In common with countries around the world, the UK is experiencing global inflationary forces. We are taking action to support the country through that, with £37 billion of support targeted at the most vulnerable, but also focused on the long term in combating inflation and reducing prices through supply-side reforms, responsible fiscal policy, and a strong and forceful independent monetary policy.
Many people are grateful to the Chancellor for all the support he has given to help people with their energy bills, but many businesses are also struggling with very high energy bills. Will he consider giving further support to businesses to help them through that, preferably through cutting their taxes? It would be a tragedy if the Chancellor kept all those businesses going, at huge cost, through the pandemic, only to see them come a cropper after the pandemic because of the inflationary cost pressures caused by those lockdowns.
My hon. Friend is a champion of all the small businesses in his constituency, and rightly so. They have endured the pandemic and are bouncing back strongly on the other side, and we want to support that. On tax cuts, I hope he can reassure his small businesses that this year they are benefiting from two specific tax cuts—a cut of about £5,000 in business rates for a typical pub; and with the increase in the employment allowance, a cut of £1,000 on national insurance contributions—and we will of course support them in the years to come.
Consumer confidence is at its lowest level since records began because working people have less money to spend, but we are not all in this together. Pay for the top 1% of earners is increasing at 20 times the rate for the bottom 10%, and all the while the Prime Minister eyes up luxury tree houses instead of fixing the broken economy. Does the Chancellor realise that, to avoid a cost of living calamity, he must address the stagnant wage crisis created by Tory policies?
On wage policy, this is the Government who introduced the national living wage and, this year, increased the national living wage by about £1,000 a year. Combined with the cut to the universal credit taper rate and the increase in the national insurance threshold, that is significant support to those on the lowest earnings. It is right that we increase people’s wages, but the hon. Lady should start in her own office, where, I heard, she is perhaps not quite paying her own staff properly.
Some 4.8 million people in Britain are paid less than a real living wage. That includes cleaners, caterers and security guards employed by the Government. They work hard, they pay their taxes—in Britain, Chancellor—and they have been taken for granted for far too long. Will the Chancellor guarantee that all those who work for Government, whether directly or through a contractor, will be paid a real living wage from now on so that they can afford their bills, put food on the table and support their families?
We want everyone to be paid the national living wage. That is the law in this country. I am proud that we have increased it by £1,000 this year, which, combined with our tax cuts, is putting more money in the pockets of the lowest paid. I say again that there are lots of people being paid less than the national living wage but they should not include people in the hon. Lady’s own office.
My hon. Friend is a fantastic champion for his region and his support for a freeport on the Humber has been noted across Government. We are of course investing in our levelling-up programme, which has a direct bearing on areas such as the Humber. Crucially, we want to advance devolution within England to allow areas such as his to reap the full rewards and take full control of this exciting opportunity.
Recently, it was revealed that Her Majesty’s Revenue and Customs is failing to use the third-party data information that we get through international agreements to investigate how much tax is being evaded through offshore assets. Given that £850 billion is held offshore, with two thirds of it stashed in known tax havens, either Ministers are content for the super-rich to evade paying their fair share in the knowledge that their offshore wealth is not being systematically checked, or they will direct HMRC to use this reporting data, as is done in the US and Denmark, to uncover tax evaders. Which is it?
I am proud that HMRC is a leader in tax transparency, has a number of double tax treaties and co-operates with a large number of countries and international organisations to share tax information to ensure that people pay their fair share.
The global cost of living crisis is affecting many of our constituents, so it is welcome that those on means-tested benefits—one in three households—will receive £1,200 in support from the Government this year. When will that vital support be hitting bank accounts?
My hon. Friend is right to highlight the need to target support on those who most need it. I am pleased to tell him that the payments will be made for those on means-tested benefits in July, with the second of those payments following a few months later, in the autumn, for those on tax credits, so that deduplication can be done.
In his answer to my hon. Friend the Member for Glasgow Central (Alison Thewliss), the Chancellor seemed actually to be boasting that unlike the Scottish Government he is not willing to invest in tackling child poverty or in supporting carers. May I therefore suggest that instead of boasting about his poverty-inducing social insecurity system he tries looking at and replicating the Scottish child payment and the carer’s allowance supplement?
My right hon. Friend the Chancellor set out very clearly the choices the Scottish Government made at their most recent spending review, on which they can be judged. Let us be very clear: it is the Scottish Government and the Scottish Government alone who are wasting millions of pounds of this country’s and indeed their country’s citizens by pursuing a referendum. That is the last thing that Scotland or the UK needs, soaking up resources that should be spent on people who need them.
