to address precarious and insecure work, zero-hours contracts, in-work poverty, high childcare costs or the rising cost of travel to work. The Government chose to force workers to meet work coaches to increase their hours or earnings, instead of tackling exploitative and scrupulous bosses, bringing rail and other public transport back into public ownership and ensuring that childcare is made affordable.

    Private rents are growing at their fastest rate. Families are being driven out and made homeless as landlords pursue ever higher rents and for less space. The autumn statement and the Finance Bill could have offered a ban on evictions and a freeze on rent increases. Instead they do nothing for the millions in privately rented accommodation.

    Meanwhile, fossil fuel firms can avoid paying most of any windfall tax by offsetting their investments in more oil and gas drilling. The Finance Bill is meaningless if we continue to subsidise and rely on fossil fuels. We need public ownership of energy to protect jobs, minimise prices and deliver a green, clean and sustainable future.

    The effects of the autumn statement have rightly been compared to boiling a frog slowly. However, in Leicester East and places with similar levels of deprivation, the water started deeper and hotter, and the Chancellor has lit a big fire. According to the United Nations, all of this could easily have been avoided.

    We need to see problems tackled at their root. We need public ownership of energy, transport and other vital services to keep costs under control and to ensure that profits are invested in improving those services and the fabric of our society. A complete reversal of cuts to local authority budgets is essential. Councils were long ago past the point where they could cope and maintain even essential services at the levels needed.

    The Chancellor needs to think again about his plans and about his evident lack of concern or compassion for those who are going under because of the political and ideological choices that Governments have made. We must challenge and change this unjust and unfair economic system, not just put a sticking plaster over it. We need a society that cares for all so that no one is left behind. We cannot be happy that the annual median income in my constituency is £20,300. The Finance Bill fails on all counts.

  • Paul Holmes – 2022 Speech on the Finance Bill

    Paul Holmes – 2022 Speech on the Finance Bill

    The speech made by Paul Holmes, the Conservative MP for Eastleigh, in the House of Commons on 28 November 2022.

    Thank you for calling me so early in this debate, Madam Deputy Speaker—presumably the answer is that you are saving the worst for first.

    I rise to speak in favour of the Bill because in it we have the outlines of the clear steps necessary to ensure a solid financial footing and the path to growth in the medium term. I congratulate both of the Ministers on the Front Bench, my hon. Friends the Members for South Suffolk (James Cartlidge) and for Louth and Horncastle (Victoria Atkins), who are friends of mine. I am delighted to see them in their place, and I know they will take their roles seriously and deliver that much-needed economic growth.

    We have to remember the context in which we find ourselves and this Bill: not just the £400 billion that we have spent on support for businesses and people during the covid pandemic, but the terrible situation we see in Ukraine. Those are the reasons why the nation finds itself in this situation today, as do many nations across the globe. I think the Minister said that one third of the world economy will be in recession over the next year, and that includes the United Kingdom. We need to set out that context and those reasons why we have to take the tough, difficult but fair decisions outlined in the Bill.

    I remain convinced that the actions taken last week in the autumn statement and in this Bill put us on a path to growth and to a stable financial footing. I think that is what the public expect. When I go into my constituency every week and speak to people, they now want—dare I say it—boring leadership. They want us to have a stable and sound economic plan for the future, meaning that in the end they will have more money in their pockets and will know what this Government stand for. This Bill, the Minister and the Chancellor last week have all outlined that very clearly. As I say, that is what the public expect. They expect to be treated in a fair way, and this Bill outlines that fair way, with an equal base of spending cuts and tax rises.

    I want to focus on some specific things in the Bill that we can achieve because of the tax measures that we are outlining, and what they will deliver. Because of this Bill, the most vulnerable in society will be protected. The announcements made in this Bill and the autumn statement mean that welfare and social security will rise in line with inflation and pensioners will be protected by maintaining the triple lock. That is incredibly important to the 19,500 pensioners in my Eastleigh constituency, as is the £300 they will get this year to support them with the rising cost of energy.

    Particularly in areas such as Hampshire, we do not have particularly cash-rich pensioners; they may live in quite large houses in my constituency, but that does not mean they are cash rich. They have invested and saved and they have lived responsible lives. They are people who have paid into the system and deserve to get some stuff out of the system. That is why I am delighted that the Government are protecting the triple lock and have announced that extra support to pensioners, going some way to reassure them as they go through some of the challenges that we all face over the next year or so. We have also seen, through this Bill and the measures that the Minister has outlined, a total of £12 billion of support for the most vulnerable in our society. I am proud that the Conservative principle of protecting the most vulnerable is in full force.

    Added to that is the £7 billion being spent on health services. I am sorry to see the Labour party this evening speaking against a Government measure that will see unprecedented amounts of investment going into our national health service as we come out of the covid pandemic and with the backlogs we have. I never thought I would see the day when Labour Members would stand up in this Chamber and argue against record amounts of investment in the national health service, but they have done so. I hope their constituents will see that when they watch this speech—or when they watch this debate. They will not be watching this speech, but they might watch the debate.

    Crucially, we have also outlined £4 billion-worth of investment in our schools. When I went round my constituency during the covid pandemic, many students had missed out on vital schooling. The Government helped with that by putting in place measures such as remote learning, but we have to put in that investment to ensure that those students—often in some of the most deprived areas of my constituency, which does have areas of deprivation—are brought back up to the expected attainment levels.

    Again, I am sorry that Members across this House—not on the Conservative side; or not yet, anyway—have again spoken against measures that would see record amounts of investment in our public services. Over the next two years, there will be £11 billion more for schools and the NHS. We will tackle the post-covid backlog and deliver for the future of this country by bringing in measures that we so desperately need after the shock that our economy has gone through in the past few years. The Chancellor has firmly set out the actions necessary for reducing inflation. The Minister has—ably, if I may say so—outlined the measures that the Chancellor has taken. The shadow Minister, the hon. Member for Ealing North (James Murray), who I have a lot of time for—I used to work with him when he was London’s Deputy Mayor for Housing—refused to accept, or at least did not put the necessary emphasis on, the fact that the international crisis we are in has caused many countries and many of our neighbours to go through the same issues we are going through.

    The Chancellor has outlined measures to bring down inflation, including the £6 billion-worth of investment in capital spending for businesses, which is crucial. I do not expect you to remember this, Madam Deputy Speaker, but you were in the Chair when I made my maiden speech about the crucial investment needed in infrastructure across the United Kingdom. Investing in infrastructure across the United Kingdom means employing people, keeping businesses in work and bringing inflationary pressure down. That is why I am so pleased that the Chancellor outlined that last week, along with the measures in the Bill. The Government are protecting R&D spending and providing £14 billion of relief for small businesses by cutting the rates of tax that they have to pay.

    Labour criticised the lack of inclusion of the Office for Budget Responsibility in the financial measures that were taken a few months ago. The Government have now included an OBR outlook, which states that 1% will be added to our GDP over the next year. Now, Labour suddenly wants to say that the OBR is very important. I agree, but Labour cannot have it both ways by pooh-poohing the OBR’s findings—that this Budget will help to grow our GDP—and then not necessarily taking its advice as read as we go forward.

    Overall, the Bill is hard for now and takes some really tricky decisions, but I am convinced that it will deliver a stable economic outlook for everybody. I will go into a bit more detail on the measures that will reduce inflation. The Bill is split equally between tax rises and spending cuts. We are protecting and maintaining public spending for the next two years at the level set out in 2021, and then increasing spending by 1% in real terms every year until 2027-28. We have invested in our NHS and schools, which is, as I have said, important for the attainment and health outcomes of my Eastleigh constituents.

    In the difficult measures that we will go through over the next few months, we are, vitally, protecting people from the shock of their living costs and energy bills going up. That is the most crucial thing: this Government have stepped in. The Labour party might not want to recognise that billions of pounds were spent during the covid pandemic. That has to be paid back at some stage, but we are now spending billions of pounds to protect people from the shock of energy bills.

    I say again that I have a lot of respect for the shadow Minister, but I will not take lectures from him when he says that we are not taking the necessary action on nuclear or energy planning. It was his party that pre-emptively scrapped nuclear energy as an option for this country, which is partly why we are in the situation we find ourselves in today. I think he should go back and possibly rewrite his speech, and then come back and outline that his party is partly responsible for the crisis we are in.

