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On the mechanics, the Association of Taxation Technicians has raised the point that the scheme is due to be a requirement from May, yet there is a lack of clarity about how or when advisers need to register. Further to that, will the Minister get HMRC to set target times for responding to—approving or rejecting—applications?
I beg to move amendment 50, in clause 259, page 236, line 4, at end insert— “(1A) After paragraph 5(8) insert— ‘(8A) A person is not liable to a penalty point as a result of the late filing of a return under this Schedule if they had no tax liability due in the relevant period. (8B) For the purpose of this section, “no tax liability due” has the meaning that the total amount of tax owed, after credit for any tax deducted at source, tax credits, or other reliefs, is zero or results in a repayment to the taxpayer.’” This amendment would mean that a person would not be subject to a penalty point because of the late filing of a return where there is no tax liability due.
It is good to be back in the saddle as we come on to some more clauses and, later this afternoon, new clauses. The amendment was tabled in my name, and I will speak to clauses 259 to 262 on penalties for the late filing of tax returns.
I am grateful to the Minister for her response and to the hon. Member for Maidenhead for highlighting the large number of people who miss the deadline. As I say, the reality is that a number of people get late filing penalties when they do not owe any tax. The case I cited was that of someone called Andrea, who suffered with mental health difficulties for many years. During that time, she never earned more than a few thousand pounds and was well below the personal allowance, so she never had any tax liability, but she ended up with £10,000-worth of late filing penalties. That is clearly not appropriate. The new system that the Government are bringing in could be strengthened with the principle that someone who does not owe any tax cannot get a fine. I therefore wish to press amendment 50. Question put, That the amendment be made.
Clauses 263 to 271, which introduce the new system of advance tax clearance, will give legislative effect to the commitment in the Government’s corporate tax road map to offer greater certainty for major investment. A public consultation was run last year; the summary of responses, which came out at the Budget, shows consistent support for this measure. We welcome it and look forward to it beginning in July 2026. Under clause 263, HMRC will be able to issue binding advance tax clearances for investments worth more than £1 billion over their lifetime. Although corporation tax is the most important area in which respondents argued for certainty, it could also cover VAT, stamp duty, land tax, income tax and other measures. In simple terms, a company planning a project on that scale can get specified advice on how the tax rules will apply and can get a written determination that both sides need to follow, subject to the caveats to which the Minister referred, including the change of law. Will the Government be keeping the £1 billion pound threshold under review? Will they commit to publishing clear statistics on the number of applications and approvals? Clause 264 sets out the binding nature of the clearances. Where HMRC issues a ruling and the facts remain consistent, it must apply that treatment so that the taxpayer can rely on it. That is what we need to see and what investors want to see: certainty. HMRC will be bound to maintain the treatment for five years, as the Minister referred to, and clause 265 will allow the period to be extended for a further five years. I cannot see a limit on the number of extensions that could be granted. Given that the purpose is to incentivise people to get on with investments and have certainty in advance of a project, will the Minister explain how multiple extensions could be appropriate, when that could appear to frustrate the ambition to get shovels in the ground? Clause 266 will allow HMRC to modify or revoke clearance if facts change or by agreement with the taxpayer. Flexibility is sensible, because clearly projects evolve. Will HMRC publish clear criteria setting out when, and on what grounds, it may modify a clearance? Will there be a right of appeal for developers who have previously been given certainty only for the advice to be changed? We do not want to undermine the certainty that is the whole purpose of this measure. Clause 268 provides that where the taxpayer withholds or misrepresents material facts, any clearance can be treated as invalid. That is clearly right in principle, but will there be guidance so that legitimate applicants are not deterred for fear of being second-guessed after the fact? Clause 270 will enable the Treasury to make regulations to amend part of the framework, including adding or removing tax matters on which HMRC can give clearances. It is important that there be consistency of approach, so will the Minister give a commitment that there will be proper consultation before any such changes are put into effect? These clauses represent useful steps towards greater tax certainty for investors, but I seek a little reassurance, particularly on the five-year extensions.
I will not detain the Committee long on these clauses. We support clause 274 and the sensible modernisation work, which—the Minister must have overlooked this, but I am sure he will acknowledge it in his reasonable way—began under the previous Government—
Not that one—the stamp duty one. Extending the oversight in clause 275 is clearly sensible, and I do not have anything to add on the cleaning-up operation in clause 277, the enabling of abbreviations in clause 278 or the title of the Bill.
