Peter Aldous leads a debate on the unintended consequences of the proposed changes to the taxation of furnished holiday lettings. He calls for the proposals to be put on hold whilst a consultation is carried out, as the one-size-fits-all approach will hit hard some areas and a more targeted, localised solution is needed.
Peter Aldous (Waveney) (Con)
I beg to move,
That this House has considered the taxation of furnished holiday lettings.
It is a pleasure to serve with you in the Chair, Dame Siobhain. I welcome the Minister and other colleagues to their respective places.
This debate arises because of the changes announced in the Budget to the taxation of the furnished holiday letting—FHL—regime, which have already acquired the nom de plume “the staycation tax”. As I mentioned in the Budget debate on 12 March, I am concerned that the proposal could have unintended consequences.
I acknowledge the thinking behind the change, because there are areas of the country where local people are having great difficulty renting local properties, and it is possible—I will put it no more strongly than that—that holiday lettings might be contributing to that. In other areas across the UK, however, holiday lettings are not having such a negative impact, and they are a vital component of local economies all around our four nations. That is the case in the Waveney constituency, although I acknowledge—this may be where we have difficulties—that there are significant challenges for local people looking to rent a home in nearby Southwold, in the constituency of my right hon. Friend the Member for Suffolk Coastal (Dr Coffey).
Duncan Baker (North Norfolk) (Con)
I thank my hon. Friend for giving way on that point, which is a good one for North Norfolk, where there are clearly problems with housing supply. I put it to him that, in an area such as mine, which has a large number of second homes, the policy change may well lead to more homes coming on to the market to be snapped up by people who are buying them as second homes, making the situation even worse in picturesque places like North Norfolk.
Peter Aldous
My hon. Friend may have read my speech, because that is one of the issues that I will highlight, and I will mention some statistics that the Professional Association of Self-Caterers—PASC—kindly provided to me to make that point.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Member on bringing the debate forward. I suspect that I might be about to add a controversial opinion, but we will see how it goes. As a representative of what I believe to be the most beautiful constituency in the United Kingdom, Strangford, it is my desire to attract more bed nights to the area, and the Airbnb-type scenario was one way in which we felt that could be done. Does the hon. Member agree that the removal of the tax incentive may prohibit people from doing up the old granny flat in the garden, and so prevent the local economy from benefiting from bed nights? I see the benefits of the incentive, and I think it could be to our advantage.
Peter Aldous
I thank the hon. Gentleman for that intervention. In certain parts of the country, the incentive’s removal might well have benefits, but I argue that it is a rather blunt instrument, which could have unintended consequences in other areas.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I understand the concerns about housing shortages, which I have in my constituency. The answer to the shortage of housing, however, is to build more houses; it is not to punish what is a very important part of the local economy, including in parts of the country like mine. The advantage of such a tax provision is that it allows for the improvement and professionalisation of the sector, which at the end of the day can only improve the visitor offering.
Peter Aldous
I agree with the right hon. Member on both counts. There are other measures being introduced, such as the register, that I believe will help bring professionalism into the sector. In fact, I know from the constituents I have spoken to and the businesses that operate this type of furnished holiday accommodation that they are incredibly professional businesses.
Simon Jupp (East Devon) (Con)
Several owners and operators in East Devon have been in touch with me about the changes, about which there is widespread concern. Does my hon. Friend agree that the Minister should hold a public consultation about the changes—my hon. Friend might be intending to say that—and consider a list of exemptions, for example if a property cannot be a permanent residence because it is on a working farm?
Peter Aldous
I agree with my hon. Friend wholeheartedly, and I intend to develop some of those points.
Anne Marie Morris (Newton Abbot) (Con)
Will my hon. Friend give way?
Peter Aldous
I will give way one more time at this stage, after which I will have to make some progress.
Anne Marie Morris
On the basis of the contributions that have been made, does it not seem obvious that what we need is a proper impact assessment of the reform? We need to look at the impact on the economy, the impact on housing and the impact on the tourism sector. I am sure my hon. Friend will also come to the expected impacts on gross value added and on jobs.
Peter Aldous
I agree wholeheartedly. I had planned to raise a lot of the points that have been made; let me now get on to back them up with the evidence.
Since the Budget, I have been contacted by many constituents highlighting their concerns. I am grateful to them for their feedback, as well as to PASC, the Short Term Accommodation Association and the National Farmers Union for all their briefings and advice.