    I know that Ministers will not have been immune to hearing the press and some colleagues saying that the Bill, and some of the measures that have been outlined this evening, are not Conservative enough. Despite what many colleagues on my side of the Chamber may think, I am a fiscal Conservative, but I have to disagree with some of those assertions. In the Chancellor’s statement and in the Bill, we have framed the narrative on four things that I think are important: protecting the vulnerable, investing in public services, fairness in the tax system and delivering growth in the economy.

    Standing here today, I am 100% fine with the measures outlined by this Conservative Government, because they are asking people with the broadest shoulders to pay the most, on a temporary basis, while we look after the most vulnerable in our society and target support during a troublesome time on people who genuinely need our help. If that means I am not a Conservative—I do not think it does, because the Budget and the measures are based on solid conservative principles—I am quite happy with that, but I think that this is a Conservative approach and one that we should be all proud of.

    As is usual in these debates, we have opposition from the Labour party. In my seat, I often contest Liberal Democrats, but there are no Lib Dem Members here to outline their lack of plan for the cost of living crisis—but there we go. I am massively in favour of what is set out in the Bill. I am grateful to the Minister for outlining the measures that he has taken, because I know that, over the medium term, we will have growth back in the economy and people will see and be grateful for the Government’s actions.

  • Alison Thewliss – 2022 Speech on the Finance Bill

    Alison Thewliss – 2022 Speech on the Finance Bill

    The speech made by Alison Thewliss, the SNP MP for Glasgow Central, in the House of Commons on 28 November 2022.

    It is a pleasure to follow the hon. Member for Amber Valley (Nigel Mills), who gave a characteristically thoughtful speech. How strange it is that we agree on so many things in this debate, and yet on so few other things. It would be nice if those on the Government Front Bench listened to some of the considered and sensible remarks from their colleagues.

    This Finance Bill really does illustrate that we are all having to pay more tax, because of the very misguided steps taken by the former Prime Minister and her Chancellor, who crashed the economy in 26 minutes, leaving us all £30 billion worse off. That will have an impact on this broken UK economy not just now, but for many years to come.

    Let me start with the energy profits levy. That additional tax on UK oil and gas profits will increase from 25% to 35% from 1 January 2023. As the hon. Member for Amber Valley observed, this is being extended until March 2028, which illustrates the extent of the mess into which the UK Government and their Chancellors have got themselves.

    We think that the Government should go in a slightly different direction. They should look beyond just a levy on energy profits. They might want to look at a windfall tax that includes share buybacks as well. That is something that Biden has done in the United States. That has had the effect of bringing more money into the American Treasury’s coffers—Canada is also doing this—and encouraging firms to put more money into research and development, into investing in their companies and into investing in the UK, rather than spending all their excess profits on share buybacks, That seems like an entirely sensible thing to do, given the state of the UK economy. This year, BP has earmarked £7.15 billion to buy back its own shares. The Treasury should look at what more can be done here.

    The reduction in the investment allowance is to be welcomed, but that it exists at all remains a barrier to decarbonisation. The allowance creates a perverse incentive for companies to favour new oil and gas exploration over renewables by effectively offering them a tax break for doing so. Shell paid zero windfall tax under the previous scheme, as it invested heavily in oil and drilling instead of filing profits to be taxed against. That is hardly worth a candle compared with the net zero commitments that the Government tried to make at COP26 last year.

    We are also concerned about the decision to impose a 45% tax on electricity generators as that can then undermine investment into renewables at the same time as allowing oil and gas companies to drill more. The chief operating officer of SSE has said that the company may have to “give up” on some of its plans when the tax comes into effect. He said:

    “It’s going to take money away from us…and we won’t have as much to invest.”

    The CEO of Renewable UK also said:

    “Any new tax should have focused on large, unexpected windfalls right across the energy sector, instead profits at fossil fuel plants are inexplicably exempted from the levy.”

    Scotland has a significant renewables sector. It has been a great success story. Anything that makes that sector less profitable and more uncertain is something that we are deeply worried about.

    The ordinary rate of income tax is now frozen until April 2028. Significant stealth taxes are coming in, as the Treasury stands to raise considerable revenue due to inflation. The Institute for Fiscal Studies has estimated that this could raise £30 billion by 2026 due to high inflation rates. It is unacceptable for this money to be raised by taxing those already struggling with spiralling living costs. Of the many options available to the Chancellor, it would have been better to tip the balance more in favour of those who can afford to contribute more, by which I mean greater taxes on wealth and income made from wealth, and also taxes on the non-doms, which could bring in £3.2 billion to the Treasury’s coffers. It is unacceptable that the Treasury would turn down the chance to bring in £3.2 billion and instead choose to freeze the thresholds, so that people on lower and middle incomes will receive less in their pay packet each month.

    AJ Bell has found that if allowances are frozen rather than linked to inflation, an average earner on a salary of £33,000 in 2021-22, before the income tax threshold freeze began, will end up paying £2,600 more in income tax if the policy is extended to 2027-28. Someone on £50,000 will pay an additional £6,570 in tax because the allowances are frozen rather than being linked to inflation. I ask Ministers to consider the fairness of those measures.

    Moving on to the research and development expenditure tax credit rate, the scheme has provided tax reliefs to companies subject to corporation tax that carry out eligible R&D activities. I appreciate what has been said about the efficacy of R&D tax credits and whether they are useful. I hope that topic will receive more consideration in the months and years ahead, because the UK tax code is full of different types of credits, tax breaks and incentives—or disincentives—and we need to properly understand how effective they are.

    Small and medium-sized enterprises provide around three fifths of the UK’s private sector jobs and have historically been drivers of innovation and growth. They are a significant part of solving the UK’s productivity puzzle. SMEs are less likely than larger companies to have access to formal credits to fund R&D, and in the wake of the pandemic and with recession forecast across the next year, it is more important than ever that SMEs are supported in driving growth and investing in research and development.

    It is quite perplexing the Chancellor has prioritised R&D in larger firms, which are more likely to invest their profits elsewhere or perhaps invest them in share buybacks further down the road. The Chancellor has said that the aim is to reduce fraud, but reducing the R&D expenditure credit for all SMEs in an attempt to prevent its being abused seems a bit like throwing the baby out with the bathwater. It is quite poor targeting to affect all SMEs rather than just those that might be abusing the system.

    The Federation of Small Businesses has said that the cut to R&D tax credits, which the Government presented as a way of tackling fraud, would “crush innovation and growth”, creating a “doom loop” that

    “makes a mockery of plans for growth.”

    The Minister should listen carefully to the FSB when it raises such concerns.

    The current situation is quite worrying and will have significant impacts on the Scottish budget. The Fraser of Allander Institute has said:

    “The lack of any real ability on the part of the Scottish government to be able to flex its budget within year in response to unanticipated shocks remains a real limitation of the existing fiscal settlement…a strong case can be made for enhancing the Scottish government’s ability to borrow and/or draw down resources from its Reserve.”

    It concludes that

    “this level of inflexibility does not seem tenable.”

    The Scottish Government face a £1.7 billion shortfall this year as a result of inflationary pressures, and that is just this year’s budget. John Swinney has gone back and tried to strip out anything he can from the Scottish budget to try and deal with the problem, but that shortfall remains. The Chancellor’s answer to that was £1.5 billion in Barnett consequentials over the next two years—nothing for this in-year shortfall and half of what we need across two years. That is not going to fix the pressures that the Scottish Government face. It is not going to fix the significant issues with pay deals that trade unions are legitimately asking for in Scotland to support their members. If the UK Government does not come up with that money, it will cause extreme difficulties for the Scottish Government’s ability to meet their expectations of what they want to do.

    What we are seeing from the UK Government is something of a doom loop. The OECD says that the UK will contract more than any other G7 country and that, of the G20, only Russia will fare worse than the UK. We see stagnant growth and no plans to get the economy back on track. The Chancellor and the Government want to bring forward plans to try to cut their way out of recession. That will not work. As the hon. Member for Amber Valley pointed out, consumers see that, and it affects both consumer and business confidence. Unless we hear a lot more about investment rather than cuts, this Government are going to sink the economy and take Scotland down with them.