I beg to move, That the clause be read a Second time.
I will speak to new clauses 33 and 35 in my name and that of my right hon. Friend the Member for Central Devon (Sir Mel Stride) and my hon. Friend the Member for Wyre Forest. New clause 33 would require a review of the effects of the Bill on businesses: within 12 months of the Bill being passed, the Chancellor of the Exchequer would be required to conduct a full assessment of how its measures affect businesses across the United Kingdom. The Chancellor would then be required to report back to the House with recommendations specifically on how business taxes could be used to encourage greater investment of profits and revenues, and on how to give firms more certainty about the tax system. The Committee might well ask why the new clause is necessary. I will happily explain. We have heard a common theme in Committee that the Bill places yet more strain and burden on businesses already facing a difficult economic climate. It is stuffed full of tax increases: the family farm tax, the family business tax, the cutting of venture capital relief by a third, taxes on carried interest, taxes on taxis, and higher duties and environmental levies. I could go on at length, but I suspect I would not be hugely popular. The Minister—indeed, Ministers—may think that the measures are going to encourage growth. We have not heard much about growth in this sitting, except from Conservative Members. The Exchequer Secretary spoke a lot about the need to have balance in public spending, yin and yang, but he did not talk about growth, which used to be the central driving mission of this Government. That seems to have disappeared, and little wonder: this Budget contained £26 billion of additional tax rises on top of the £40 billion in the first Budget, despite the Chancellor promising not to come back for more. Instead, the Government continue to drive the tax burden ever higher—to record levels. The new clause would require the Chancellor to look at the impact on businesses, including on increasing their profits and revenue. Let us look at the record of the Government: growth has flatlined; GDP grew by 0.1% in the three months up to November, having shown no growth at all in the period before; and inflation has been above the Bank of England’s target for the entirety of the last year. As a result, business confidence has collapsed. The Confederation of British Industry growth indicator—it comes from businesses, so I would not dismiss it out of hand—shows that firms expect output and headcount to fall. Businesses are closing as a direct consequence of the political choices that the Chancellor has made, many of which are set out in the Bill. The new clause would require that to be looked at, which is why it is so important; it would ensure that the Chancellor reviews and comes back to the House with proposals to use the tax system to support investment in growth. New clause 35 would require the Chancellor to publish, within 12 months of the Bill being passed, a full assessment of the Bill’s impact, particularly on small businesses, setting out the cumulative impact of measures in the context of wider pressures. Small businesses are the backbone of our economy, with more than 5 million of them making up 99% of total business population. Together with small and medium-sized enterprises, they employ around 17 million people—shopkeepers, market traders, tradespeople and so on, as well as the entrepreneurs who are driving growth, creating jobs and trying to keep our high streets alive. Sadly, under this Government, they are facing increasingly high costs and burdens, and the Bill adds yet more. It is little wonder that the Federation of Small Businesses has warned of the perils of a continuing economic doom loop. Its small business index shows that confidence is at minus 71—the lowest level since the pandemic. It is minus 100 for hospitality firms, which the Exchequer Secretary will not be surprised about. The CBI said that the Government’s, “scattergun approach to tax risks leaving the economy stuck in neutral”. When we hear these siren voices, it is important that Ministers stop, listen and take account of the wider effects and headwinds that people are facing. That is why new clauses 35 and 33 are so important—they would require the Chancellor to come and account for the impact of her measures.
Sadly, the Minister’s response is predictable; I think we have won the argument on why these measures would be useful have in the legislation, but we may not win a vote. The Minister refers to the TIINs once again, but as we have debated ad nauseum, they are forward looking, and not an after-the-event review of what has actually happened. That is the difference, which is why we keep returning to this. I beg to ask leave to withdraw the motion. Clause, by leave, withdrawn. New Clause 34 Review of impact of tax changes in this Act on households “(1) The Chancellor of the Exchequer must, within 12 months of this Act being passed, publish an assessment of the aggregate impact of the measures in this Act on household finances. (2) The assessment under subsection (1) must consider how households at a range of different income levels are affected by the measures in this Act.”—(James Wild.) This new clause requires the Chancellor of the Exchequer to publish an assessment of the impact of the measures in this Act on the finances of households at a range of different income levels. Brought up, and read the First time.
