MPs pass tax resolutions following Budget debate

8 Nov 2024

MPs have agreed the Budget resolutions following five days of debate on the 30 October Budget. Changes to agricultural property relief and employers’ national insurance contributions were amongst the most discussed topics with opposition MPs attacking the proposals and Labour MPs welcoming the tax changes as necessary for a fairer Britain.

62 Budget resolutions were voted on, containing measures which will appear in this autumn’s Finance Bill. 52 were passed without opposition but 10 were pressed to a vote:

  • Three resolutions relating to capital gains tax increases were opposed by the Conservatives, but voted through by Labour and SNP MPs
  • Three resolutions relating to the energy (oil and gas) profits levy were opposed by the Conservatives and SNP but voted through by Labour and Liberal Democrat MPs
  • A resolution relating to putting VAT on private school fees was opposed by the Conservatives and Lib Dems but voted through by Labour and SNP MPs
  • Two resolutions relating to stamp duty land tax for additional dwellings were opposed by the Conservatives but voted through by Labour MPs
  • A resolution on alcohol duty rates was opposed by Lib Dem and SNP MPs but voted through by Labour MPs

You can read the Budget resolutions here.

If you wish to read a summary of the main tax-related measures in the Budget, as well as our Institute's reactions please click here.

The Finance Bill was published the following day and can be read here. No date has yet been set for second reading debate.

Here’s a summary of tax-related comments from all political parties, with government responses to some concerns included at the end.

Conservative speeches

Rishi Sunak, the former Prime Minister, accused the government of raising taxes to record levels, suggesting that the Budget will “hobble growth”. He added: “It is the classic Labour agenda: higher taxes, higher borrowing, no plan for growth, and working people paying the price.”

Jeremy Hunt, the former Chancellor, believed that the Budget would lead tolower pay … lower living standards”. He labelled it the “biggest ever assault on our economic competitiveness since the 1970s”. Esther McVey described the Budget as “socialism at its worst”.

Mel Stride, the newly appointed Shadow Chancellor, said: “The Chancellor assured us that she will not fiddle the figures by changing the fiscal targets, yet we have seen the fiscal targets changed to allow this government to borrow an additional £140 billion”. This concern was echoed by Sir Geoffrey Clifton-Brown, newly elected Chair of the Public Accounts Committee.

Conservative MPs were strongly opposed to the increase in employers’ national insurance contributions (NICs) and the removal of agricultural property relief.  

Referring to the Office for Budget Responsibility’s (OBR’s) report, Richard Fuller, Shadow Chief Secretary to the Treasury, said that Labour’s “jobs tax would be passed on by most firms to their employees through reduced wages”.

Sir John Whittingdale observed that the NICs increase is estimated to cost businesses £25 billion and said the government cannot “fuel growth by punishing the businesses”. Alex Burghart, Joe Robertson and Edward Argar expressed concerns about the impact of the increase on those providing health services including care homes and general practices. They urged the government to exempt the sector from the increase, with Argar stating: “You cannot tax your way to growth and you cannot invest in public services without that growth”.

Dame Harriett Baldwin, a member of the Treasury Committee (and its former chair), criticised Labour for breaking promises, saying the changes announced were the “biggest unforced tax-raising Budget ever”. She challenged the government over the measures they have ‘imposed’ on businesses, citing the OBR, which predicts a short-term boost to growth but “a longer-term reduction in the sustainable growth rate of the British economy”.

Similarly, Nick Timothy, Jack Rankin and Robbie Moore considered the Budget ‘anti-business’. Moore quoted the Joseph Rowntree Foundation which has estimated that the average family business would be £770 worse off. Rankin believed that the tax burden is “higher than is necessarily sustainable” and called on the government to focus their public services efforts in the first instance on productivity reforms.

Mike Wood argued that the increase in business rates would add £6,000 to the bills for pubs. He added: “We are seeing French labour laws and German taxes, and I fear that will lead to Spanish unemployment rates”.

The “40 billion tax bombshell” will have a huge burden on businesses, suggested Peter Bedford, arguing that capital gains tax does not only affect the richest. He made the case that ordinary working people save and invest as well to make a ‘modest’ profit on small shareholdings. George Freeman said that Labour’s proposed changes to capital gains and inheritance tax could ‘kill’ the very engine that drives innovation in the economy.

On inheritance tax (IHT) changes many Conservative backbenchers including Tom Tugendhat said that Labour were potentially destroying family farms and businesses. Geoffrey Clifton-Brown said: “The purpose of that tax relief was to ensure that working farms that provide our food will not have to be split up after the death of a family member.”

