Dame Harriett Baldwin
MP for West Worcestershire · Conservative · United Kingdom
“I welcome the Chancellor to his new role. I paid close attention yesterday to the long speech he made to reset the narrative and drive growth Britain. In paying tribute to his predecessor, will he recognise that she left the highest tax burden on record? Instead of postponing the words he could utter to my hon.”
“I welcome the new Prime Minister to the Dispatch Box. I note that in his statement he referred to the biggest issues facing the country as being “the economy and the cost of living crisis”. Will he accept that one of the things that has damaged our economy and caused prices to be higher is the tax-and-spend Budget in November 2024?”
“Could the Leader of the House make a commitment that the new Chancellor of the Exchequer will come to the House on the first day we are back from recess?”
“With a stroke of his Whitehall pen, the Secretary of State has just abolished Malvern Hills district council, Worcester city council, wonderful Wychavon district council and Worcestershire county council. He said in his statement that this is about making “real improvements to people’s lives and…communities”.”
“In recent weeks in West Worcestershire, I have met local police and the police and crime commissioner; the police and crime commissioner is being abolished, and the police are being reorganised. I have met the local health commissioners; they are being reorganised, and Healthwatch is being abolished.”
“Will the Leader of the House confirm that, given that the other place is sitting next week, there is nothing to stop him tabling a business statement to enable this House to sit next week? Given the enormity of the events happening in the Government next week, does he not think that would be a good idea?”
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“Those two taxes are the ones that were outlined by the shadow spokesman. The first is the non-dom taxation, which analysis shows would actually result in a net subtraction in tax revenue to the UK economy. Furthermore, they are proposing that we should be the only country in the world that taxes education, with a tax that would increase the cost to the state and again fail to pay for itself. So that was my scour of Wikipedia. I am now going to move on from discussing the Opposition rant to talk about the excellent points that the Financial Secretary to the Treasury, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) has made.”
“What an extraordinary experience that was. I have just listened for nearly 20 minutes to the hon. Member for Ealing North (James Murray) ranting on about tax hikes, but at the same time not proposing a single concrete economic policy. Indeed, Opposition Members have gone entirely AWOL. Where are they? There is no one on the Opposition Benches this afternoon. They are not going to oppose a single measure in this Finance Bill. I have scoured Wikipedia for any policy they might have come up with on taxation, and all I have found is that they are proposing an additional £28 billion in borrowing. That is simply more taxes for our children and grandchildren to pay in the future. I have also spotted that the Opposition have two additional new taxes that they think would be a good idea.”
“We also published a report on tax reliefs that identified more than 1,000 tax reliefs in our tax system, many of whose impacts or costs to the Exchequer the Treasury does not even know. They really should be thought of as expenditure lines, and they should be looked at a bit more carefully. Some of the steps announced in these measures, and indeed in last week’s National Insurance Contributions (Reduction in Rates) Bill, will do some good in that regard, and I want to highlight those.”
“The hon. Lady is the honourable exception that proves my rule. She is indeed engaging thoroughly in the debate from the void that is the Opposition Benches this afternoon. The tax on education is her party’s Front-Bench policy to add VAT to school fees. She may not be aware of that policy, but it is not a good one and I recommend that she use her influence to get her Front Bench to drop it. Let me turn to the excellent remarks made by the Financial Secretary to the Treasury. It is the view of the Treasury Committee that the tax system in the UK is far too complicated. We were concerned earlier this year, as we mentioned in our report, about the abolition of the Office for Tax Simplification, because we want to see the Treasury team look at more ways in which it can simplify the tax system.”
“The freezing of the thresholds is having side effects. As the Financial Secretary thinks ahead to next year’s fiscal events, I urge him to consider those two potential simplifications.”
“We should consider the opportunity for simplifying the tax system by getting rid of the taper altogether, as it is a terrible deterrent to the families who get caught. A person with a lot of children, earning between £50,000 and £60,000, can have a marginal tax rate of over 100%. It has become far too complex, and it is deterring many women from taking on more work. With the childcare offer we now have, it is time to look again. I also want to throw the evidence from our “Sexism in the City” inquiry into the mix. The City has the highest pay and, indeed, the highest pay gap in the country. Some of the best paid careers for women are in financial services, but we hear time and again that, because of the tax-free childcare cut-off at £100,000, some women are choosing to work less than a full week.”