I beg to move, That the clause be read a Second time. The new clause would require the Chancellor to publish an assessment of how the measures in the Bill affect the finances of households across different income levels. It would shine a light on the real impact on ordinary families of the Government’s choices. As we all know, households are under immense financial pressure, and the measures in the Bill will, in many respects, not make that easier. The Office for Budget Responsibility has confirmed that growth in real household disposable income per person is set to fall dramatically, from 3% in 2025 to just 0.25% a year over the forecast period. That is not just below the OBR’s March forecast, but well below the average growth of the last decade, as the Minister knows full well. The OBR has been up front about the reasons for that growth, if we can call it that: it says that slower real wage growth and rising taxes explain much of the decline. For a Budget that was supposed to focus on the cost of living, that is a pretty damning verdict. Even the Government’s own watchdog says that the Government’s measures will make things worse, not better. With inflation continuing to stay well above target and well above the level that this Government inherited, families are continuing to feel the price of this economic mismanagement, and they will do for some time. Whether through higher alcohol duty, air passenger duty or vehicle excise duty, or by making the cost of taxis more expensive, the measures in the Bill will directly hit households, and the costs that go on to business will obviously feed through into their prices as well. Behind all that, soaring borrowing means that billions of pounds are now being spent just to service the Chancellor’s debt. Hard-working families are paying the price for the failure to get a grip and to get growth into the economy. That is why we believe that the impact of these measures on households should be monitored carefully, and why the Chancellor should publish a full assessment, as new clause 34 would require.
I am not sure about the analogy—I do not know whether the Minister was pulling that off the cuff. I do not think I heard him deny the figure that I quoted, which was that the OBR predicts that real household disposable income will increase by only 0.25% over the forecast period. I do not think that he is disagreeing with that figure, or that the average over the previous decade was growth of 1%.
Well, as my hon. Friend the Member for Wyre Forest says from a sedentary position, pandemics, wars and energy price shocks did have something to do with the impact, but the figure is a 0.25% rise over the forecast period. The Minister can boast about that growth and say he is going to beat the forecast, but that is the OBR forecast, in black and white, following the decisions in the Budget. The Minister’s comments almost tempt me to push my new clause to a vote, but on balance, I beg to ask leave to withdraw the motion. Clause, by leave, withdrawn. New Clause 36 Review of the effects of this Act on the administrative burden on businesses “(1) The Chancellor of the Exchequer must, within 12 months of the passing of this Act, lay before the House of Commons a report on the effects of the provisions of this Act on administrative burdens faced by businesses. (2) The report must in particular consider any— (a) change in the time or resources required by businesses to comply with obligations arising under this Act, (b) effects on small and medium-sized enterprises, and (c) measures taken by HMRC to mitigate any increase in administrative burdens. (3) The Chancellor of the Exchequer must make a statement to the House of Commons on the findings of the report within three months of its publication.”—(James Wild.) This new clause would require the Chancellor of the Exchequer to review and report on the effects of the Act on the administrative burden on businesses, including the impact on SMEs and any mitigation measures. Brought up, and read the First time.
I beg to move, That the clause be read a Second time. New clause 36 would require the Chancellor of the Exchequer to review and report on the effects of the Bill on the administrative burden on businesses, including the impact on small and medium-sized businesses, and any mitigation measures that have been taken. Throughout the Bill’s passage, we have been reminded not only of its financial impacts on businesses and working people, but of the red tape and regulatory cost it piles on to them. Whether it is the new reporting requirements faced by charities, the complex international rules or the new levies, such as the vaping tax and carbon tax, businesses will once again face an increased burden. The Ministers speak with zeal for deregulation—the Business Secretary is a particular repeat offender—and about the Government’s ambition to cut the administrative burden of regulation by 25% by the end of this Parliament. We know that red tape and regulatory compliance costs out at about 3% to 4% of GDP, which is about £70 billion. We all want to see that cut; it is an issue I have focused on since coming into this House, as I did in my previous roles in the Department for Business, Innovation and Skills. The case for action could not be clearer. However, as is so often the case with this Government, there is a big gap between what they promise and what they deliver. They talk about cutting bureaucracy, but the reality tells a different story. A growing list of quangos are being created: Great British Energy, the Independent Football Regulator, Great British Railways. For every body that they scrap, they seem to create at least one more, and possibly two. Last week, an important National Audit Office report warned that the Government’s regulatory reforms risk doing the opposite of what is intended. It concluded that the cost of new legislation may well outweigh any reduction in administrative burden—that 25% reduction that the Government have committed to, despite not allocating the required savings amounts to Departments. Businesses will be no better off. I am sure that the Public Accounts Committee, of which my hon. Friend the Member for Mid Bedfordshire is a member, will look carefully at that report in holding regulators, Ministers and civil servants to account. More than 530 pages of the Bill are taken up with technical tax changes and a lot of detailed schedules. Those changes carry a real financial cost, as well as a time cost, as staff will have to focus on them rather than on growing their businesses. That will result in a loss of productivity, particularly in small and medium-sized firms that lack the resources necessary to keep up with the changes. That is precisely why we need a clear assessment of the Bill’s impact on the administrative burden facing businesses. What, if anything, do the Government intend to do to mitigate that? After all the pre-Budget speculation—the column inches, leaks, briefings and counter-briefings—will the Minister, if he does not want me to press the new clause to a vote, provide a combined estimate of how much all the measures in the Bill will cost UK industry? Can he confirm whether the Bill moves us closer to the Government’s 25% reduction target, or further away from that goal?