Mims Davies accused the Treasury of miscalculating the impact of changes to agricultural and business property relief, stating that, to cover IHT, firms will need to extract capital at a 38% dividend tax rate, higher than the proposed 20% IHT rate. With capital gains tax at 24%, it’s impractical for family businesses to pass on shares, she said. Greg Smith questioned the statement in the agricultural property relief policy paper that “any unused allowance will not be transferable between spouses and civil partners.” In an interview with the BBC, the Chancellor had claimed otherwise, he said.

Sir Bernard Jenkin and Andrew Rosindell expressed disappointment that inherited pensions will face IHT.

On other measures, Harriet Cross warned about the negative impact of increasing the windfall tax, suggesting that the changes will see the Treasury receive 83% of cash flow from the oil and gas sectors – the highest share ever received.

Sarah Bool, Vice-Chair of the All-Party Group on Investment Fraud, urged the government to protect victims of past pension and investment fraud, calling for enforcement action against them to be suspended and for HMRC to use its ‘discretion’ in debt forgiveness.

Liberal Democrat speeches

Sir Ed Davey, Leader of the Lib Dems, suggested that Labour is repeating Conservatives’ past mistakes. He believed that increasing employers’ NICs is a tax on jobs and people that would result in reduced household incomes. Davey suggested that the Chancellor has chosen ‘unfair’ tax increases instead of adopting Lib Dem proposals to ‘reverse tax cuts for the big banks’.

Calum Miller and Steve Darling shared hospitality sector concerns that due to the NICs increase, they would see a ‘significant’ reduction in employment. Vikki Slade argued that employers will now be calculating whether they can give a pay rise to workers next year, questioning why the government are not taxing the wealthiest rather than ‘hitting’ small businesses.

Will Forster claimed that Labour’s actions “do not support” their growth aim, while Claire Young and Andrew George argued that the impact of the employers' NICs increase on GPs and care providers has been ‘overlooked’ by Labour. Sarah Gibson asked whether the government would consider lowering the earnings threshold for surgeries.

George also discussed a loophole in the business rates system, suggesting some holiday home owners have managed to abuse it by using small business rate relief, and asked the government to investigate the matter further.

Most of the Lib Dem MPs suggested that the government should have adopted their ‘fairer’ policies to raise revenue. This included Sarah Olney, who argued that Labour could have asked the social media giants to pay more, rather than taxing education. John Milne and Helen Morgan agreed, emphasising the important role private schools play, in particular for special education needs children.

Like the Conservatives, Lib Dems disapproved of the restriction of agricultural property relief. Brian Mathew argued that the impact on small farms that are slightly larger than the £1m threshold will be ‘devastating’ and John Milne warned the move would ‘wipe out’ family farming that has shaped the countryside for generations.

On alcohol duty, Wendy Chamberlain believed taxing based on the strength of alcohol is not the “right way” and would not have an effect in supporting responsible drinking. Susan Murray welcomed the increase in capital funding for Scotland while Zoe Franklin and Liz Jarvis were disappointed that the two-child benefit cap was not included in the Budget.

Bobby Dean, a Treasury Committee member, said: “I want the country to start a more honest conversation about tax. He added: “The Labour manifesto proposed only £5 billion in tax rises, but yesterday we were presented with an increase of £40 billion”. While he acknowledged the ‘black hole’ in the economy he suggested numbers in the Budget “do not add up”.

Labour backbench speeches

Many Labour MPs including Helen Hayes, Paulette Hamilton, Danny Beales, Sarah Hall and Kirith Entwistle welcomed the measures announced. Beales claimed tax increases fall on those with the broadest shoulders. Hall said this was “a Budget for change”. Entwistle argued that the decisions made would build a ‘fairer’ Britain.

Ruth Cadbury, Alex Ballinger, Torsten Bell, Sam Carling and John Slinger defended Labour’s Budget, with Bell claiming that “tax rises put in place by the previous government were much larger than the tax rises” that Rachel Reeves had announced. Carling made the case that a capital gains tax increase that has been criticised by some is paid by less than 1% of people. Slinger said that freezing the small business multiplier for one year will protect more than 1,000 small businesses in his constituency.

Dame Meg Hillier, Chair of the Treasury Committee, supported the government’s ‘tough’ choices and described the increase in employers’ NI as “an understandable measure”. She warned that the promise to reduce the tax gap was “very bold, and difficult to deliver”, adding “[T]he Chancellor will appear in front of our Committee, without fear or favour, over the coming years and we will be challenging her and her Ministers to make sure that they stick to the promises that she has laid out today.”

However, a number of Labour MPs raised concerns and suggested alternative solutions to raise revenue for public services.

