James Murray MP: speeches 2024

Speeches

• 17 Dec 2024 · National Insurance Contributions (Secondary Class 1 Contributions) Bill · Hansard source

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  I cannot give way. I have given way to the hon. Gentleman many times in recent weeks, but I have about four minutes in which to address everyone’s comments. As hon. Members have set out, we recognise that the changes we are making today will have an impact on employers. Making these changes was a tough decision that we did not take lightly, but we are also clear that the revenue raised from the measures in this Bill and others in the Budget will play a critical role in both restoring economic stability and getting the NHS back on its feet. As a result of the measures in this Bill and the wider Budget measures, the NHS will receive an extra £22.6 billion over two years to deliver 40,000 extra elective appointments a week. The Government will provide support for Departments and other public sector employers on additional employer national insurance costs, including central Government, public corporations and local government. Independent contractors, including primary care providers, social care providers, charities such as hospices and nurseries will not be supported with the costs. That is the same as was the case with the changes to employer national insurance rates under the previous Government’s plans for the health and social care levy. Primary care providers—general practice, dentistry, pharmacy and eye care—are important independent contractors that provide nearly £20 billion-worth of NHS services. Every year, the Government consults each sector about what services they provide, and about the money to which they are entitled in return under their contract. As in previous years, the issue we are debating today will be dealt with as part of that process in the round. The Department of Health and Social Care will confirm funding for general practice, dentistry and pharmacy for 2025-26 as part of the usual contract process later in the financial year, including through consultation with sectors. I turn to adult social care. The Government have provided a real-terms increase in core local government spending power of around 3.2% for 2025-26, including at least £680 million of new grant funding for social care. The funding can be used to address the range of pressures facing the adult social care sector; again, they will be considered in the round. Some hon. Members have tabled amendments to exclude charities from the new national insurance rate and threshold. However, it is important to recognise that charities can benefit from employment allowance, which this Bill has more than doubled from £5,000 to £10,500. That will benefit charities of all sizes, particularly the smallest. The Government also provide wider support for charities, including hospices, via a tax regime. This tax regime is among the most generous in the world, with tax reliefs for charities and their donors that are worth just over £6 billion for the year to April 2024. I recognise that some hon. Members have shown an interest in the impact of this Bill on childcare settings, as highlighted in the amendments tabled by the hon. Members for St Albans, for Grantham and Bourne, and for Lagan Valley, and in the new clause tabled by my hon. Friend the Member for Walthamstow (Ms Creasy). Early years providers have a crucial role to play in driving economic growth and breaking down barriers to opportunity. We are committed to making childcare more affordable and accessible, which is why the Government committed in our manifesto to deliver the expansion of Government-funded childcare for working parents, and to open 3,000 new or expanded nurseries, by upgrading space in primary schools to support the expansion of the sector. Despite the very challenging circumstances that the Government inherited, the Chancellor announced in her Budget in October significant increases to the funding that early years providers are paid to deliver Government-funded childcare places. This means that the total funding will rise to over £8 billion in 2025-26. New clause 4, tabled by my hon. Friend the Member for Walthamstow, specifically refers to the eligibility criteria for employment allowance. I can assure her that they have not changed, except for the removal of the £100,000 threshold, which will mean that more organisations are able to access employment allowance. The eligibility of a particular organisation will depend on the make-up of an individual business’s work, which can be determined following detailed guidance from His Majesty’s Revenue and Customs. While every organisation will need to check its eligibility for the employment allowance, it is likely that many childcare providers will be able to access it. Finally, I will turn to the amendments to exclude universities from the new rate and thresholds for employer national insurance. We greatly value UK higher education in creating opportunity, being an engine for growth in our economy and supporting local communities. The Budget provided £6.1 billion of support for core research and confirmed the Government’s commitment to the lifelong learning entitlement. The Secretary of State for Education has confirmed that the maximum fees in the academic year 2025-26 will rise, for the first time since 2017, from £9,250 to £9,535. This was a difficult decision, which demonstrates that the Government are serious about the need to put our world-leading higher education sector on a secure footing. I would like to continue, Madam Chair, but I should stop now—