I am surprised the Minister was able to say that last bit with a straight face when he was corpsing about carbon taxes earlier in Committee. As this will be the final time I speak in Committee, I thank you, Mrs Harris, along with Mr Efford and Sir Roger, for your time in the Chair. I thank the Clerks and officials, all the Members, who contributed so well to the Committee’s deliberations, and our Doorkeepers. I thank the Chartered Institute of Taxation, the Association of Taxation Technicians, the ICAEW and the many other organisations that provided valuable submissions on the provisions of the Bill. In particular, I thank the authors of the TIINs, which I have studied diligently. They do a very good job, but they do not do a review job. I thank Billy Falcon in my office, who has done sterling work in pulling together all the evidence from industry and in scrutinising the Bill, helping me to put together my remarks. I know that my hon. Friend the Member for Wyre Forest, the shadow Minister, will want to thank William in his office, who has performed a similar job, at rather short notice as well. He has helped to ensure that we have scrutinised the Bill thoroughly. I am grateful to the Exchequer Secretary and to the City Minister for their responses to our points and our new clauses. I am not sure which one of them I will see in February in King’s Lynn on the dodgems—
Perhaps both—there we go. Any other Members would be welcome to join us as well. I look forward to that. Sadly, the Exchequer Secretary was unable to give me that global figure, so I intend to press the new clause to a vote. Question put, That the clause be read a Second time.
Every week, millions of people up and down the country sit at their kitchen table and do the sums to work out what is coming in, what is going out, and what simply is not affordable. Sometimes the conversation may take a more serious turn to one of life’s biggest decisions: “Shall we start a family?” or “Can we afford another child?” Though romantics might love that to be a decision about whether people want the joy of bringing new life into this world, the reality is that many ask themselves, “Can we afford it?” They are not looking to someone else to help them make ends meet or pick up the bill; they are just doing the maths. That is a difficult conversation, but Members have to ask themselves a simple question before we vote: why should people on benefits get to avoid the hard choices faced by everyone else? Let us be clear about what the two-child cap is and what it is not. The two-child cap restricts the additional universal credit a household can get to the amount for two children, with carefully considered exceptions, such as twins or non-consensual conception. It does not apply to child benefit. It says that there is a limit, and a point at which it is simply not fair to make taxpayers fund choices that they themselves cannot afford to make.
I am sure that all of us in this House care about poverty and children’s prospects, but the answer is not to spend more, to hand out more money and to trap people in worklessness; the answer is to support people to work, and that is exactly the opposite of what the hon. Lady’s Government are doing. We all know that bringing up children is expensive and important, but when working couples are having to make tough decisions about whether they can afford to start a family at all, they should not be asked to pay higher taxes to fund someone else to have a third, fourth or fifth child. Someone who is in work does not get a pay rise because they have another child. If we are serious about avoiding a benefits trap, whereby it pays more to be on welfare than in work, we should be honest about what happens if we lift the two-child cap. Benefits for individual households will rise by thousands. Nearly half a million households will receive around £5,000 more on average. A single parent on universal credit with five children could get an extra £10,000 without doing any work, taking their household income to more than £45,000, untaxed—people have to earn about £60,000 to get that income from work! Around 75,000 households will get between £10,000 and £21,000 extra as a result of this Bill. For some households, the extra money will be more than a full-time income, after tax, for someone on the minimum wage.