“I would love to see the Financial Secretary focus on the unintended disincentives to taking on additional work and additional hours that exist throughout the tax system, at all sorts of income points. We have made huge strides on simplifying it for people on universal credit, making every extra hour of work pay, but once people get into the tax system, there are cliff edges and high marginal tax rates that deter them from working more. I will highlight two in particular. First, the Treasury Committee is currently holding an inquiry on “Sexism in the City,” and we have had evidence on how we could improve some of those marginal tax rates. The child benefit taper was introduced 10 years ago with my wholehearted support. It was the right thing to do in 2013, but it is now time to look again at how it interacts with the free childcare offer.”
“There is an increase in “the threshold for individuals with income taxed through Pay As You Earn to file a Self Assessment return to £150,000”. That is important because more and more people would otherwise be caught by the freezing of the thresholds. From April 2024, that threshold will be abolished altogether. There are also simplifications for individual savings accounts in this Finance Bill, as well as measures to simplify customs processes. I think the Financial Secretary’s heart is in the right place on simplification, and there is no question but that R&D tax credits were being abused. I draw the Financial Secretary’s attention to future opportunities for simplification while welcoming the fact that venture capital tax relief is being extended to 2035, as the Treasury Committee called for in our report.”
“He wants taxpayers to be able to understand what they need to do “at key life cycle points”, and he wants a tax policy that “does not…distort the decisions of taxpayers and result in poorly informed choices.” In summary, the Government want “the tax system to be simpler, fair and to support growth.” The Financial Secretary’s letter, which we will be publishing on the Treasury Committee website this afternoon, also outlines further simplifications, which were in the remarks he made earlier. They include expanding the cash basis for small businesses, improving the design of Making Tax Digital, simplifying research and development tax credits, which we welcome, and simplifying capital allowances and making them more permanent. I will draw to the House’s attention to other measures for individuals that he did not highlight.”
“We also had a great simplification in childcare entitlement with the announcement of a much wider offer of free childcare. These simplifications have been broadly welcomed. There are further welcome simplifications in this Finance Bill. The Financial Secretary to the Treasury was kind enough to write to me yesterday to summarise his principles for the simplification of the tax system. He wants tax rules that “have a clear consistent rationale”. He wants it to be “easy for taxpayers to get their tax right”.”
“I can also attest to the fact that the hon. Lady is the second Labour Back Bencher in the Chamber. That brings the total to the two who are visible to me at this time on the Opposition Benches— [ Interruption. ] I think that the hon. Member for Mid Bedfordshire (Alistair Strathern) is also providing the shadow Parliamentary Private Secretary role. National insurance is indeed a terrible regressive tax as it stands and I wholeheartedly endorse any measures that reduce that burden and simplify things. The hon. Lady has pointed out that this is work in progress, but I think she should welcome the abolition of class 2 national insurance. That has simplified the national insurance system, and in the spring Budget we had the welcome simplification of the lifetime allowance charge.”
“I thank my hon. Friend for securing this important Adjournment debate. My constituency contains the River Severn catchment, the River Teme and the River Avon, so it is also prone to flooding. Does he agree that it is wonderful that the Environment Agency has delivered schemes in Upton upon Severn, Pershore, Uckinghall, Kempsey and Powick? Does he also agree that it would be good if the Environment Agency would complete the schemes it is working on in Tenbury Wells and in Severn Stoke?”
“Malvern College in my constituency employs hundreds of local people, supports the local economy, earns export earnings for our country, ensures that people around the world love the UK, and is a huge supporter of our local schools. What kind of destructive ideology would put all that at risk and make the UK the only country in the world to tax education?”
“The UK-Rwanda partnership is a long-standing one. I first went to the country 15 years ago and have returned many times since, including when I was serving as Africa Minister. How many of the Opposition Members who are railing against the deal or the judges who have criticised the deal have been to the now Commonwealth country of Rwanda?”
“I, too, convey to Mr Speaker a “Get well soon” message. In addition to the amenities in Yorkshire and elsewhere in the north, there is a wonderful real ale pub called The Bell Inn at Pensax, in the north of the Malvern Hills. May I put on the record my strong endorsement of its bid to the community ownership fund?”