• 17 Dec 2024 · National Insurance Contributions (Secondary Class 1 Contributions) Bill · Hansard source

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  I am conscious that I have only a few moments to speak. I will not go through the four clauses of the Bill, as I take it that everyone will have read it already. I will instead go directly to the amendments that have been tabled, ahead of potential votes in a few moments. I will address the amendments tabled by the hon. Members for St Albans (Daisy Cooper), for Angus and Perthshire Glens (Dave Doogan), for Leicester South (Shockat Adam), for Grantham and Bourne (Gareth Davies), and for Lagan Valley (Sorcha Eastwood). These amendments seek to exclude certain sectors, including healthcare providers, educational settings and charities, from the new rate and threshold for employer national insurance. As hon. Members know, the changes in the Bill before us represent one of the difficult but necessary decisions that the Government have had to take to fix the foundations of our economy and our public finances.

• 17 Dec 2024 · National Insurance Contributions (Secondary Class 1 Contributions) Bill · Hansard source

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  I beg to move, That the Bill be now read the Third time. The Bill seeks to put into law one of the toughest decisions we made at the Budget in October. As I set out in earlier stages of the Bill, we recognise that there will be impacts on employers as a result of the changes, with employers facing difficult decisions. It will implement a difficult but necessary decision that, along with others, is critical to raising the revenue needed to fix the public finances, get public services back on their feet and restore economic stability. The Bill before us has three measures: first, an increase to the main rate of employer secondary class 1 national insurance contributions from 13.8% to 15%; secondly, a decrease in the secondary threshold for employers from £9,100 to £5,000 per year from 6 April 2025; and thirdly, changes to the employment allowance to support small businesses. The measure will protect small businesses and charities by more than doubling the employment allowance from £5,000 to £10,500 pounds a year from April 2025. In addition, the £100,000 eligibility threshold will be removed. Through the measures in the Bill and others in the Budget, the Government are taking the difficult but necessary decisions to fix the foundations of our economy. If hon. Members in other parties choose to vote against the Bill, the British people will see that they are voting to ignore the fiscal mess that we inherited. They are voting to cut investment in the NHS and to increase borrowing for day-to-day spending. Finally, I reiterate my thanks to hon. Members who have participated in the debate, and I extend my thanks to all the officials for their support. I commend the Bill to the House.

• 11 Dec 2024 · Finance Bill · Hansard source

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  My hon. Friend is right to point out that decisions on VAT reliefs are political choices. Indeed, the Opposition are showing which side of that choice they land on when it comes to education; through their new leadership, they are choosing to prioritise a tax break for private school fees over investment in state education. That is a political choice. I am very happy to stand behind where we are on that side of the debate. I will turn to some of the clauses in detail. The changes made by clause 47 will remove the VAT exemption from which private schools currently benefit on the education, vocational training and boarding they provide. Let me be clear: this policy does not mean that schools must increase fees by 20%, and the Government expect schools to take steps to minimise the increases for parents. Schools can reclaim VAT paid on inputs and make efficiency savings to minimise the extent to which they need to increase fees. Many schools have already committed publicly to capping fee increases at 5% or absorbing the full VAT costs themselves.

• 11 Dec 2024 · Finance Bill · Hansard source

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  Let me begin by thanking all hon. Members for their contributions. I will take a few moments to respond to some of the points raised and then to set out the Government’s view on the proposed new clauses. The shadow Minister, the hon. Member for North West Norfolk (James Wild), addressed new clause 8, which was tabled by the right hon. Member for Central Devon (Mel Stride). I will come to the new clause in a moment, but for the avoidance of doubt let me reassure the shadow Minister that higher education and teaching English as a foreign language are both exempt from and not affected by this policy. I also reassure him that HMRC stands ready to support schools. It has already published bespoke guidance for schools, run webinars, updated registration systems and put additional resources in place to process applications.