It is exactly as my hon. Friend says. The extra money that some families will be receiving—without even working—would require such a high income to achieve through work. This simply exacerbates the poverty trap.
I will give way to Members on the Government Benches in a moment. I just ask them to think about the implications of the extra money that people will be receiving. Some people will—frankly and factually—calculate that they can boost their income far more by having children than by working. The best way out of poverty will not be work—[Interruption.] Government Members do not like to hear this, but I am afraid it is just rational. The best way out of poverty will not be work; it will be having babies. I want to address the argument that lifting the cap is necessary because women are not having enough babies. We know that a declining birth rate is a cause for concern, but falling birth rates are driven by many factors, including changes in people’s aspirations, the poor jobs market, the cost of housing and childcare, the penalties that motherhood imposes on careers and the changing nature of 21st-century relationships. Children are important and we need to have more, but the answer to that complex problem is not, “Here’s some cash for having a kid.”
The fact is that people do the sums. That is the reality of the world we live in. The hon. Gentleman indicated that he is a member of the Treasury Committee, so he must be interested—even though he is looking at his phone—in these unavoidable questions. Where will the £3 billion to fund this Bill come from? Where will the £14 billion over a five-year period come from? We all know where it will come from: taxpayers—either today’s or tomorrow’s—and the men and women who get up every morning, go to work, pay their bills and do the right thing. In the last Budget, as she knows, the Chancellor made a deliberate political choice: to raise taxes on people who work and save, so that millions who do not work will receive more in benefits. Working families already make hard choices. Many already strive and struggle to live within their means. This Bill asks them to shoulder even more.
Unfortunately, the hon. Lady does not seem to understand that hypothecated taxes are not a thing. What she has said simply does not make sense. The fact is that this Bill will cost the Government money, so it will cost taxpayers money, either now or in the future. That is simply the way it works.
I would be delighted to hear it.
My right hon. Friend has indeed made a significant point about the strange position in which so many Labour Members find themselves. Having previously voted against lifting the cap, here they are now, delighted about lifting it. Labour Members say that the Bill will end child poverty. They have read that increasing handouts will decrease the metric called relative poverty. However, relative poverty is a deeply misleading measure. It is not an accurate measure of living standards. It tells us nothing about whether people have enough to live on, or whether children will have better life chances. It can get worse when the country gets richer, even when living standards for the very poorest are rising, and it can look better when people are getting poorer. That is not progress; it is levelling down. Throwing money at one flawed metric is not a strategy. In fact, it risks doing the opposite of what Ministers claim to want, trapping families in long-term dependency rather than lifting them out of it. There is a proven way in which to improve children’s life chances, and that is work. Work allows parents to provide for their families, to pay the rent or mortgage, to put food on the table and clothes on their children’s backs, to set an example to their children, and to create structure and routine in their households. The Centre for Social Justice has found that children in workless households are four times more likely to be materially deprived, but under this Government the number of children growing up in workless households has risen at the fastest rate on record, and has now reached 1.5 million. Contrast that with our record, Madam Deputy Speaker. From 2014 onwards, the number of children in workless households fell year on year. We lifted a million people out of absolute poverty, including 100,000 children, and we drove unemployment down to historic lows. Under this Labour Government, unemployment is rising month after month, so, sadly, the number of children in workless households will continue to increase. Inflation is up as well, to almost double the level that the Government inherited. Higher inflation means that the money in your pocket is worth less: in other words, you are poorer. Fewer jobs, more unemployment, a higher cost of living—that is what the Government are doing to people. I say this to them: you do not lift children out of poverty by making the whole country poorer.
My hon. Friend has made the important point that no other party in the Chamber seems to realise what a serious financial position the country is in. We have to ask ourselves hard questions about what the country can afford.