“He also said that “some people at the margin who thought it perhaps was not worth working might now be persuaded to actively try to get a job”, and that the measures will help retain people in the labour force. To conclude my short remarks on the narrow measures in the Bill, I wanted to focus on the evidence that we have received on the choice that the Chancellor took on national insurance, and how that is very much focused on the structural challenges that the UK economy faces.”
“Far too many things in our tax system act as disincentives to doing an extra hour of work. There are too many complicated withdrawal rates. The steps taken on class 2 and class 4 contributions represent a simplification of the tax system. Interestingly, we were told in our evidence session that the changes to class 2 and class 4 reduce “the incentive for people to incorporate to gain a tax advantage.” We should have a tax system that is broadly neutral on those two things. Professor Miles told us that he thinks that the national insurance cuts are “unambiguously” a more positive incentive to work. The Office for Budget Responsibility does not see the measures as inflationary.”
“In the evidence that we took, we heard from the member of the Office for Budget Responsibility, Professor David Miles, that the choice to go for the national insurance contribution reduction in the autumn statement created a “definite positive” as an incentive to work. The OBR forecast that it will bring close to 100,000 full-time equivalent extra workers back into the workforce. That is so important. Paul Johnson from the Institute for Fiscal Studies noted in his evidence that, compared with a similar cut in income tax rates, a cut to national insurance is more progressive. It benefits people in work, but only on their earnings up to £50,000. That is important context for the choice that the Chancellor took. I also welcome the simplification of taxes—a concept our Committee is committed to.”
“The shadow Minister and the Chief Secretary both talked about the choices that the Chancellor could make on this occasion. In the evidence that the Treasury Committee took this week on the autumn statement, we saw the clear impact of the Chancellor’s choices on two long-standing challenges for the UK economy: slow productivity growth and the fact that not everyone has returned to work since the pandemic. When we get to the Finance Bill, I will expatiate further on the supply-side measures on the labour market and permanent full expensing, but today I will focus on the national insurance contributions element, which the Office for Budget Responsibility also considered to be a supply-side measure.”
“I am not sure that I have ever heard a more grudging shadow Front Bench speech on measures that the Opposition support. They support them so wholeheartedly today that none of their Back Benchers has shown up to speak to them. I endorse the measures in the legislation. The Chief Secretary is right to point to the turning point that the UK economy has reached this year, thanks to the steps taken a year ago to ensure that fiscal policy did not cut across the central bank’s aim to reduce inflation to its target. Thanks to that, inflation, which might have been as high as 13% last year, has fallen to 4.6%. That means that today, the earnings of the average UK worker are rising faster than the rate of inflation. We are seeing real earnings growth. That is the turning point that I am talking about.”
“Can the Chancellor tell the House overall how much his measures will improve growth and how much they will help to drive down inflation over the course of next year?”
“What a difference a year makes. We have seen a reduction in the rate of inflation from 11.1% this time last year down to 4.6% this month, and we heard yesterday from the Governor of the Bank of England that he expects inflation to return to its target over the course of the next year or so. I was interested to hear that there are 110 measures in the announcement today which will drive growth in the UK economy. I welcome the fact that the Office for Budget Responsibility is now forecasting that this year we will see growth in the UK economy, in contrast to its forecast this time last year of a recession. The Committee looks forward to examining the 110 growth measures in detail next week, when we hear from both the OBR and the Chancellor himself.”
“On a point of order, Madam Deputy Speaker. Is it appropriate for the Opposition spokesman to be talking about measures that were actually not announced today?”
“All our constituents who pay mortgages are concerned about the increase in rates. Did the hon. Member hear the Governor of the Bank of England accept yesterday, as he has in earlier Treasury Committee sessions, that it is the Bank of England taking independent decisions to tackle inflation that has led to those increases? The hon. Member is wrong to label them “Tory” mortgage increases.”