Liam Byrne suggested that the Chancellor could have “restored fairness” to the tax system by raising money to increase the national wealth fund. Likewise, Nadia Whittome and Matt Western expressed concern about the UK’s wealth inequality with the latter MP arguing that the government should address “the imbalance of regressive flat taxes”.

While supporting the changes to non-dom status and IHT, Clive Efford believed that wealth is not being taxed the same as work. He said, “Despite that growth in wealth, wealth taxes have not increased as a share of overall taxation or as a share of GDP”.

Neil Duncan-Jordan warned about the increase in NICs contributions for employers and urged the Chancellor to consider granting hospices an exemption, in recognition of their difficult work.

The Chair of the All-Party Parliamentary Group for Responsible Vaping, Mary Glindon, said the vaping tax proposed by the Chancellor “is unsustainably high” and discourages a small number of smokers from quitting. However, her colleague Becky Gittins disagreed.

Jim Dickson called on his party to extend the “sugar tax” policy to other products, including foods high in salt, fat and sugar. Kate Osborne expressed disappointment the Budget did not lift the two-child benefit cap or increase the pension credit threshold.

Other parties

SNP: Dave Doogan opposed the NICs increase, arguing that it will hit around 340,000 SMEs in Scotland. He continued that with the threshold down to £5,000 this is a “double whammy tax on jobs”. Graham Leadbitter urged the government to cut the duty on spirits to generate more sales and revenue to support public services.

DUP: While questioning Labour's ‘black hole’ accusation, Sammy Wilson said that curtailing agricultural property relief will have ‘huge’ implications for farmers. He welcomed that the loan charge would be reviewed but enquired why it had not been outlined in the Red Book.

Jim Shannon asked whether the government would consider raising the IHT threshold for farmers to £4-5 million. Gavin Robinson described the Budget as “sugar rush” - something that will make us feel good immediately but then peter out. Gregory Campbell suggested that due to the minimum wage increase many working in the private hospitality sector would “become taxpayers overnight”, urging the government to be ‘honest’ with businesses.

Reform: Rupert Lowe claimed that Labour has taken “working taxpayers for fools”, adding that small businesses will suffer as a result of the Budget.

Plaid Cymru: “Wales deserves more than broken promises” stated Llinos Medi who argued that the Budget has done little to fix issues in Wales, with the NICs increase ‘punishing’ businesses that are creating jobs.

TUV: Jim Allister believed that changes to agricultural property relief could diminish the viability of the farm and food production.

Independents: Imran Hussain and Richard Burgon welcomed some of the measures in the Budget, however Apsana Begum and Alex Easton criticised it. Begum suggested that investment is not on the scale needed and introduction of wealth tax could have been a better way to raise revenue.

Iqbal Mohamed was disappointed that Labour did not remove the two-child benefit cap. Zarah Sultana stated that: “We need a fair tax system that places the burden on those who can pay the most”.  She suggested that a 2% tax on assets over £10 million could raise £24 billion annually.

Government responses

James Murray, Exchequer Secretary to the Treasury, defended the government’s Budget suggesting that before considering any changes to taxes “we make sure everyone pays the tax they owe by closing the tax gap”.

Describing a series of policy changes, he acknowledged concerns raised in regard to agricultural property relief and argued that the total value of a farm should not be confused with the value being passed on at death.

Pensions minister Emma Reynolds also acknowledged MPs’ concerns about this issue and emphasised that a couple who jointly own a farm will be able to pass on land and property valued up to £3 million to a child or a grandchild tax-free.

Jonathan Reynolds, Secretary of State for Business and Trade, told MPs that the total number of farms that will be affected is “only 500” for the 2026-27 financial year. He continued that any IHT liability has a 10-year, interest-free payment period.

On worries that business investment will fall in the long term according to the OBR, the minister argued that the OBR cannot model the government’s “wider pro-business changes”.

Reynold acknowledged the hospitality sector concern which was raised by some, saying: “If the living wage goes up for people employed … that is a business cost”. However, he emphasised that the government has put in place a system that accommodates the ‘burden’: along with the increase in NICs, the government has doubled the employment allowance to £10,500.

Asked (by Pete Wishart) whether £500 million in NICs contributions for Scottish public sector employees will be fully compensated directly to the Scottish government, rather than added to the block grant, Chief Secretary Darren Jones answered: “It is right that the government are not legislating to exempt non-public sector organisations from these changes, as the Secretary of State said, we pay for these services and it will be reflected in their settlements.”

Wednesday 30 October Full debate

Thursday 31 October Full debate 

Monday 4 November Full debate

Tuesday 5 November Full debate

Wednesday 6 November Full debate