  • Nigel Mills – 2022 Speech on the Finance Bill

    Nigel Mills – 2022 Speech on the Finance Bill

    The speech made by Nigel Mills, the Conservative MP for Amber Valley, in the House of Commons on 28 November 2022.

    It is a pleasure to speak so early in the debate. It is also a great pleasure to have a Finance Bill that is so short. I must have spoken on a dozen of them in my time in Parliament and to have one that has only 12 clauses is some sort of miracle. During this week, we have probably about as much time as we normally have for one of several hundred pages, so we can really scrutinise the 11 substantive clauses. Perhaps that is progress, compared with what we normally expect.

    I start by comparing this Finance Bill with ones we had at the start of the previous recession a decade and a half ago and ones we had at the start of previous measures to tackle a large budget deficit. If I recall rightly, the single biggest measure we had 14 years ago was a VAT reduction at the start of the recession, which cost something like £15 billion. I am not sure it had the effect we wanted. Interestingly, as we sadly slip into a recession, which we hope is shorter and shallower than that one, what we have not seen in this Finance Bill is any attempt to boost consumer confidence. We can argue that we tried that in September and it did not go so well, and probably the right thing here is to focus on how we reassure the markets that we can keep borrowing under control and therefore not risk a rise in interest rates.

    However, if this recession looks like it might be any longer or deeper than the Government’s forecasts, I urge them to think carefully about how we get consumer confidence to turn around. I fear that what we will see in the new year is a big retrenchment in people’s personal spending. We will spend the money for Christmas because we have to, but people will then take a very cautious approach in the early part of next year, knowing that energy bills will go up in April and that tax changes are around the corner. We would not want them to go too far and retrench too fast. So I hope the Government will think about the role that tax can play in turning the economy around if we need that next year.

    The other interesting comparison is with the approach George Osborne took in his Budgets in the first half of the last decade to introduce austerity to tackle the big public deficit we had. Let us look at what he prioritised. He had a VAT increase, which we are rightly not doing in this situation, but he increased the personal allowance and reduced corporation tax to try to put more money into people’s pockets from work and to encourage business investment in the UK. Interestingly, the Government are doing the complete opposite now. I am not sure whether we have worked out that that plan did not work, but there is evidence to suggest that the lower corporation tax rates we had for a decade did not achieve the additional investment that we wanted them to and we are probably better off sticking at about 25% than going lower.

    I am slightly intrigued. The great claim we made was that we were taking people out of the scope of income tax. We are now at great risk of putting them all back into the scope of it again. I accept the Minister’s point that the personal allowance by the end of this five-year period will still be £2,000 higher than it would have been by inflation, but I think that is not enough of an increase. I hope that the Government regard these personal allowance freezes for another five years to be a kind of last resort and if we get any improvement in the economic outlook they can be reversed. Especially at the lower end of the level, keeping people out of tax, letting them keep more of the income and making sure that work pays are strong arguments. Frankly, I am not absolutely sure why we need to legislate for personal allowances in five years’ time. We will have another five Finance Bills before we get to those and we could have brought those into law at any point. I accept that we want to give the market a clear steer that we are serious about closing the budget deficit. If we need those measures, fine, they are probably less bad than a rate increase, but what is the point of legislating for them in this situation?

    There is another contrast with what we have done on national insurance this year. We chose to—and I accepted the argument that we needed to—increase the headline rate of NI, but the compensation for that, when it became clear that that was a real problem at the start of the economic downturn, was to increase the personal allowance for NI—the starting point at which someone pays that tax. Yet now, rather than increasing the headline rate, we are effectively holding back the starting points of those taxes. So we have a tax on income and a tax on wages where we are taking one approach, and on the other tax we are doing something completely different.

    As we go forward from what I accept are emergency measures that we need to use to fill a hole, the Government need to have a clear strategy for what our tax system should look like. They should consider the things we are trying to tax and the things we are trying to incentivise. They should try to give people some long-term stability so that they can plan and understand and we can get the behavioural changes and incentives that we want, rather than having a clear direction one way, and then doing a U-turn and wondering why people do not do the things that we would really like them to do. Now we are through the real firefighting, I hope the Government can produce a strategy and plan for where they think the tax system should go, so that people can understand it and respond accordingly. I think that that is what we had under the Gauke doctrine in 2010. We need to revisit that, now we seem to have changed our mind on so many of those things.

    The bleakest bit of news in this Finance Bill was extending the windfall tax to 2028. I was hoping that the energy crisis might be over quite a bit before then and we would not need to have those measures in place. The fact we have done that suggests we are not expecting energy prices to come back down any time soon. Clearly, the windfall tax is the right thing to do. I have always taken the view that this is a level of profit that nobody could ever have thought they could get. These companies are earning it from extracting our natural resources; they are not their natural resources. We have given them permission to extract them, and they have rightly made some profit from doing so. However, we should limit that profit and accept that those are our resources and that we should take the right return from them, rather than the exploiter doing so, so I hugely welcome the introduction of the windfall tax.

    I am quite intrigued by the research and development stuff. It is right, even at the most difficult time, to say that we want to make sure that we are incentivising R&D. That is a sensible, long-term measure that shows some long-term planning. I remember being at work as a young accountant when R&D tax credits were introduced—in 2000 for small companies and in 2002 for large companies. The journey they have been on, with rates going up and down and approaches changing—above the line, below the line, cash incentives and all those things—makes me wonder whether, 22 years on, we are really sure that R&D tax credits are delivering the outcome that we want. I suspect that the speeches in the Finance Bill debates in 2000 were that these measures would make us a science superpower in the next generation. I think that we are still giving those speeches, and we have not quite got the superpower bit. I wonder whether the Government should stop at some point and ask whether those are working. I know that there is an ongoing review on combining the reliefs, but are they triggering the right thing?

    One piece of data that did worry me was that a disproportionate amount of those are claimed by companies in London and the south-east and they are not spread around the country in the way we would like. Is there a way we can use these tax measures to encourage that kind of investment and those kinds of skilled jobs in the regions of the UK, and not just focus them in the most prosperous parts?

    I have expressed the view previously to many Treasury Ministers that, outside the EU, the one thing that we can do is take a regional approach to certain taxation to encourage activity in different parts of the country that we do not need to encourage in London and the south-east. I urge the Treasury to look seriously at whether we could take a regional approach to some taxes so that we can get those differentiating incentives to move wealth outside London and the south-east. That would fit entirely with our levelling-up agenda, but we have not chosen yet to be that creative with our tax system.

    Given that we have plenty of time for detailed questions on clauses on Wednesday, I will just say that I accept the need for this Finance Bill. I will support all the measures in it and I will happily vote for it later. I will not be voting for the Opposition amendment, which I suspect will not come as a great shock. I think I support ending non-dom status, but we should have temporary residence relief. If somebody comes here on a secondment or for a short period, we should not try to force them to move all their tax affairs here. We should tax them on the income that they earn here. There would be a big disincentive and it would be out of step with other countries if we did not have a short period where somebody had that different situation to reflect the fact that they are not ordinarily resident here.

    The fact is that a person’s non-dom status depends on where their father was born. In theory, they can become a non-dom even if they have lived here all their life and never been resident anywhere else in the world. That shows how ludicrous those rules are. I urge the Government to look at modernising all our residence tests, including that on non-dom status. They are all far too complicated. We could have a far more effective system that works better and would achieve the advantages of attracting investment here. There is a real problem with just scrapping non-dom status; it may drive some people we do want here to leave. On balance, a change is better and we should continue with the direction of travel that we had a decade ago of restricting the time period. I think that we could restrict it with a more modern relief that would achieve what we want without having the big downsides.

    With that, I will happily support the Bill and oppose the amendment if there is a Division later.

  • James Murray – 2022 Speech on the Finance Bill

    James Murray – 2022 Speech on the Finance Bill

    The speech made by James Murray, the Labour MP for Ealing North, in the House of Commons on 28 November 2022.