“Energy prices continue to be volatile, but the Governor told our Committee yesterday that it is the inflation-busting hikes in rates that have generated the increased payments that our constituents are facing on their mortgages. Therefore, when the hon. Member for Ealing North says that these are Tory mortgage hikes, that is just throwing mud and trying to make it stick. It will not stick, however, because I am hopeful that rates are now high enough to bring inflation back down under control. In the analogy the Bank of England uses, we have marched to the top of Table mountain and are now walking across the top of the mountain, and the markets are now forecasting that the next rate change will be a decrease.”
“It was thanks to the help given through the energy price cap that households were able to get through last winter. I do not need to remind the House how serious inflation is for the poorest households. It is the worst tax on our economy, our businesses, and people’s budgets. It is a truly evil problem, and it is right that it has been the No. 1 focus of the Prime Minister and the Government this year. Clearly, with inflation at 4.6% there is still more to do. Yesterday, the Treasury Committee heard from the Governor of the Bank of England. The Bank of England is forecasting that we will get to a 2% handle, probably by the end of next year. That is in line with what the Office for Budget Responsibility is saying. Clearly, there are still risks to the upside.”
“What a difference a year has made to this country’s finances and to the economy. Last year, our inflation rate was 11.1%; it is now down to 4.6%. It is still too high, but that is enormous progress, thanks to the independent Bank of England and the decisions taken in this Chamber a year ago to manage the public finances prudently, in a way that would not increase inflation. We need to reflect on the progress that we have made in our economy. From listening to the—I am not going to use unparliamentary language—speech of the Opposition spokesperson, the hon. Member for Ealing North (James Murray), we would not think that anything had changed from a year ago. Things have changed enormously. This time last year, our economy was reeling from the energy shock caused by Putin’s evil invasion of Ukraine.”
“I am very glad the right hon. Gentleman made that intervention because it allows me to repeat the point of my argument. Of course I remember what happened, and we all saw it; it is thanks to the new Prime Minister and the measures that the Chancellor took this time last year that those effects have been worked through. We can see the progress not only in reduced inflation but in the OBR’s increasing its growth expectations—a year ago it was expecting a recession and now it is forecasting growth. The right hon. Gentleman makes my point: we have heard from the Governor, on the record, that those effects have dissipated and that the year has made all the difference.”
“My hon. Friend is absolutely right. Central banks around the world have lessons to learn from this recent bout of inflation, but I am comforted by the evidence we got yesterday from the Governor, which, while acknowledging there are still risks to the upside, shows that the world is on a trajectory of having dealt with this.”
“Schools in my constituency will welcome that record level of per pupil funding in real terms. In conclusion, I am delighted to see many of these measures and look forward to scrutinising more of them in detail, and I am particularly pleased that the Chancellor did not heed the Opposition’s advice to borrow £28 billion more every year.”
“I was very pleased to see the measures backing British businesses as well, because ultimately it is British businesses that will help our country grow and tackle the important productivity challenge and deliver more jobs and prosperity for the British people. I look forward to encouraging the Chancellor to think about simplifying even more. There were some simplifications that I welcome in today’s autumn statement, particularly in terms of national insurance for the self-employed. I look forward to seeing the detail of the measures that will help our constituents invest their savings and get better rewarded for their pensions by being able to access advice more easily. Measures the Chancellor can take in terms of the advice guidance boundary will help enormously. I welcome, too, the funding for a world class education.”
“I cannot stress how important the announcement on the national living wage is, because it means that those working full time on the national living wage now have an income of over £22,000, taking them over the poverty line. With so many vacancies in our economy, that will give more people the opportunity to work their way out of poverty. So I thank the Chancellor for that reform, and for the fact that now the income of the lowest paid comes predominantly from work, whereas in 2010 the income of those on the lowest pay was primarily from welfare. We can be proud of that real shift. I was pleased to hear measures about the grid in the autumn statement. Building sustainable domestic energy will require improving our grid, and building more renewables and new nuclear and domestic oil and gas.”
“I have gone through the small print of the documentation, and I do not think I have got to the bottom of all 110 of them yet, but I hope we shall do so when we take evidence from him, the OBR and independent economists next week. I welcome that the OBR is revising growth up this year, however, and that the measures announced in the statement were taken through the lens of making sure inflation continues to decline. Cutting tax is also an important priority because it rewards hard work, and it is good that earnings are again growing faster than inflation, which means households up and down the country are seeing disposable incomes rise once again. We all know that work is the best route out of poverty.”