• 11 Dec 2024 · Finance Bill · Hansard source

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  I am going to make some progress. I thank my hon. Friends the Members for Falkirk (Euan Stainbank) and for Loughborough (Dr Sandher) for their comments. I feel that I am duty bound to add my congratulations to my hon. Friend for Loughborough on his engagement. The hon. Member for Hinckley and Bosworth (Dr Evans) is not in his place—sorry, he is at the Bar. Perhaps he could come and take a seat on the Benches. He asked an important question to try to get some clarity about the VAT treatment of combined fees that cover school meals, transport and other services. I hope that my earlier answer gave him some reassurance on that. I reiterate that I cannot provide advice for individual schools, but it is worth emphasising that the general principle is that if a school supplies a package of education for a single fee, that will normally be a single supply for VAT. That package could include a number of other elements such as transport or meals, alongside the main element of education. If it is a single supply, it is a single VAT liability. However, where a school supplies education and also supplies other elements for a separate fee, that will normally be treated as a separate supply. For example, if a school offers school meals alongside the education for a separate charge, those will normally be two different supplies, and they may have different VAT liabilities. Although the education would be subject to the standard rate of VAT, the school meals may be exempt, if they meet the conditions.

• 11 Dec 2024 · Finance Bill · Hansard source

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  Local authorities and schools already have processes in place to support pupils who move between schools at any point in the academic year. Analysis carried out by the Department for Education under the previous Government suggests that each year, almost 60,000 secondary school moves take place not at normal transition points or over the school holidays. We fully expect the majority of moves to take place at natural transition points or in the school holidays, rather than within the school year. I have been clear that ending these tax breaks for private schools has been a difficult decision, but it is necessary to secure additional funding that will help us to fulfil the commitments we made to improving education for all.

• 11 Dec 2024 · Finance Bill · Hansard source

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  This Government believe that all children should have the opportunity to succeed. That opportunity should not be limited by who they are, where they are from or how much their parents earn. We are determined that a young person’s background should not limit what they can achieve. That is why, despite the dire fiscal situation that we inherited and the numerous tough choices that it has entailed, the Chancellor prioritised investment in education at the Budget in October. At that Budget, the Chancellor announced real-terms growth of 3.4% in education funding, including a £2.3 billion increase to the core schools budget in England for the next financial year. This funding supports the recruitment of 6,500 additional teachers, in line with the Government’s commitment, and includes £1 billion for the special educational needs and disabilities system, to help the 1 million pupils in the state system with special educational needs. This Government will make sure that all children get the high-quality education that they deserve, as well as high-quality school buildings; funding has been announced for the school rebuilding programme, and for school maintenance, so that we can begin to tackle the maintenance backlog. These changes are crucial first steps to improving education for all children and meeting the aspirations of parents across the country. Investment in education has to be paid for, so I turn to the focus of this debate: our decision to end the VAT exemption for private school fees. In July, the Chancellor announced that the Government will end tax breaks on VAT and business rates for private schools. These policies are expected to raise £1.5 billion in their first full year, rising to over £1.8 billion a year by 2029-30.

• 11 Dec 2024 · Finance Bill · Hansard source

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  I will not give way because I am making a clear point. We have to make choices in politics about what to prioritise. We have said that the VAT tax break for private school fees is not something that we want to prioritise. We want to spend that money instead on improving state education for all children.

• 11 Dec 2024 · Finance Bill · Hansard source

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  The right hon. Gentleman is tempting me into hypotheticals and into trying to give advice to a school that does not yet exist—I will hold back from that, because I think the principles of our Bill are very clear on what VAT at the standard rate is applied to and what can be made exempt, in line with the existing rules on VAT. We heard several times from the right hon. Member for East Hampshire (Damian Hinds). I assure him that the Government costing has, of course, been fully scrutinised and certified by the Office for Budget Responsibility. He also spoke about capital funding. Obviously, pupil numbers fluctuate for a number of reasons. The Government have already announced more than £700 million to support local authorities over this academic year and the next to provide places in new schools and expand existing schools. I did note, however, that in response to an intervention by my hon. Friend the Member for Hartlepool (Mr Brash), the right hon. Gentleman seemed implicitly to admit to his Government’s failure to improve high-needs education in the state sector, which is precisely why our measures today are so important.