    I beg to move an amendment, to leave out from “That” to the end of the Question and add:

    “this House declines to give a second reading to the Finance Bill because, notwithstanding the importance of increasing the energy (oil and gas) profits levy, it raises taxes on working people through its freeze of the personal allowance threshold; because it fails to take advantage of other sources of revenue, such as ending non-domiciled tax status and further reducing the tax allowances available to oil and gas companies; and because it derives from an Autumn Statement which fails to set out plans to arrest the 7 per cent fall in average living standards forecast over the next two years, and to grow the UK economy, including through replacing business rates, supporting start-ups, giving businesses the flexibility they need to upskill their workforce, investing in clean and renewable energy, insulating homes across the country, and creating jobs in the green industries of the future.”

    After 12 years of economic failure from the Conservatives and 12 weeks of economic chaos, we now have this Finance Bill from a party that is holding Britain back. It is a Bill from a party that has, of course, lost any claim that it might once have tried to lay to economic competence; but more than that, it is a Bill that shows a party making the wrong choices time and again, and a party with no plan to grow our economy and halt the decline in living standards.

    As people across the country know, the Conservatives’ economic failure is hitting households hard. We are living through the longest period of earnings stagnation for 150 years, with real wages lower this year than when the Tories came to power in 2010. Living standards are forecast to fall by 7% over the next two years—the biggest fall on record, taking incomes down to 2013 levels. No wonder the director of the Institute for Fiscal Studies described the forecast drop in disposable income as “simply staggering”. This will truly feel like a lost decade for people across the United Kingdom: a decade of low growth, with incomes now set to fall back to where they were a decade ago.

    I know that Conservative Members are desperate to make out that global factors are entirely to blame for the economic reality of today, but although no one denies the deep impact of covid and of Putin’s invasion of Ukraine, it is simply not credible—and it is frankly insulting—to pretend that the occupants of Downing Street, now and over the past 12 years, have had nothing to do with the mess that we face. It was decisions taken by the Conservatives in office that left us uniquely exposed to the inflationary shock of oil and gas prices rising—they took misguided and damaging decisions to shut down our gas storage, to stall on nuclear power and to ban renewable technologies such as onshore wind—and it was decisions taken by the Conservatives in office that have denied the UK the opportunity to grow our economy over the past 12 years as we could and should have done.

    Richard Fuller

    Will the hon. Gentleman please check his facts? If he looks at the period from 2010 to just before the covid pandemic and compares the UK’s average rate of growth with that of our OECD competitors, particularly the G7, he will find that the UK outstrips all of them bar the United States and Germany.

    James Murray

    I seem to be engaging more with the hon. Gentleman now that he is on the Back Benches than when he was briefly on the Front Bench. If he looks at the statistics, he will see that, over the last 12 years, the UK’s growth rate has been a third lower than the OECD average, and a third lower than it was during the previous Labour years. I will take no lessons from him or his colleagues on the need for economic growth.

    I take this opportunity to give the previous Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), some rare credit. At least he took responsibility for the mess he inherited from his colleagues when he confirmed that our economy is stuck in a “vicious cycle of stagnation.” On that point, he was absolutely right.

    Over the Conservatives’ 12 years in power, as I said to the hon. Member for North East Bedfordshire (Richard Fuller), the UK economy grew a third less than the OECD average and a third less than during the previous Labour years. What is more, we are now the only G7 economy that is still smaller than before the pandemic. Over the next two years, we are forecast to have the highest inflation in the G7 and the worst economic growth of any country in the G20 except Russia.

    What is more, we are the only country in the G7 whose governing party chose to inflict profound damage on its own economy. Although the Prime Minister and the Chancellor refuse to take responsibility, the British people can see through them and will hold them to account. What the British people want and need is a Government who will get on and do the right thing without having to be pushed, dragged and forced into doing so. That is one reason why people across the country have been so exasperated by the Government’s reluctance at every turn to implement a windfall tax on oil and gas producers’ huge profits this year.

    My right hon. Friend the Member for Leeds West (Rachel Reeves) first called on the Government to bring in a windfall tax in January. It took five months of pushing the Government along a painful journey to get them to act. In those months, Conservative Ministers tried to defend their position, saying that oil and gas producers were struggling. They said a windfall tax would be “un-Conservative”, and the current Prime Minister said it would be “silly” to use this money to offer people help with their energy bills. Conservative MPs voted against a windfall tax three times, and then, when they finally realised their position was untenable, they did a U-turn.

    Even then, having been dragged kicking and screaming into introducing a windfall tax, the current Prime Minister coupled it with a massive tax break for the oil and gas giants. This tax break will be given to the oil and gas giants for doing the things they were going to do anyway, which helps to explain why some of them have paid zero windfall tax in the UK this year, despite record global profits.

    Despite having another go at windfall tax legislation with this Bill, the massive tax break is still there. It is set at a level that will, to quote the explanatory notes,

    “maintain the overall cumulative value of relief”.

    This tax break leaves billions of pounds on the table. These profits—the windfalls of war—could go towards helping people facing the difficult months ahead. This tax break is set to cost the taxpayer £80 billion over five years. This tax break was brought in by decisions that this Prime Minister took when he was Chancellor, and it is staying thanks to the decisions of the Chancellor he appointed from No. 10. What clearer evidence could there be that, no matter which Conservative goes through the revolving door of Downing Street, it is all more of the same?

    All we get from the Conservatives is the same vicious cycle of stagnation. This doom loop has been dragging wages down, forcing taxes up and hitting public services, all of which come round again and keep economic growth low.

    Jonathan Edwards

    I agree with many of the hon. Gentleman’s points. Much of the narrative around the autumn statement and the Budget is about restoring market credibility after the implosion of the previous Administration. In reality, the one thing we could do to restore market credibility is to have a more sensible trading relationship with the European Union. There is no hope from the Government, but will the Labour party offer us that hope?

    James Murray

    Later in my speech I will talk about our plan for growth, which will involve fixing the holes in the Brexit deal with which the Conservatives left the European Union. Alongside other measures, it is important to make sure that the deal has a proper plan for growth that is sorely lacking from this Government.

    This Finance Bill is a bill in more ways than one, because as well as being legislation, it represents a bill landing on working people’s doormats. It is a bill that working people are being forced to pay for the Government’s failure. Working people are paying for the Tories’ decisions that, for the last 12 years, have held back the economy, and for the last 12 weeks have crashed it.

    This Bill freezes the income tax personal allowance, which will leave an average earner paying over £500 more income tax a year by 2027-28. In the autumn statement, the Government announced a council tax bombshell that will force a £100 tax rise on families in the average band D house from next April. As a result of all the tax measures announced in this Parliament, middle-income households will see their tax bill rise by £1,400. That is what it looks like when working people are made to pay the price.

    It is all the more galling for people to be asked to pay more when the Conservatives are so slapdash with public money. Today, new figures show that the current Prime Minister wasted a staggering £6.7 billion on covid payments to businesses and individuals that were fraudulent or mistakes. Despite wasting public money so carelessly, he is now happy to put up taxes on working people across the country.

    It could have been different had the Government made fairer choices. The Government could have chosen to close the unfair private equity loophole that gives hedge fund managers a tax break on their bonuses. They could have chosen to reverse their tax cut for banks. Perhaps they have forgotten what their position is, having voted for the cut at the start of the year, before U-turning on it a few months ago and then, more recently, U-turning again.

    The Government could have finally chosen to scrap non-dom tax status, an outdated and unfair tax break that costs the taxpayer £3.2 billion a year. A tax break for non-doms should have no place in the UK in 2022. As if evidence were needed that this tax break belongs in a different era, the law makes it clear that people can inherit non-dom status only from their father, unless their parents were unmarried. More fundamentally, this loophole ignores the principle of fairness that should be at the heart of our tax system. If a person makes Britain their home, they should pay their taxes here.

    There are theories going around about why the Government are so reluctant to modernise the tax system and abolish the non-dom tax break. Perhaps the Minister will be able to confirm at the end of the debate, or in writing afterwards, whether the Prime Minister has been consulted on the option of abolishing non-dom tax status. Perhaps he can confirm whether the option was ever considered. When the current Prime Minister was Chancellor, did he recuse himself from discussions on this matter? I see the Exchequer Secretary to the Treasury acknowledging my request, so I look forward to his response either later today or in due course.

    We know that the Conservatives’ choices on tax are deeply unfair, but we also know that the lack of economic growth is the deep root of the rising tax burden in the UK. Over the last 12 years, the UK economy has grown a third less than the OECD average and a third less than during the previous Labour years. We are now the only G7 economy that is still smaller than it was before the pandemic, and over the next two years we are forecast to have the lowest growth of any country in the G20 bar Russia.