If the hon. Gentleman listens to what I am about to say about the back and forth on this policy on his side of the House, he will see that he should think a bit harder before talking about “consistency”. So what is this Bill really about? If Labour truly believes that lifting the two-child limit is essential to tackling poverty, why did it take the Prime Minister 18 months to do it? Years ago he called the cap “punitive” and promised to scrap it, but then, once he had secured the leadership of the Labour party, he changed that tune. He said that Labour was not going to abolish the two-child limit. His Chancellor, who is sitting on the Front Bench, said that it was unaffordable. Just six months ago, the Government even suspended the whip from MPs who voted to lift the cap, but now that the Prime Minister’s leadership is under threat, it is the end for the cap. How long will it be before he goes the same way? That is the real reason we are debating the Bill today: we have a weak Prime Minister, running scared from his left-wing Back Benchers. Talking of the left wing, I expect that Labour will be joined in the Division Lobby later by some of the Opposition Members sitting to the left of me. No doubt the Liberal Democrats, the Scottish National party and Plaid Cymru will also be competing to see who can be the most generous with other people’s money. Reform UK has jumped on the welfare spending bandwagon too. You will have noticed, Madam Deputy Speaker, that we have not tabled a reasoned amendment today, not because we think that the Bill is perfect—I hope that is clear—but because any amendment would still leave us with a watered-down version of the cap. Other parties have got in a right muddle on this—one in particular—but to us it is clear and simple: the cap should stay. Anything else is a worse policy. Amending the Bill is not the right answer; the House should just vote it down. First and foremost, I have argued against the Bill on the grounds of fairness, but there is another reason to vote against it. More than 50% of households now receive more from the state than they pay in. The benefits bill is ballooning. Health and disability benefits alone are set to reach £100 billion by the end of the decade—more than we spend on defence, education or policing. The benefits bill is a ticking time bomb. We have to start living within our means. Other parties are simply in denial about the situation that we face in our country. The Conservatives are the only party that recognises how serious this is. We would not be spending more on benefits; in fact, we have explained how we would be saving £23 billion. We would stop giving benefits to foreign nationals, stop giving benefits for lower-level mental health problems and milder neurodiversity, stop the abuse of Motability, and bring back face-to-face assessments. We would get the benefits bill under control, and back people to work. Labour claims to be compassionate, but there is nothing compassionate about making welfare the rational choice, nothing compassionate about rewarding dependency over work, and nothing compassionate about saddling working families with higher taxes to fund political U-turns. Outside this place, people can see what is happening. They know when a system is unfair. They know when a Government have lost their way. They know when a Prime Minister’s time is up. Members should not be enticed by his final throws. They should step back and do what is right for the country. They should back people who do the right thing, back jobs and work and lower taxes, and back living within our means and raising the standard of living for everyone, rather than backing a policy that will add billions to the benefits bill and trap parents in a downward spiral of dependency. This Bill does not end poverty. It entrenches it, so we oppose it.
I beg to move, That this House has considered the impact of taxation on small and medium-sized enterprises. It is a pleasure as always to serve under your chairmanship, Mr Dowd, and I am grateful to colleagues for attending this debate. Small and medium sized-enterprises are the backbone of our economy. They create jobs, sustain local communities and keep our high streets alive. However, since the autumn Budget 2024, they have been met with higher taxes, higher costs and a Government who appear indifferent to whether they survive at all. It is almost impossible to know where to start with this debate, given the Government’s complete failure on the economy and sustained neglect of business and enterprise. The Prime Minister speaks the language of growth, but lacks the backbone to take the decisions needed to achieve it. If the debate were simply an exercise in cataloguing failure, we would be here all day. Instead, I will focus on the real-world consequences of that incompetence for the small and medium-sized businesses that keep our economy moving. In my constituency, I repeatedly hear the same message from business owners about staffing pressures, soaring energy bills and rising financial costs, which in many cases have more than trebled as a direct result of decisions taken by this Government. That is not anecdote; it is reflected clearly in the data. Research from Xero shows just how precarious the situation has become: two in five SMEs do not even know whether they were profitable last month. That is not confidence; that is business flying blind. Since the 2024 Budget, Labour has made a deliberate political choice to increase the burden on retail, hospitality and leisure. Those are not marginal sectors—they are the lifeblood of our town centres, as major employers and key drivers of local economic activity.
I entirely agree with my hon. Friend. Like him, I have held roundtables with hospitality businesses, which are saying the same thing as others: they want to see a cut in business rates. The Conservative pledge to entirely scrap business rates for businesses with bills under £110,000 is the right step and would be welcomed by business. I hope the Minister will take up that idea; good ideas should be taken up by the Government, but they seem to have a problem with doing that. In mentioning business rates, my hon. Friend reminds me that the Labour party manifesto—which I am sure you read, Mr Dowd—pledged that “Labour will replace the business rates system, so we can raise the same revenue but in a fairer way.” That clearly has not happened, because businesses are being hammered.