• 11 Dec 2024 · Finance Bill · Hansard source

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  The way that we treat private school fees and the other charges that private schools may levy has to be consistent with the VAT principles more broadly, which is why I have tried to explain how the supply of education and the supply of other elements would interact with the VAT system more widely. I will hold back from giving specific advice about that individual school, but I would encourage it to contact HMRC to get advice about its specific registration. If the school staff read what I have just said in Hansard , I hope they will see some information that will help them to understand how to approach this issue.

• 11 Dec 2024 · Finance Bill · Hansard source

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  As I said to the right hon. Gentleman, pupil numbers in schools fluctuate regularly for a number of reasons, and the Department for Education, and indeed the devolved Governments, already work with local authorities to identify pressures and take action where necessary. As I said in my earlier remarks to him, the Government already provide capital funding through the basic need grant to support local authorities in England to provide school places, and the Government have already announced £700 million over this academic year and the next, which can be used to provide places in new schools and to expand existing places. Finally, the hon. Member for Bexhill and Battle (Dr Mullan) raised the motivation behind our policy, which other Opposition Members also spoke to. Let me be clear on this: our decision to fix the public finances to fund public services, including education, means that difficult decisions have to be taken. Our choice to end the VAT exemption for private school fees has been a difficult but necessary decision that will secure additional funding, which will help to deliver on our commitments to improve education for all.

• 11 Dec 2024 · Finance Bill · Hansard source

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  In designing the Bill and making sure that it is clear, we decided to focus on those schools that provide full-time education. Following feedback during the consultation on the Bill, we decided to clarify some of the treatments, such as for nurseries, which I mentioned earlier, to ensure that they are treated appropriately. If they are fully stand-alone nurseries, they are not covered. In the original drafting of the legislation, we referred to nurseries that wholly comprise children below the compulsory school age. We changed that to wholly or almost wholly to ensure that having, for example, one pupil over compulsory school age would not trip a nursery into being covered.

• 11 Dec 2024 · Finance Bill · Hansard source

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  Given the record of the Conservatives over the past 14 years, I do not think it is ridiculous to assume that they might need some education on how public finances work, with the mess that we inherited and the desperate need for us to restore fiscal responsibility to public finances. Restoring that fiscal responsibility requires us to take decisions that are difficult but necessary to raise the finances to fund our priorities. We have taken the decision that we will not support a VAT exemption for private school fees and that we will invest the money that we raise in state education to ensure that the aspirations of every parent across this country can be fulfilled. That is a decision I will defend every time I am in this Chamber.

• 11 Dec 2024 · Finance Bill · Hansard source

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  What is connected is that if we want to fund public services and fix the public finances, we have to take difficult decisions. This is one of those difficult decisions we are taking today: a difficult but necessary decision to restore fiscal responsibility after the mess we inherited from the Conservative party and to fund our public services. It is necessary to take those decisions, so that we can get that funding into education for all. If the hon. Gentleman does not want to take that decision, he is, in effect, denying the choices that we are making about funding public services. I will now make some progress to address the new clauses tabled by Opposition Front Benchers. New clause 8, which was tabled by the right hon. Member for Central Devon, would require the Government to make a statement to Parliament about the impact of removing the VAT exemption for private school fees within six months of the Act being passed. It states that it “must include details of the impact on…pupils with special educational needs and disabilities…small rural schools, and…faith schools.” It would require the Government to “make a statement about the impact of the removal of the exemption on schools that take part in the music and dance scheme” within 18 months of the Act being passed. I want to make it clear that in developing this policy, the Government carefully considered the impact it would have, including the impact it would have on pupils with special educational needs and disabilities, rural and urban schools, faith schools, and schools that take part in the music and dance scheme. As I said before, the Government considered a wide range of representations, including over 17,000 consultation responses, before finalising the policy design. The Government set out the expected impact of the measure in a tax information and impact note published at autumn Budget 2024 in the usual way. I set out earlier today how the Government will ensure that those children with an EHCP, or its equivalent in other nations, will not be subject to VAT on any private school fees. I am not clear whether the right hon. Gentleman’s new clause, when it refers to “pupils with special educational needs and disabilities” refers to only those in the private sector, or whether he intends the new clause to consider also the 1 million or more pupils with SEND in the state system. If it is the latter, I am sure he will welcome the extra £1 billion for high-needs funding next year that we have been able to announce thanks to our decisions on tax policy, including that which we are debating today. In addition, based on the evidence provided, it is not apparent that small faith schools will be more affected by this policy than other schools. The hon. Member for Twickenham, the Front Bench spokesperson for the Liberal Democrats, tabled new clause 9. I think I have addressed most of those points already in my remarks today. To conclude, I hope I have been able to reassure Members that the new clauses are not necessary, for the reasons I have set out. I therefore urge the Committee to reject new clauses 8 and 9. Question put , That the clause stand part of the Bill.