    A plan for growth has been missing for a decade, and its absence is having a greater impact than ever. In its report this month, the OBR confirmed that measures announced at the autumn statement will make no difference to growth in the medium term. The CBI’s director general, Tony Danker, put it starkly following the autumn statement:

    “There was really nothing there that tells us that the economy is going to avoid another decade of low productivity and low growth”.

    We cannot afford another decade like the last. We cannot afford another decade of being held back, another decade of lost growth. That is why Labour’s plan is so crucial to raising wages and living standards, supporting and sustaining public services and driving business investment and job creation in the decade ahead.

    Karin Smyth (Bristol South) (Lab)

    My hon. Friend is making an excellent speech, in stark contrast to what we have heard from the Conservative party. It is about people, working people and building back better. Does he agree that, for the people, particularly young people, who lost out so much during covid and are now facing another decade of low growth, we are particularly disappointed about the lack of support for further education and colleges to support the skills agenda for both 16 to 18-year-olds and adults who desperately need retraining and skills? That is starkly absent from what we have heard from this Government.

    James Murray

    I thank my hon. Friend for her contribution. She is a great advocate for investment in skills training and making sure that young people have opportunities in the decade ahead, which they have been denied in the last decade under this Conservative Government. The points she makes fit well within a wider plan for growth, which is at the heart of what Labour Members are proposing and pushing the Government to adopt.

    That plan is wide ranging. It covers business rates being replaced with a fairer system that makes sure that high street businesses no longer have one hand tied behind their back. It relies on us implementing a modern industrial strategy to support an active partnership of government working hand in hand with businesses to succeed. Labour’s start-up reforms will help to make Britain the best place to start and grow a new business. Small businesses will benefit from our action on late payments and we will give businesses the flexibility they need to upskill their workforce. As I mentioned, we will fix holes in the Brexit deal so our businesses can export more abroad. Crucially, our green prosperity plan will create jobs across the country, from the plumbers and builders needed to insulate homes, to engineers and operators for nuclear and wind. We will invest in the industries of the future and the skills people need to be part of them. That is what a plan for growth should look like. As John Allan, the chair of Tesco, said recently, when it comes to growth, Labour are the

    “only…team on the field.”

    The truth is that the need for an effective plan for growth has exposed the emptiness and exhaustion of the Conservative party. All we have to show from 12 years of Cameron, May and Johnson is chronic economic stagnation.

    Madam Deputy Speaker (Dame Rosie Winterton)

    Order. The hon. Gentleman knows that he should not refer to existing colleagues by name.

    James Murray

    I apologise, Madam Deputy Speaker. All we have to show from those three former Conservative Prime Ministers in the last 12 years is chronic economic stagnation. This autumn, the Conservatives tried desperately to make their economic strategy work, but their decisions crashed the economy, imposed a Tory mortgage premium, put pensions in peril and trashed our reputation around the world. Now they are trying again. We face tax hikes on working people, the biggest drop in living standards on record and growth still languishing at the bottom of the league. It seems that Conservative MPs are beginning to realise they have come to the end of the road and their time is up. In a timely echo of the popular TV show, hon. Members from Bishop Auckland to South West Devon are declaring: “I’m a Tory, get me out of here.” It seems the Conservative party is finally beginning to realise what the rest of us already know: the Tories are out of time and out of ideas, and Britain would be better off if they were out of office.

    Our amendment makes it clear that, although Ministers have been dragged, kicking and screaming, into action on oil and gas giants’ windfall tax, this Finance Bill fundamentally fails the UK economy and comes from a Government holding the British people back. Be in no doubt: the mess we are in is the result of 12 years of Conservative economic failure. With this Bill, they are loading the cost of their failure on to working people. The Government still have no plan to grow the economy and to stop the fall in living standards that is filling people across the country with dread. We need a Government with a plan to get our economy out of this doom loop, to support businesses to grow and to raise living standards again. We simply cannot afford another decade of the Conservatives. Now is time for change, now is the time for them to get out of the way, now is the time to let Britain succeed.

  • James Cartlidge – 2022 Statement on the Finance Bill

    James Cartlidge – 2022 Statement on the Finance Bill

    The statement made by James Cartlidge, the Exchequer Secretary to the Treasury, in the House of Commons on 28 November 2022.

    I beg to move, That the Bill be now read a Second time.

    In the face of challenging global headwinds, my right hon. Friend the Chancellor of the Exchequer delivered an autumn statement that was honest about the difficult decisions this Government will need to take to tackle the cost of living crisis and rebuild our economy. We are not alone in dealing with economic problems. One third of the global economy is forecast to be in recession this year or next. At the same time, while inflation is high in the United Kingdom, it is notably higher in Germany, at 11.6%, in Italy, at 12.6%, and in the Netherlands, at 16.8%.

    It is our duty to curb rising prices, restore faith in our country’s economic credibility internationally and, ultimately, to deliver growth. The independent Bank of England is responsible for controlling inflation. However, as the Chancellor set out in the autumn statement, monetary and fiscal policy need to move in lockstep. That means, for the latter, taking a disciplined approach and giving the world confidence in our ability to pay our debts. We have been clear that we will be following two broad principles in this consolidation: first, we ask those with more to contribute more; and, secondly, we will avoid the tax rises that most damage growth. With just under half of the £55 billion consolidation coming from tax and just over half from spending, the autumn statement set out a balanced plan for stability.

    Today, we are debating a small number of the tax measures that were announced last week. In order to provide certainty to markets and help stabilise the public finances, we are taking forward important tax measures in this focused autumn Finance Bill, ahead of a fuller spring Finance Bill, which will follow the Budget early next year as usual.

    Sir William Cash (Stone) (Con)

    During the autumn statement, I raised the point about High Speed 2 with the Chancellor, and I also wrote to the Chief Secretary to the Treasury and, indeed, to the Chair of the Treasury Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin). According to the Office for National Statistics yesterday, annual inflation in the infrastructure sector was 18.1% in September, which is 80% higher than the consumer prices index for the same month. How can the Government continue to bankroll phase 2 of the HS2 project at a cost of more than £40 billion when all the independent advice suggests that it will make rail services to the north-west worse than could be achieved with merely phase 1 and the Handsacre link? Could I also have a reply from the Chief Secretary to the letter I wrote to him?

    James Cartlidge

    I am grateful to my hon. Friend and will of course check with the Chief Secretary’s office; my officials will have heard the point he makes and will ensure he receives a response. On inflation in infrastructure costs, obviously that will apply across the board and cannot in itself be a reason to reconsider such fundamental investment. There are strong views on this project; from the Government’s point of view, it creates thousands of jobs and apprenticeships and builds much greater connectivity. But of course, as the Chief Secretary himself has been clear—I am sure he will emphasise this in the letter to my hon. Friend—we need to see discipline on cost control whatever is happening to wider macroeconomic factors.

    Turning to the substance of the Bill and the specific measures, I shall start with the energy profits levy. Since energy prices started to surge last year there have been calls for the Government to ensure that businesses that have made extraordinary profits during the rise in oil and gas prices contribute towards supporting households that are struggling with unprecedented cost of living pressures. This Bill takes steps to do exactly that by ensuring oil and gas companies experiencing extraordinary profits pay their fair share of tax. We are therefore taxing these higher profits, which are due not to changes in risk taking or innovation or efficiency, but as the specific result of surging global commodity prices driven in part by Russia’s illegal invasion of Ukraine.

    The measure increases the rate of the energy profits levy that was introduced in May by 10 percentage points to 35%. This will take effect from January next year, bringing the headline rate of tax for the sector to 75%, triple the rate of tax other companies will pay when the corporation tax rate increases to 25% from April next year or 30% for the largest companies. The Bill also extends the levy until 31 March 2028, but as the Government have made clear, it is important that such a tax does not deter investment at a time when shoring up the country’s energy security is vital.

    Paul Holmes (Eastleigh) (Con)

    I thank the Minister for outlining the detail on the energy profits levy. Does he agree that the measures he has announced will raise £52 billion over six years? Although in previous debates the Labour party has said that that does not go far enough, it is more than Labour’s proposed energy profits levy would raise.