“The right hon. Gentleman might think the UK should join the euro, but I shall fight strongly against him on that campaign. I want to return to the theme of what a difference a year has made in terms of the public finances. It is remarkable to see how the priorities in the autumn statement are being delivered. First, that is seen in reducing debt, something all on this side of the House are keen on otherwise we are just passing on the costs to our children and grandchildren. Last year’s forecast was 94.6%, which still feels uncomfortably high to me, and that is why I welcome that in today’s autumn statement debt is falling to 92.7% in the same year. I encourage the Chancellor to keep on moving in that direction. The challenge now is to support growth, and non-inflationary growth above all. The Chancellor announced 110 measures.”
“If the Leader of the House is not able to spare Government time to debate this important topic, would she be kind enough to write to her counterpart in the other place to express the concerns of our cross-party membership that the proposed committee would duplicate the work that we are already doing and have thoroughly established in this House?”
“May I ask for a debate in Government time on the scrutiny of financial services regulation? Since we left the European Union, that has been undertaken by a Sub-Committee of the Treasury Committee. We have appointed expert advisers, we regularly take evidence on new consultations from the regulators and we have published reports to keep the House informed about that scrutiny for well over a year now. I was therefore a bit surprised yesterday to see that the Liaison Committee in the other place has published a recommendation that it set up a financial services regulation scrutiny committee. Paragraphs 10 and 15 of its report suggest that that committee would substantially duplicate and potentially contradict ours, and of course it would cost Parliament a significant sum to set up.”
“On the Conservative Benches we all agree that the way to sustainable economic growth without inflation is through business investment. It is early days, but I wonder whether we have indications of how well full expensing is working for encouraging business investment in this country. Is the Chancellor considering making that full expensing permanent next week at the autumn statement?”
“We have also seen low pay fall dramatically: fewer than 10% of the many millions more people who are now in work are low paid, thanks to the national living wage. There was one omission from the Gracious Speech, in respect of what I regard as constitutional sexism in our country. No steps were announced to end the indefensible system of “men only” seats in the other place. The 92 hereditary peerages are almost exclusively for men, and the Hereditary Titles (Female Succession) Bill, which I tried to get enacted in the last parliamentary Session in order to change that, sadly did not make it on to the statute book. I shall try again to get a good slot in the ballot for private Members’ Bills, and if I do so, I will reintroduce that Bill. If I do not get a good slot, I will invite my colleagues to take up the baton.”
“I am also glad that Ministers will help the Bank of England to return inflation to target. It is the Bank of England that has raised mortgage rates, and the Governor of the Bank of England has acknowledged that the only increases that mortgage payers are now seeing are thanks to its efforts to control inflation and are nothing to do with the decisions of our now responsible Treasury. These decisions will help household finances, reduce public sector debt and safeguard the financial security of our country, about which my constituents care deeply. Tomorrow we should see a milestone in the quest to reduce inflation: the market expects the consumer prices index to decline to 4.7%, and, combined with wage growth of more than 7%, that means that real wage growth has returned to our economy.”
“In His Majesty’s Gracious Speech, there was not a lot to distract the Treasury Committee; that will come in next week’s autumn statement—and let me add, in case colleagues are interested, that in addition to our Committee’s scrutiny of that statement, the Bank of England and the financial regulators, we currently have open inquiries into access to finance for small and medium-sized businesses, quantitative tightening, sexism in the City and central bank digital currencies. I am glad that His Majesty, and also the Chancellor today, have emphasised the focus on increasing economic growth. I am glad that everyone now agrees that we should continue to take action to bring down inflation, ease the cost of living for families, and help businesses to fund new jobs and investment.”
“Our world seems increasingly dangerous, and around the perimeters of NATO we see terrible conflict and lots of mischief being played to stir up conflict. As a proud member of the NATO Parliamentary Assembly, I know how important it is that NATO countries continue to show unity and that our door is open to new members such as Sweden and Finland, as well as, of course, Ukraine, Moldova and, I hope, Georgia; I draw attention to my interest in that country. It is time that Putin realised that annexing his neighbours gives him more NATO on his borders, not less.”