• 11 Dec 2024 · Finance Bill · Hansard source

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  Let me explain to the hon. Gentleman how public finances work. Funding a tax relief or a tax break is equivalent to public spending, because it is money that cannot be spent on something else. The Conservatives have committed, through their new leadership, to repealing this policy if they win the next general election. That implies cutting state education—cutting the investment in education for all that we are prioritising.

• 11 Dec 2024 · Finance Bill · Hansard source

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  I thank the hon. Gentleman for his specific question. Let me just be clear that I am not giving tax advice for that particular school in my response, because I would always assume that any school would get its own tax advice. In general, the VAT treatment of a particular supply is determined by the predominant supply, so there are options available to schools. I am happy to pick the matter up with him outside the Chamber and to make sure he has the details in writing. As I said, I would not want to give specific advice to that school, but it is worth the school getting advice on the VAT treatment of the fees it charges based on the predominant supply. I will return to the impact of the policy we are proposing and the changes in clause 47. Government analysis suggests that the impact of the VAT policy on private and state school sectors is likely to be very small—ultimately leading, as I was saying a few moments ago, to 37,000 fewer pupils in the private sector, which includes both pupils who will never enter the private sector and those who will move.

• 11 Dec 2024 · Finance Bill · Hansard source

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  I thank the right hon. Gentleman for his question on the impact of the policies on children’s education. I will come to the details shortly, but to give him an overview of the forecast impacts, we estimate that ultimately there will be around 37,000 fewer pupils in the private sector. That is a combination of pupils who will never enter the private sector in the first place and those who will leave. They represent around 6% of private school pupils. We expect most of the moves to take place at natural transition points, such as when a child moves from primary to secondary school or at the beginning of exam courses.

• 11 Dec 2024 · Finance Bill · Hansard source

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  I thank the hon. Gentleman for raising the continuity of education allowance, because the Government greatly value the contribution of our diplomatic staff and serving personnel. The continuity of education allowance is therefore provided to ensure that the need for frequent mobility does not interfere with the education of their children. As he may know, the Ministry of Defence and the Foreign, Commonwealth and Development Office have increased the funding allocated to the continuity of education allowance, to account for the impact of any private school fee increases on the proportion of fees covered by the CEA, in line with how the allowance normally operates. The Government have carefully considered the impacts of the policies set out in clause 47 and received a wide range of representations covering topics that have already been raised in the debate today. The Government received more than 17,000 consultation responses, and my officials and I have met those representing schools, local authorities and devolved Governments. As a result of these representations, the Government have made several changes to the legislation, including to clarify the treatment of nurseries. In deciding on the final design of the policy, we have made sure that schools are treated fairly and consistently. A number of hon. Members have raised with me concerns about the impact of this measure on particular types of schools and on different pupils, so I am glad to have this chance to address some of those points. First, to protect pupils with special educational needs that can be met only in a private school, the local authorities and devolved Governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees. Secondly, as I just mentioned in response to the intervention on military and diplomatic families, the Ministry of Defence and the Foreign Office have agreed to increase the funding allocated to the continuity of education allowance to account for the impact of private school fee increases. The Government are aware that while many schools have always offered schemes enabling the prepayment of fees, there were concerning reports of some parents using such schemes in an attempt to avoid these fees being subject to VAT. The Government believe that allowing fees paid from the date of the July statement to the date this policy comes into force to be paid without charging VAT on them would be unfair on the vast majority of families who will be unable to pay years-worth of fees in advance. The changes made by clause 48 will therefore introduce anti-forestalling provisions that will apply to all prepayments of private school fees and boarding services on or after 29 July 2024 and before 30 October 2024. Finally, clause 49 sets out the commencement date for these changes, which will apply to any fees paid on or after 29 July 2024 relating to the term starting in January 2025. To conclude, the reason the Government are raising funding from the changes we are debating today is to increase investment in the state education system. Every parent aspires for high-quality education for their children. The removal of the VAT exemption for private schools will help to support the Government’s investment in schools and ensure that every child has a chance to thrive. We are determined to be a Government who enable the aspirations of all parents to be met and who ensure that all children have the opportunity to succeed. I therefore commend these clauses to the Committee.