    James Cartlidge

    My hon. Friend is extremely astute: he has noted the significant contribution these taxes will make to the Exchequer. As I have just said, although this generous allowance is to ensure that we still encourage investment at a time when energy security is critical and where the long-term solution is having secure energy in this country, he is right to highlight the revenue being raised. After all, it goes a long way to funding the support that our constituents are receiving. In fact, they are receiving it this very week: payments are going out to support people facing these very high energy bills. The energy support guarantee this winter will save a typical household £900. We are putting in place extensive support, and as my hon. Friend says, a significant amount of that revenue comes from this new tax.

    Putin’s barbaric illegal invasion of Ukraine and the utilisation of energy as a weapon of war has made it clear that we must become more energy self-sufficient. That is why this Bill also ensures that the levy retains its investment allowance at the current value, allowing companies to continue claiming around £91 for every £100 of investment. This investment will support the economy and jobs while helping to protect the UK’s future energy security, and in future the Government will separately legislate to increase the tax relief available for investments which reduce carbon emissions when producing oil and gas, supporting the industry’s transition to lower-carbon oil and gas production. Together these measures will raise close to £20 billion more from the levy over the next six years. As my hon. Friend said, that brings total levy revenues to more than £40 billion over the same period—of course he added on top of that the electricity generators levy, which we will be consulting on. The Government are also taking forward measures to tax the extraordinary returns of electricity generators, as I have just said, but we will do so in a future Finance Bill to ensure that we can engage with industry on these important plans.

    The autumn Finance Bill also introduces legislation to alter the rates of the R&D tax reliefs. Making those changes will help to reduce error and fraud in the system, ensuring that the taxpayer gets better value for money while continuing to support valuable research and development needed for long-term growth. Over the last 50 years, innovation has been responsible for about half of the UK’s productivity increases. That is an extremely important statistic. We all know the value of R&D to all of our constituencies—I look in particular at my hon. Friend the Member for South Cambridgeshire (Anthony Browne), who will know of its importance in our university cities and all of our key clusters. R&D is a key way of raising productivity, which is why we have protected our entire research budget and will increase public funding for R&D to £20 billion by 2024-25 as part of our mission to make the United Kingdom a science superpower. These measures are significant, but ultimately businesses will need to invest more in R&D. The UK’s R&D tax reliefs have an important role to play in doing that.

    Richard Fuller (North East Bedfordshire) (Con)

    The Government are absolutely right on this point. The objective of giving taxpayers’ money to companies for use through R&D tax credits is to focus on improving productivity. There were real concerns, particularly in the smaller business segment, that the scheme was not working correctly. One aspect of the scheme that caused some concern to small businesses was the time that it was taking for some credits to be paid out, but I think that is improving. Perhaps in summing up later, the Financial Secretary to the Treasury could point to what recent progress has been made on that.

    James Cartlidge

    I am grateful to my hon. Friend. Of course, he was in the Department and has a business background, so he knows the detail and the importance of R&D tax reliefs. I am sure that my hon. Friend the Financial Secretary to the Treasury will have a chance to look at that later. I believe that we will be having a meeting about a separate issue of concern—a certain railway project that matters to him—when we can also discuss these points.

    I turn to the specific detail. For expenditure on or after 1 April 2023, the research and development expenditure credit rate will increase from 13% to 20%. The small and medium-sized enterprise additional deduction will decrease from 130% to 86%, and the SME scheme credit rate will decrease from 14.5% to 10%. That reform will ensure that the taxpayer support is as effective as possible. It improves the competitiveness of the RDEC scheme and is a step towards a simplified RDEC-like scheme for all.

    That means that Government support for the reliefs will continue to rise in cost to the Exchequer—from £6.6 billion in 2021 to more than £9 billion in 2027-28—but in a way that ensures value for money. To be clear, the R&D reliefs will support £60 billion of business R&D in 2027-28, which is a 60% increase from £40 billion in 2020-21. The Government will consult on the design of a single scheme and, ahead of the spring Budget, work with industry to understand whether further support is necessary for R&D-intensive SMEs without significant change to the overall cost.

    Richard Foord (Tiverton and Honiton) (LD)

    It was indeed welcome to hear the Chancellor talking in the autumn statement about additional money for research and development, but what seemed to be lacking was investment in skills. He talked about skills only loosely, and actually there was not one mention of colleges. Will there be any additional money for colleges as a result of the Bill?

    James Cartlidge

    I am grateful to the hon. Gentleman. In raising education, I hope he will have noted and strongly welcomed the fact that, despite the tough fiscal situation, the Chancellor was able to find additional spending for education—indeed, £2.2 billion this year and next year for our schools. I hope he agrees that that is crucial.

    Richard Foord

    Colleges?

    James Cartlidge

    The hon. Gentleman is right to raise further education. We also announced in the statement that there will be a review by Michael Barber looking at the many positive initiatives that the Government have in place for training and increasing technical and vocational skills—T-levels, for example. We want to see maximum support for such schemes, so we will be reviewing them to ensure that we deliver them as effectively as possible. He makes an important point.

    I turn to the measures on personal taxation. We know that difficult decisions are needed to ensure that the tax system supports strong public finances. To begin with, we are asking those with the broadest shoulders to carry the most weight. The Government are therefore reducing the threshold at which the 45p rate becomes payable from £150,000 to £125,140.

    Clive Efford (Eltham) (Lab)

    What consideration have the Government given to taxation of those who benefited during covid? The National Audit Office states that the Government invested £368 billion in the economy through furlough and various other pieces of support, but the people who received that money passed it on. Far from trickling down, the money has trickled up. During covid, the number of billionaires and millionaires increased to record levels in the UK. They have clearly benefited extraordinarily well from Government investment. Why are we not following the money?

    James Cartlidge

    The hon. Gentleman makes an interesting point. I, for one, would never resent the fact that someone is successful in life, particularly because of starting a business, working hard, investing in this country and creating wealth. We should always celebrate that. He says, however, that the money and expenditure during covid did not trickle down. On the contrary, speaking from my experience out in my constituency, businesses still express to me their gratitude for the grants and loans, for the £400 billion of support that we put in place that helped to carry the country through the pandemic—

    Clive Efford rose—

    James Cartlidge

    I will finish this point; the hon. Gentleman is welcome to come back at me on it. He will recall the estimates at the start of the pandemic that unemployment would be 2 million higher than it turned out to be. That is an entire depression’s-worth of unemployment that we saved through our measures, and he should be grateful.

    Clive Efford

    I absolutely agree with everything that the Minister just said, but the truth is that the money paid to people in furlough and to small businesses was passed on. That money was used to repay loans, to pay rent and to pay the lease. People have paid their mortgages. The people who received that money at the end of the day were those who were already wealthy, as the figures show. We should follow the money. We should not squeeze those people until the pips squeak, but we should make them pay their fair share.

    James Cartlidge

    By any objective assessment, that enormous support helped our country through one of the toughest challenges that we have ever faced—the biggest crisis outside war in recent memory. We have, of course, moved straight into another one. Across the House, there is recognition that the £400 billion of extra support that we put in place has benefited the country.

    The hon. Gentleman talks about business costs. Of course, businesses had costs that we had to help them with, but to protect public health, steps were taken to close parts of the economy. We faced an extraordinary contraction. To avoid that, the Government had to step in and, in so doing, we lost 2 million jobs fewer than were predicted to go.

    Clive Efford

    Will the Minister give way?

    Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)

    Will the Minister give way?

    James Cartlidge

    If the hon. Member for Eltham (Clive Efford) will forgive me, we have some interest from another part of the House, so will I take an intervention from Wales, from the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards).

    Jonathan Edwards

    I am grateful to the Minister. I welcome the announcement in the Bill that reduces the additional rate level to £125,000. The calculations I have seen show that somebody earning £150,000 will pay about 1% more in income tax, so this is definitely a step in the right direction. However, somebody earning £1.5 million will pay only 0.1% more as a result of the proposals. Does that not make the case for a further band to be created for those earning very high wages? My understanding, if my history lessons were correct, is that the Thatcher Government, for instance, had a 60% rate.