“It has been said that we enjoyed a holiday from history between the fall of the Berlin wall and 11 September 2001, but unfortunately history has now etched two more horrendous dates into our memories: 24 February 2022 for Russia’s evil invasion of Ukraine, and 7 October 2023 for Hamas’s evil terrorist attack on innocent Israelis. It is against this tumultuous backdrop that we discuss His Majesty’s historic first Gracious Speech—the first King’s Speech for 70 years, and a speech that represents a profound moment in the stability and continuity of our unwritten constitution. That we were able to change our sovereign and change our Prime Minister twice last year and arrive at the Gracious Speech with entirely peaceful transitions of power is something that we should all find profoundly moving.”
“Will the Economic Secretary update the House on the progress he is making to enable our constituents to access personalised financial guidance if they are among the 93% of our constituents who cannot afford regulated financial advice?”
“The Government are indeed giving generous cost of living support to households on certain means-tested benefits this winter, but if someone is on one of those means-tested benefits and they earn £1 more, they have the potential to lose the full payment. I wonder if the Minister has noticed any change in people’s behaviour as a result of that disincentive to take on extra work.”
“Further to the question from the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), I welcome the UK’s strong leadership at the NATO summit and thank the Prime Minister for it. The unity, the resources and the new members send a powerful message. There is no timetable for Ukraine joining NATO, but its membership is only a matter of time. When that time comes, the extent of reconstruction and the investment needed will be vast. A lot of Russian assets are held here and are frozen. Can the Prime Minister elaborate even further on the conversations he had at the summit on how the UK will again play a leadership role in unlocking resources from those Russian assets to help with the reconstruction of Ukraine?”
“I should probably note in this context that I am a trustee of the Parliamentary Contributory Pension Fund. I warmly welcome the work that the Economic Secretary and the pensions Minister have done in this important area, and strongly endorse what the Economic Secretary says about its meaning that future pensioners will be able to retire with higher pension incomes. However, he will know that I have put another piece of urgent work in his inbox, about helping the 93% of our constituents who are unable to afford access to financial advice and have to rely on bog-standard generic guidance. Can he update the House on how his review of the advice-guidance boundary is going and how he will help the majority of people who save in defined-contribution schemes to get access to some sort of personalised coaching or guidance?”
“When the Chancellor announced that he was cutting fuel duty by 5p a litre, which cost the Exchequer billions of pounds, little did he expect that, as outlined so persuasively today by the CMA, it would feed through immediately into the profits of fuel retailers—although cynical British motorists may not be surprised, because they observed it themselves on a day-to-day basis. I welcome the steps that the Minister has announced, and urge him to act with greater speed in implementing them, but is he as surprised as I am that he has been asked this urgent question by the Liberal Democrats, who voted at their conference to hike fuel duty sharply?”
“The growth plan in September obviously had an impact on the mortgage market, but is the Economic Secretary to the Treasury aware that by November, the Governor of the Bank of England said, when he gave evidence to our Committee, that the increases in mortgages henceforth were down to the Bank of England’s own increases, because that temporary effect from the growth plan had dissipated? Increases since then have been largely due to the fact that inflation has been worse than the Bank was forecasting. Did the Economic Secretary note that this week I received a letter from the Chair of the Court of the Bank of England, saying that they are going to undertake the request that I sent for them to look at their inflation modelling and at why it has been incorrect?”
“Indeed, next winter a person who earns an extra £1 will take home £900 less because they lose the cost of living support entitlement, which we reflected in a recent report. People would actually be better off by working less, or perhaps not working at all, and surely that is something we do not want to see in our tax and benefits systems.”
“VAT creates a crippling compliance burden for small businesses and, as a result, there is a massive pile-up of companies just underneath that £85,000 turnover threshold. This shows that small, potentially dynamic, growing businesses—the engines of our economy—would rather stay under the threshold than deal with the VAT system. Unfortunately, the VAT threshold is far from the only cliff edge in our tax and benefits systems. At worst, these cliff edges result in people being worse off for earning more money. In recent evidence to a joint session of the Treasury Committee and the Work and Pensions Committee, we heard how people can suddenly find themselves much worse off, after losing entitlements such as free school meals and council tax support, when they earn only a little more money.”