• 11 Dec 2024 · Finance Bill · Hansard source

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  It is right that these changes be implemented as soon as possible to raise the funding that we need to deliver on our education priorities. As a result of the policies coming into effect in January, we will raise a forecast £460 million of additional revenue in 2024-25. We are ambitious for the state education system, and we want to get on with delivering the changes that we committed to in the manifesto.

• 11 Dec 2024 · Finance Bill · Hansard source

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  The reason why the Liberal Democrats hear this time and again from the Government Benches is that, time and again, they want all the benefits of investment without having to pay for it. That is a pattern that we see again and again in this Chamber.

• 11 Dec 2024 · Finance Bill · Hansard source

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  I am going to make some progress, because I will come to the right hon. Gentleman’s point in a moment, and I want to mention the points made by other hon. Members in the debate. We heard from the hon. Members for Twickenham (Munira Wilson) and for Richmond Park (Sarah Olney). Yet again from the Liberal Democrat Front Bench, we see a party that is happy to support our extra investment in education for all children, but that cannot bring itself to support the measures that we put in place to help pay for that investment in education.

• 11 Dec 2024 · Finance Bill · Hansard source

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  If the right hon. Gentleman is referring to the comments I just made in response to the shadow Minister’s remarks, teaching English as a foreign language and higher education are exempt from the provisions of the Bill.

• 10 Dec 2024 · Finance Bill · Hansard source

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  I am not entirely clear that that is what the Liberal Democrat amendment does. We have been clear that our intention is to end unjustifiably generous allowances. That is exactly what we are doing by abolishing the core investment allowance, which was unique to oil and gas taxation and is not available to any other sector in the economy.

• 10 Dec 2024 · Finance Bill · Hansard source

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  At the Budget in October, the Chancellor set out the decisions that we are taking to restore economic stability, put the public finances on a firm footing, and embed fiscal responsibility in the work of Government. Having wiped the slate clean of the mess we inherited, our Government can now focus on boosting the public and private investment that is essential for sustainable long-term growth. It is through sustainable economic growth across the UK that we will create wealth and provide security, making people across the country better off. That goal of raising living standards in every part of the UK so that working people have more money in their pocket is at the heart of the Government’s plan for change that the Prime Minister set out last week. That plan also set out the Government’s commitment to securing home-grown energy, and to protecting bill payers by putting us on track to secure at least 95% clean power by 2030. Making the transition to home-grown energy has required us to take immediate action to unblock investment, including deciding to reverse the de facto ban on onshore wind. The Government have their part to play, alongside the private sector, in making sure that investment happens on the scale and at the pace that we need. That is why the clauses that we are debating are so important—they are a key mechanism for raising the funding that is needed for that investment to be delivered. We are taking a responsible approach that recognises the role of businesses and their employees in the energy industries of today and tomorrow. Since we formed a Government, my colleagues and I have been working closely with the sector affected by the energy profits levy to make sure that the transition is managed in a way that supports jobs in existing and future industries. Our approach recognises that oil and gas will have a role to play in the energy mix for many years to come, during the transition, and it balances that with ensuring that oil and gas help to raise the revenue that we need to drive investment towards the energy transition. Our legislation delivers that approach, and I welcome the chance to set out the details of how it does so. The clauses that we are debating concern the energy profits levy, a temporary additional tax on profits from oil and gas exploration and production in the UK and on the UK continental shelf. The levy was introduced by the previous Government in response to the extraordinary profits being made by oil and gas companies—and, it is fair to say, in response to substantial political pressure from Labour Members.