The east of England is the only region in the country without a dedicated children’s hospital which is why I am delighted that the Government have committed £100 million to building Cambridge children’s hospital. It has recently got planning permission and its exciting designs were shown last week to the Duke and Duchess of Cambridge, William and Kate. Will my right hon. Friend the Chancellor or the Chief Secretary to the Treasury commit to working with me to make sure the hospital is built on schedule?
This Government are determined to deliver for the people of Cambridgeshire. My colleagues at the Department of Health and Social Care will have heard my hon. Friend’s comments about the importance of this facility, and that is why we are investing £4.2 billion in new hospitals over the course of this Parliament.
The recent announcement by the Chancellor on support with energy bills was welcome as far as it goes; however, I remain deeply concerned about my constituents in North Ayrshire and Arran who live in park homes, many of whom are elderly and vulnerable, who have no clarity as to whether they will receive the same support for energy bills as every other household in the UK. Will the Chancellor put an end to this uncertainty and confirm today that he will make a firm commitment to ensure that park home residents do not miss out on this vital support?
The hon. Member makes an important point about people living in park homes—I also have constituents who live in park homes—and we are determined to ensure that people receive the help that they need with the increase in energy costs. The Department for Business, Energy and Industrial Strategy has been consulting on how we deliver support to people living in places such as park homes that do not have the same electricity or energy supply as others.
Yesterday morning, I had the pleasure of hosting a roundtable discussion with farmers from my constituency in collaboration with the National Farmers Union. My constituent Andy Cornthwaite informed me that he was struggling to employ extra staff to grow his business due to the current £85,000 VAT threshold. I am aware that my right hon. and learned Friend recently responded to a written question from my hon. Friend the Member for North West Durham (Mr Holden) on the subject, but will she consider an early review of the VAT threshold due to the increase in labour and/or materials costs for small and medium-sized enterprises?
The Government recognise that accounting for VAT can be a burden on small businesses. That is why we maintain the highest VAT registration threshold in the OECD and as compared with EU member states. At spring Budget 2021, to give businesses certainty, it was announced that the VAT threshold would be maintained at its current level until March 2024. Although there are no plans to change the VAT threshold at this time, we keep all taxes under constant review.
Last year, at the spending review, the Government announced that after years of austerity there would be a small real-terms increase in local authorities’ spending power—but that was when inflation was around 2% to 3%. Has the Chancellor seen the recent assessment from the Local Government Association showing that, with inflation at a somewhat higher level now, it will cost local councils £2.4 billion extra this year? What steps will he and the Levelling Up Secretary take to have talks with the Local Government Association about extra help for local authorities so that we do not get another round of austerity imposed on our constituents?
Of course, we invested £1.6 billion in local authorities in each year of the spending review precisely to help them with all the responsibilities that they must discharge. I would say to all Departments and devolved Administrations that, if we are to live within the spending review, it is vital that they make responsible choices about how to deliver services at best value to the taxpayer. We cannot be in a situation where we chase after inflationary pressures as that will only worsen and prolong the crisis that we face.
My constituents want to see a low-tax, high-growth economy where work and productivity are prioritised and incentivised. Will my right hon. and learned Friend assure me that the next move in taxes will be downwards and that that will happen at the first available opportunity?
The Chancellor set out at the spring statement that he would be cutting taxes. We have seen that already in the universal credit taper rate and in the increase in the national insurance contributions threshold to £12,570, which will come in just a few weeks. We have also seen the announcement that income taxes will be cut in 2024.
Small businesses in Ceredigion have told me how increasing electricity and fuel costs are having a direct impact on their operating costs in addition to an indirect impact in reduced demand for their goods and services. They are concerned that those costs are being disproportionately felt in rural areas. Does the Treasury share that assessment? Will it consider bringing forward bespoke measures to support the rural economy?
The hon. Member and I met recently to speak about the cost of fuel in rural areas. As I also represent a rural constituency, I appreciate his point. As he knows, the cut that we made to fuel duty is benefiting people in rural areas as well as those across the whole country. That, combined with the duty freeze, is £5 billion-worth of help for people. As we have discussed today, we are also providing targeted support to people: in particular, there is the £1,200 for 8 million households on benefits to help with the rising cost of living.
I call the Chair of the Treasury Committee.
Our country is facing its highest tax burden since the 1950s, although it should be acknowledged that, more recently, my right hon. Friend the Chancellor has been bringing taxes down rather than putting them up. Does he agree that, with the elevated level of inflation, now is not the time for dramatic cuts, but that once inflation starts to recede—hopefully at the end of the year or into next year—that will be the opportunity to come forward with serious tax cuts to get growth and jobs going and to support our constituents?