    James Cartlidge

    The hon. Gentleman makes an interesting suggestion. He will not be surprised to hear that I do not announce new tax bands from the Dispatch Box on Second Reading of a Finance Bill. I can confirm, however, that those earning £150,000 or more will pay just over £1,200 more in tax every year. That is the precise figure.

    For the final time, I give way to the hon. Member for Eltham.

    Clive Efford

    Any Government would have given the support that the Government gave at that time, so I accept everything that the Minister said about that, but where is the money now? There has been £368 billion paid into the economy. Who has it now? Who benefited from it? Should we not follow that money and make those with the broadest shoulders contribute?

    James Cartlidge

    The furlough scheme, on its own, protected 11.5 million jobs. Does the hon. Gentleman seriously think that the Government should expand some extraordinary array of resource to find out what those 11.5 million people did with the money that kept them in work when they could have been looking at unemployment, and we could have been facing the most staggering economic depression in our history? We avoided that and, instead, we reduced unemployment by 2 million more than was expected. We avoided that cut in jobs, which would have been absolutely devastating for communities across the country, and we should all be grateful.

    Richard Fuller rose—

    Paul Holmes rose—

    James Cartlidge

    I have already given way to both my hon. Friends, but I will go to Bedfordshire.

    Richard Fuller

    That is certainly the best place the Minister can go. He is always welcome in North East Bedfordshire.

    The Minister will remember that the additional rate of tax was introduced as a temporary measure by Gordon Brown. When the Conservatives came into government in coalition in 2010, we looked forward to its being scrapped—yet here we are today, proposing that more people on lower incomes, in nominal as well as real terms, be made to pay that additional rate of tax. With the basic allowance tapering off above £100,000, and with the introduction of this rate, does the Minister accept that people in this country who earn more than £100,000 now face effective tax rates of 60% or 50%?

    James Cartlidge

    As a Conservative who wants taxes to be lower, I do not stand here with any relish in putting forward a Finance Bill that will increase taxes. The Chancellor was very clear that we will have to pay more tax, but my hon. Friend understands the aggregate reason, I hope, which is the need for fiscal stability. The overall rate will have an impact of £1,200 a year, as I have said; I do not deny that it will be significantly impactful for our constituents. We want to cut taxes if we can, but before we do so we have to get on top of inflation.

    I give way to my hon. Friend the Member for Eastleigh (Paul Holmes).

    Paul Holmes

    I thank the Minister for giving way. It is a good job I can remember what I was about to say.

    The hon. Member for Eltham (Clive Efford) asked where the money has gone. The support that the Government have given has kept a lot of small businesses in business, as I know he recognises. Does the Minister agree that the money actually went to the medium-sized businesses that keep people in our constituencies employed and on the payroll? That is where the money went, thanks to the actions of this Government. Opposition Members should not pooh-pooh those actions, because they kept businesses going and people in work.

    James Cartlidge

    My hon. Friend is an absolute champion of small businesses and of businesses of all sizes in his constituency. We and our colleagues believe in free enterprise. We knew that the pandemic was an extraordinary situation in which, to keep businesses and free enterprise going, we had to step in an extraordinary way and be a force for maintaining aggregate demand and expenditure. My hon. Friend is absolutely right. What did those businesses do by staying in business? They maintained employment in our communities and maintained the services that they provide. We should all be proud of the extraordinary effort that was made.

    We have announced a reduction in the dividend allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024, as well as a reduction in the capital gains tax annual exempt amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. We have also announced that we are abolishing the annual uprating of the AEA with the consumer prices index and are fixing the CGT reporting proceeds limit at £50,000. The current high value of these allowances can mean that those with investment income and capital gains receive considerably more of their income tax-free than those with, for example, employment income only. Our approach makes the system fairer by bringing the treatment of investment income and capital gains closer in line with that of earned income, while still ensuring that individuals are not taxed on low levels of income or capital gains. Although the allowance will be reduced, individuals who receive a high proportion of their income via dividends will still benefit from lower rates of 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers respectively. These two measures will raise £1.2 billion a year from April 2025.

    We are maintaining the income tax personal allowance and the higher rate threshold at their current levels for longer than was previously planned. They will remain at £12,570 and £50,270 respectively for a further two years, until April 2028. This policy will have an impact on many of us, as I said to my hon. Friend the Member for North East Bedfordshire (Richard Fuller), but no one’s current pay packet will reduce as a result. By April 2028, the personal allowance, at £12,570, will still be more than £2,000 higher than if we had uprated it by inflation every financial year since 2010-11.

    I reiterate that these are not the kinds of decisions that any Government want to take, but they are decisions that a responsible Government facing these challenges must take. I remind the House that this Government raised the personal allowance by more than 40% in real terms since 2010, and that this year we implemented the largest ever increase to a personal tax starting threshold for national insurance contributions, meaning that they are some of the most generous personal tax allowances in the OECD. Changing the system to reduce the value of personal tax thresholds and allowances supports strong public finances. Even after these changes, as things stand, we will still have the most generous set of core tax-free personal allowances of any G7 country.

    Let me now turn to the subject of inheritance tax. As we announced in the autumn statement, the thresholds will continue at current levels in 2026-27 and 2027-28, two more years than previously announced. As a result, the nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. That means that qualifying estates will still be able to pass on up to £500,000 tax-free, and the estates of surviving spouses and civil partners will still be able to pass on up to £1 million tax-free because any unused nil-rate bands are transferable. Current forecasts indicate that only 6% of estates are expected to have a liability in 2022-23, and that is forecast to rise to only 6.6% in 2027-28. In making changes to personal tax thresholds and allowances, the Government recognise that we are asking everyone to contribute more towards sustainable public finances, but—importantly—we are doing this in a fair way.

    I am almost there, Madam Deputy Speaker, but I will be assisted by an electric vehicle, because I am now moving on to that method of transport. Earlier this month I attended COP27, where I met international finance Ministry counterparts and reaffirmed the Treasury’s commitment to international action on net zero and climate-resilient development. The Government welcome the fact that the transition to electric vehicles continues apace, with the Office for Budget Responsibility forecasting that half of all new vehicles will be electric by 2025. Therefore, to ensure that all motorists start to make a fairer tax contribution, we have decided that from April 2025, electric cars, vans and motorcycles will no longer be exempt from vehicle excise duty. The motoring tax system will continue to provide generous incentives to support electric vehicle uptake, so the Government will maintain favourable first-year VED rates for electric vehicles, and will legislate for generous company car tax rates for electric vehicles and low-emission vehicles until 2027-28.

    These are difficult times, but that does not mean we will shy away from difficult decisions; it means we must confront them head-on. Today the Government are tacking forward specific tax measures in this Bill to help stabilise the public finances and provide certainty for markets. This is an important part of the Government’s broader commitments made in the autumn statement on fiscal sustainability, ensuring that we take a responsible approach to fiscal policy, tackling the scourge of inflation and working hand in hand with the independent Bank of England.

    We will do this fairly; we will give a safety net to our most vulnerable, we will invest for future generations, and we will ensure that we grow the economy and improve the lives of people in every part of the United Kingdom. The measures in this autumn Finance Bill are a key part of those plans, and I therefore commend it to the House.

  • Jeremy Hunt – 2022 Statement on the Bank of England Asset Purchase Facility

    Jeremy Hunt – 2022 Statement on the Bank of England Asset Purchase Facility

    The statement made by Jeremy Hunt, the Chancellor of the Exchequer, in the House of Commons on 23 November 2022.

    The Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the APF—asset purchase facility—by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and has since commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022.

    The then Chancellor agreed a joint approach with the Governor, in an exchange of letters on 3 February 2022, to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.

    On 4 November the Governor and I agreed to reduce the maximum size of the APF from £966 billion to £886 billion, to reflect the unused portion of the recent financial stability-related APF expansion. Since 5 May 2022, the total stock of assets held by the APF for monetary policy purposes has fallen from £866.6 billion to £851.6 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £871 billion.

    The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.

    There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.

    The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. If the liability is called, provision for any payment will be sought through the normal supply procedure.

    A full departmental minute has been laid in the House of Commons providing more detail on this contingent liability.

  • Alison Thewliss – 2022 Speech on Jeremy Hunt’s Financial Statement

    Alison Thewliss – 2022 Speech on Jeremy Hunt’s Financial Statement

    The speech made by Alison Thewliss, the SNP MP for Glasgow Central and Westminster spokesperson for the party on economic matters, in the House of Commons on 17 November 2022.