I hope the Minister is listening; this is a problem not just for constituencies in the south but across the country. It is not just Conservative or Lib Dem Members raising the issue—clearly Labour Members have the same problem. The Minister should look at all good ideas, but current Treasury orthodoxy is to carry on with what it is doing, and to tax anything that looks like enterprise, business or job creation, which will destroy our economy and harm our high streets.
I thank the hon. Member for, as always, bringing his experience from Northern Ireland. That emphasises the point that I was making: this is a whole-country problem. He is absolutely right that we are on a knife edge. We are at a tipping point for our small and medium-sized enterprises, and if they go under, the consequences will be dire. If one wants to speak Treasury speak, that means the Treasury will actually raise less money. The only way that the Treasury will raise more money is by freeing up businesses to expand, grow and employ more people. That is how we will get our economy going, not by taxing every single business until the pips squeak. I turn now to hospitality, which has been a focus of mine since I was elected. It underpins community life and provides work for young people and for those who rely on flexible hours. Yet the Government slashed retail, hospitality and leisure relief from 75% to 40%—an ideological and damaging decision—which will be followed by eye-watering increases in rateable values from April this year. UKHospitality data shows that the average pub will see its business rates rise by 15% in the first year, climbing to a 76% increase by year three. At the same time, online and out-of-town competitors are being protected. Distribution warehouses used by online giants will see increases of just 9% in year one and 16% by year three. This is not a level playing field; it is actively tilted against the high street. The Government’s so-called emergency pubs relief, announced this year, does little to address the scale of the problem. It is a sticking plaster, not a solution. Just one in 20 retail, hospitality and leisure businesses will benefit, and even then the average pub will still be paying £5,700 more in business rates than before. Business rates are simply not being reduced, and those pressures are compounded by the changes to employer national insurance contributions introduced at the 2024 Budget. For the hospitality sector alone, that amounts to £1 billion every single year. More than 774,000 hospitality workers have been dragged into employer national insurance for the first time, disproportionately affecting part-time staff such as bar workers and waiting staff. Flexible work is being punished. Young workers are being hit hardest, and employing people is becoming more expensive at precisely the wrong moment. That is not pro-growth and it is not pro-work. VAT policy has also failed small businesses. The £90,000 VAT registration threshold actively discourages growth and creates perverse incentives for firms to cap expansion. The Government have ignored repeated calls for a reduced VAT rate of 12.5% for hospitality, a policy that would support growth, improve competitiveness and align the UK with many of our European neighbours. The refusal to act is holding back an entire sector. The Parliamentary Private Secretary, the hon. Member for Hitchin (Alistair Strathern), is chuntering from his seat. I am sure he will be able to hold his own debate at some point to tell us all what is going on in his constituency. I suspect that, if he were honest, he would tell us about the impact that his Government’s policies have had on the sector, and how they are absolutely destroying his high street, as they are mine. These pressures are not theoretical; they are being felt by real businesses across my constituency. For example, at Birdies café in Farnham Park, business rates have increased by 450%—from £290 to £1,600 a month—a change that has already cost the business a member of staff. Energy bills have risen from £300 to £400 a month to £3,500 a month, while rising wage costs and changes to employment law have forced the owner into rolling three-month contracts—a worse outcome for workers, driven entirely by the Government’s pressure and policies. At the Bat and Ball pub, business rates are doubling from £800 to £1,600 a month. Minimum wage changes have added £56,000 a year to its wage bill. Across my constituency, community businesses such as the Antiques Warehouse, the Packhouse, the Bluebell pub, Serina, the Six Bells, the Healy Group, and Hamilton’s in Farnham; Acorns Coffee, the Dairy, Issaya and Smallworld IT in Bordon; Oliver’s café and wine bar and Davids menswear in Haslemere; Passfield Stores in Passfield; Little Latte in Tilford; the General Wine Company and Stedman Blower in Liphook; and the Greatham Inn in Greatham have all written or spoken to me and are facing the same relentless squeeze from Government tax and regulatory decisions. These are not failing businesses; they are community anchors being priced out by this Government’s policies. These issues are not confined to hospitality. Yesterday I met representatives of Medicines UK to discuss the impact of Government policy on suppliers of generic medicines. They raised serious concerns about the extended producer responsibility packaging tax. Packaging is obviously mandated by the Medicines and Healthcare products Regulatory Agency for safety reasons, leaving companies with little ability to reduce their tax liability. As a result, costs are either absorbed or passed directly on to the NHS and therefore the taxpayer.