I thank my right hon. Friend, the Chair of the Select Committee, for his constructive and thoughtful dialogue with me on these issues. He makes an excellent point, and I direct him to the tax plan that we published at the spring statement to indicate the direction of travel on tax. There will be tax cuts in, I think, a day’s time to help people with the cost of living, tax cuts in the autumn to drive growth in business investment and innovation, and further cuts to personal taxation thereafter, once the situation stabilises.
Unpaid carers have seen their bills soar during this cost of living crisis. Many carers find it impossible to reduce their energy use, because the person for whom they are caring relies on electricity to power a wheelchair, a hoist or other vital equipment, yet last month the Government decided to exclude hundreds of thousands of unpaid carers of state pension age who are not in receipt of a means-tested benefit from the £650 cost of living support package by leaving carer’s allowance out of the qualifying benefits. Will the Chancellor reconsider this unfair decision, which risks putting even more carers into financial hardship?
The hon. Lady is right to pay tribute, as we Conservative Members do, to those who care for others. She should be reassured that of the 1 million people in receipt of carer’s allowance, 60% or more will be in a household that receives the £650 or, indeed, the disability payment. Carer’s allowance itself is not a means-tested benefit.
Investment in clean, low-carbon energy infrastructure will be crucial to creating long-term, rewarding jobs in coastal constituencies such as Waveney. Has my right hon. Friend carefully considered the impact that changes to tax policy on electricity generators would have on investment in the UK?
The Chancellor is looking very carefully at this industry, and he engages with industry stakeholders. My hon. Friend Peter Aldous will know that there are a number of ways in which the tax system supports low-carbon energy infrastructure, including through the super deduction, research and development tax relief, our consultation on broadening the emissions trading scheme, and the £1 billion investment in the carbon capture and storage fund.
The rural fuel rebate was introduced 10 years ago at 5p a litre and remains unchanged. With inflation and the cost of living crisis, what thought has the Treasury given to increasing the rural fuel rebate to at least 10p a litre?
The hon. Gentleman is probably talking about the rural fuel relief scheme, which is specifically targeted at a small number of locations where fuel prices are much higher than the national average, perhaps because they are a long distance from the refinery. In proposing an extension to the scheme, he should consider the potential unintended consequences. For example, people might drive out of their way to go to a petrol station in these rural areas.
Thanks to this Government, we have record low unemployment and more job vacancies than jobseekers, but almost 9 million people are economically inactive, including many who can work and many who have worked in the recent past. Does my right hon. Friend agree that getting more of this group back into work is key to filling the labour shortages that many Members have spoken about today, and to strengthening our economy for the longer term?
My right hon. Friend is absolutely right, and he knows about this from his time as Secretary of State for Work and Pensions. There is no doubt in my mind that the work we are doing, through the spending review, to provide more than £1.1 billion of measures to support disability employment and the effective management of health in the workplace will be important. The Government’s Way to Work programme is yielding fantastic results, and is a sign of our intention in this space.
We provide regular updates on the amount of money lost to fraud because all Members on both sides of the House want action to pursue perpetrators. We have shown our intention in this space with a series of targeted interventions against fraud, the most recent of which is putting in place the new Public Sector Fraud Authority, which goes live in July.
The laws around IR35 are loosely defined, and it looks as though Her Majesty’s Revenue and Customs is using the tribunals and courts to pin down the case law on it. The effect is that I now know of a number of people whose legal bills are many times what their original tax bill might have been. This is impoverishing them, and in some cases bankrupting them, and obviously it is terrifying them. Will the Chancellor institute a review of this procedure? Although it is important that HMRC raises all the money necessary, it should not do so by destroying lives.
As my right hon. Friend will know, IR35 was brought in to ensure that people doing the same job paid the same tax. I understand that he would like to discuss some issues with me, and I look forward to doing that this afternoon.
TaxWatch UK has just published research showing that on a like-for-like basis, the tax gap—or the money lost every year through unpaid tax—has gone up for two years in a row. That is before we include in the figures the estimated amount lost to error and fraud through the HMRC-administered covid-19 support schemes. The tax gap resulting from fraud is now 45% and stands at £14.4 billion. When will the Government do something about that? They could perhaps create a fraud Minister with the remit of tackling this growing problem, which takes money from other parts of the economy.
The Government are taking a number of steps to tackle fraud, including coronavirus fraud, which the hon. Member mentions. The taxpayer protection taskforce was set up to do specifically that. I will have a cross-governmental meeting this afternoon to understand how we can we work across Departments to tackle fraud.