    The current Chancellor comes here today as the seventh Chancellor in seven years, and a mere 55 days after the last Chancellor came to this House to present his chaotic mini-Budget. His predecessor managed to crash the economy in 26 minutes; this Chancellor has spent the past 53 minutes trying to patch up those mistakes. The reality is that we will all be living with the disastrous consequences of Trussonomics for some time to come.

    The Chancellor has brought forward new targets because he is failing to meet the old ones. His difficult choices are of nothing compared with what many of our constituents face. The Tories spent the summer squabbling in a leadership contest when they should have been preparing for the difficult winter ahead. Now the UK is £30 billion worse off because of the incompetence of the Conservative party. Scotland is paying a heavy price indeed for being in this Union.

    The Tories are attempting to cut their way out of a recession. It will not work. Public sector workers deserve a proper pay rise to face the cost of living crisis that the Tories have created, and the Scottish Government do not have the same flexibility as this Chancellor to borrow or make changes in-year. Their existing budgets have already been squeezed and reprioritised and there is nothing left to cut.

    The Chancellor says Scotland will get £1.5 billion in Barnett consequentials, yet the Scottish Government’s budget is worth £1.7 billion less than when it was introduced last December. Scotland is being short-changed yet again. Will he listen carefully to what John Swinney has asked for and provide the funding Scotland deserves?

    The Chancellor is proposing fiscal tightening on a scale not seen since George Osborne—and we are still living with the real consequences of those poverty-inducing policies: the two-child limit, the rape clause, the brutal benefits sanctions. The Glasgow Centre for Population Health has been clear that the previous round of Tory austerity caused 330,000 excess deaths. More of the same from this Chancellor is a price society cannot afford.

    Restoring the triple lock and uprating benefits by inflation is not some victory to be celebrated. Barnardo’s has described it as a “minimum first step”. The rate of inflation announced by the Chancellor is not the actual rate of inflation now—nor, perhaps, will it be the rate of inflation by the time the measure comes into force. Again, the Government are not keeping step with the cost of living. Any compassionate Government with an ounce of humanity would not have to be dragged to make such a decision.

    The Chancellor talks about uprating the benefit cap—he should scrap the benefit cap. In Scotland, we have introduced the groundbreaking Scottish child payment and increased it to £25 per child per week, now up to the age of 16. There is no two-child limit in Scotland, because we value every child and want them all to have the best future. Will he commit to the same?

    The Chancellor mentioned nothing in his statement for those struggling on no recourse to public funds, and nothing either for asylum seekers trying to survive on just 40 quid a week. Will he increase that support or, better yet, allow them to work and to contribute, as so many want to do?

    Inflation is running at 11.1%, a 41-year high. For those in lower-income households, the Resolution Foundation says it runs at 12.5%, as more of their income goes on the essentials. The price of food is up 16.4% in a year, with basics such as bread, milk and pasta all increasing and squeezing household budgets. Combining that with the soaring cost of energy, households are finding it impossible to make ends meet.

    Cornwall Insight has estimated that the energy price cap next year may come in at an eye-watering £3,702. I appreciate what the Chancellor has said about energy support, but his energy support package must be wider and deeper. It must lift those who are stuck on prepayment meters and make sure they can turn the heating on. Will he listen to National Energy Action, which is calling for a targeted energy price guarantee, similar to a social tariff, set at £1,500 annually until October 2024?

    National Energy Action says that should be for all households on means-tested benefits and disability benefits, those in receipt of attendance allowance and carers allowance and those who are living on less than two thirds of the median household income, and it should be targeted to people living in areas of multiple deprivation. We all know that energy bills will not be reducing any time soon. The Chancellor must ensure that people get the help they need to stay safe and warm.

    Insulation schemes should have happened already. The UK Government cut back dramatically on schemes while the Scottish Government invested. More than 100,000 homes in Scotland have been made more energy efficient, while the UK Government have ignored the problem. Now they say, “Wait until 2025.” It is not even jam tomorrow; it is, “Huddle under a blanket for three years until we get to you.” It is absolutely ludicrous.

    Will the Chancellor consider not a rent cap, but a rent freeze to help renters, as the Scottish Government have done? For those struggling with their mortgages, will he do all he can to encourage banks to support their customers, and will he fix and expand the restrictive support for mortgage interest scheme, to make it more accessible to those who need it?

    There is little in this statement to give hope to businesses. Many that managed to survive the pandemic are now struggling to keep going. Increased labour and energy costs, supply chain difficulties and the crash in the pound have all made a difficult situation so much worse.

    I have raised many times in this place the impossibly high contracts that companies are having to sign for their energy bills right now, and the Chancellor was not at all clear how he expects them to keep going once the reprieve finishes in the spring. Companies cannot wait any longer for answers, because for too many it will be too much. We know insolvencies are already on the rise, and with companies going bust, rising unemployment will inevitably follow.

    We know that recession has a bigger impact on younger workers. When we look at the Chancellor’s statement, the minimum wage rates are still lagging behind for younger workers. They are being discriminated against on the basis of their age, and that continues to be unacceptable.

    There was also nothing in the Chancellor’s statement about carbon capture and storage in the north-east of Scotland. Why not? There was a 45% hike on electricity generators—more than on oil and gas—which will hammer Scotland’s renewables sector.

    I will give the Chancellor some opportunities to bring some cash into the UK Government’s coffers. The London School of Economics says that ending the non-dom status could bring in £3.2 billion of additional tax. Taxing dividends at the same rate as income from work would stand to raise more than £6 billion a year.

    For some time now, big companies have been engaging in significant share buybacks. Oil and gas, financial services and other companies are using share buybacks because their mega-profits are more than they know what to do with. Those profits are not being invested in new development; they are simply being creamed off. It is estimated that FTSE 100 firms are now due to return £55.5 billion to their shareholders via share buybacks this year.

    The Institute for Public Policy Research estimates that a one-off 25% windfall tax on share buybacks of FTSE-listed companies could raise £11 billion in a single year. Even if companies were discouraged from buying back shares under the scheme, it would lead to higher reinvestment in development rather than profits. Why would the Chancellor pass up such an economic opportunity?

    The Chancellor should also grow the tax base by increasing immigration and improving the lot of those who have already done us the significant honour of coming to live, work and study in our communities. We should thank them, not tell them they are not welcome. It is beyond time that the UK had a sensible, grown-up conversation about immigration. We on the SNP Benches are clear that immigration is an economic good. The OBR forecasts that higher net migration reduces pressures on Government debt over time. The Chancellor should consider that.

    Finally, I come to the policy that unites all the Unionist parties in this House: Brexit. The Tories, Labour, the Lib Dems—all Brexiteers now, fully committed to this futile project of deliberate self-destruction. Dr Swati Dhingra of the Bank of England’s Monetary Policy Committee told the Treasury Committee yesterday:

    “It’s undeniable now that we’re seeing a much bigger slowdown in trade in the UK”

    than in the rest of the world. Wages are lower, business investment is lower, and the UK is underperforming in both imports and exports. That political choice has brought us here today, to the Chancellor’s decisions, which will affect us all but will hit the least well off the very hardest.

    The economist Michael Saunders said this week:

    “If we hadn’t had Brexit, we probably wouldn’t be talking about an austerity budget”.

    Put that on the side of a bus.

    Scotland did not vote for this. We did not choose austerity and we did not choose Brexit. The OBR says that living standards are to fall by 7% over the next two years. It ought to be of no surprise to anybody that just shy of half of Scots think the UK will not exist in its current form in the next five years. This is a UK so weak that no one would wish to join it. Scotland cannot be forced to stay in broke, broken Brexit Britain.

  • Jeremy Corbyn – 2022 Comments on Jeremy Hunt’s Financial Statement

    Jeremy Corbyn – 2022 Comments on Jeremy Hunt’s Financial Statement

    The comments made by Jeremy Corbyn, the Leader of the Opposition, on Twitter on 17 November 2022.

    Jeremy Hunt’s attempt to justify the last wave of austerity is an insult to all those who lost their lives to 12 years of state-sanctioned cruelty.

    Even more insulting is that he expects us to simply lie down and accept it all over again.

    He’s got another thing coming.