My hon. Friend is absolutely right. One perverse outcome of the many taxes that the Government have put on is that although the NHS is, rightly, exempt from some of these tax rises, those who operate around the NHS—for example, care homes, hospices and other charitable institutions—are being hit. Even GP surgeries are being hit. This is the nonsense that we are seeing from this Government: people taking policy off the shelf from Treasury civil servants without understanding the real-world impact that it will have on businesses, the charitable sector and, in general, our constituents. As my hon. Friend suggests, these are taxes on the NHS by another name. Extended producer responsibility sits alongside the VPAG—voluntary scheme for branded medicines pricing, access and growth—levy, which takes 10% to 35% of NHS sales from manufacturers. If the measures are taken together, the Government are heavily taxing lifesaving medicine, often at higher rates than in comparable systems overseas, with clear implications for supply and sustainability. In my November debate on alcohol duty—which I am sure you read in detail in Hansard, Mr Dowd—I was disappointed by the Exchequer Secretary’s dismissal of the impact of tax rises on hospitality. Since October 2024, 90,000 hospitality jobs have disappeared. If that many jobs had gone from a car plant or an oil refinery, the House would be in uproar, but because it is pubs and cafés, Ministers look the other way. That is a scandal.
The hon. Gentleman makes an interesting point. It would be fairer to see some equity between the online providers and the retailers that are physically on the high street and that have to pay things like business rates. I can see the Minister has heard his point and, I am sure, will respond to it; whether the hon. Gentleman will get the answer that he wants, I am less certain. To go back to my point, because it is pubs and cafés that jobs are being lost from, Ministers look the other way, which is a scandal. I urge Treasury Ministers to review the cumulative burden placed on small and medium-sized enterprises through tax and regulation. I will take any response from the Minister today directly to the hospitality roundtable that I am hosting this Friday with publicans, restaurateurs and café owners. I will return to where I began. The Prime Minister talks about growth, but refuses to show the backbone required to deliver it. The Government’s failure on business and enterprise is not abstract; it is written into higher taxes, lost jobs and boarded-up high streets. If Ministers continue to ignore that, we really could spend all day listing the consequences. With the spending review now replaced by an Office for Budget Responsibility forecast, the Government have eight or perhaps nine months before the next autumn Budget. I urge them to use that time wisely. Boost business; do not blight it. Support SMEs; do not punish them, because when local businesses fail, communities pay the price.
You are in charge now.
It is delayed.
Will the Secretary of State instruct his officials who are putting together construction plans for a new mega-prison adjacent to HMP Grendon to actually listen to local voices, rather than insisting from a distance on traffic management plans that will put thousands of heavy goods vehicles down totally inappropriate rural roads?
In answer to questions from Members on both sides of the House in relation to the proscription of the IRGC, the Minister has rightly said that he wants to see that legislation come forward, but we still do not have a fixed timetable. Given that the EU, the United States, Canada and Australia have proscribed the IRGC, does he not think that it shows Iran incredible weakness from the United Kingdom for us not to be following suit? Furthermore, given that Hezbollah were part of the Government of Lebanon when the previous UK Government proscribed them, does he not think that there is plenty of precedent to just get on and do it?
Will the hon. Member give way?
I was not here earlier in the debate, so please forgive me, Madam Deputy Speaker. The hon. Gentleman talked about Members being able to back up their assertions. Who was it in the debate who suggested that the Chancellor did not care? I have never heard anyone on the Opposition side of the House saying that she does not care. Whether she is capable of dealing with it is a different matter entirely, but who was it who said she did not care, because I am sure we would all want to take it up with them and tell them to change their line?
The hon. Gentleman is being most generous with his time. I agree with the hon. Member for Harlow (Chris Vince). Does the hon. Member for Peterborough (Andrew Pakes) agree with him that it would be a sign of this Government’s success if we saw fewer food parcels being put out by food banks by the end of this Parliament than we do today?
Will the hon. Lady give way?