In some ways, I have a sense of déjà vu, in that the proposal mirrors in many ways those put forward in the 2012 Budget to tax Cornish pasties and static caravans. In his Budget speech, my right hon. Friend the Chancellor stated that he had concerns that the current tax regime for FHLs is distorting the market and that there are not enough properties available for long-term rental by local people. Therefore, to make the tax system work better for local communities, he plans to abolish the FHL regime. In the accompanying Red Book, the proposals are described as having the advantages of tax simplification, creating a level playing field and supporting people to live in their own areas. I have concerns that the proposals will not fulfil those objectives, and I hope I can illustrate why.
The Office for Budget Responsibility has calculated that the measure, along with the abolition of the multiple dwellings relief, will raise £0.6 billion of additional receipts by 2028-29. That figure pales into insignificance compared with the potential loss of value added and local jobs, which I shall outline shortly.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (Ind)
I am grateful to the hon. Member for giving way and for securing the debate. In a response that I had from the Chancellor last week on this very issue, he talked about housing and the distortion for local people, but there is no evidence that if these houses went on sale they would become affordable houses by any manner of means. To echo the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael), it is many years since the housing charity Shelter told me that there were more second homes in Norway than in Scotland, but there were more first homes in Norway as well. The point is, let us have more first homes, but let us not be damaging the very weak economy of many of Scotland’s islands by doing that.
Peter Aldous
I thank the hon. Gentleman for that point, which he made particularly well. Hopefully, it will also come out as I move forward in my speech.
In the first instance, it is necessary for me to set out what I would describe as a few home truths and to set the record straight. First, it is important to point out that the FHL regime is not a tax loophole; it was introduced in 1984 specifically to cater for the fact that a holiday let business is very different from a private rental business. Forty years on, that remains the case, and it should be pointed out that strict criteria are in place if people wish to move into the regime.
Secondly, it should be emphasised that furnished holiday lettings are a long-standing economic lifeline for many coastal and rural areas.
Christine Jardine (Edinburgh West) (LD)
The hon. Member is making a lot of very good points, specifically about these lets being a lifeline for areas. I was recently visited by representatives of the furnished holiday lets association in Scotland, who feel that they have been hit by a double whammy: this legislation and the short-term let licensing legislation in Scotland. Should there not have been a joined-up approach? Would it not have been better for the Government to speak to the devolved Administration and find a way forward for the whole industry, rather than hamper one of Scotland’s biggest and most profitable sectors?
Peter Aldous
I think the hon. Lady has hit on the way forward. The solution to this problem—if indeed there is a problem—needs to be sorted out locally, in consultation with the devolved Assemblies in Scotland, Wales and Northern Ireland, and with local authorities elsewhere in the UK.
Dr James Davies (Vale of Clwyd) (Con)
My hon. Friend is being very generous in giving way. In April last year, the Welsh Government increased to 182 days a year the occupancy threshold that allows holiday lets to qualify for business rates. They have also allowed local authorities to increase council tax premiums to up to 300% in cases where that threshold is not met. Does my hon. Friend agree that that Welsh Government policy is destroying legitimate business among holiday let operations, and damaging the local economy?
Peter Aldous
I do agree, and that point illustrates that this is a multifaceted problem or issue. A whole host of organisations need to sit around the table and come up with solutions that are bespoke and right for their councils or counties, or indeed for their devolved nations.
Angus Brendan MacNeil
The hon. Gentleman is bang on. He is essentially saying that one size does not fit all and that we should find the right solution for every place, because the current provision is a very blunt instrument.
Peter Aldous
I thank the hon. Gentleman for that further observation; he is right.
As I was saying, my second point is that it should be emphasised that furnished holiday lets are a long-standing economic lifeline for many coastal and rural areas. The regime supports micro and small businesses that are the cornerstone of many visitor economies. Abolishing it would hurt those businesses—including farmers who have diversified into tourism, as well as other businesses such as pubs, which rely on the lets for trade—and PASC estimates that even a modest 20% reduction in furnished holiday lets could result in the loss of £1.9 billion GVA and 46,000 jobs. The former figure is considerably higher than the Office for Budget Responsibility’s assessment of the additional tax that will be generated.
Thirdly, furnished holiday lets are not the cause of the housing crisis, as I think colleagues have mentioned. PASC estimates that a total of 197,000 properties in the UK fall within the FHL regime. Due to planning restrictions, 39% of those holiday let properties can only be used for holiday purposes. That means that 76,000 furnished holiday lets could not be used as residential dwellings, and only 121,000 furnished holiday lets have planning permission to be used as residential dwellings. The context is important: those 121,000 dwellings without planning restrictions have been established not in the past three or four years but over many decades; however, they represent 0.4% of the 30.1 million total UK housing stock and just 40% of the annual house building target of 300,000 new homes. Although there might be anecdotal evidence to suggest that private rental landlords are moving into the short-term let sector, PASC can find no quantitative data to support that conclusion. Indeed, less than 2% of traditional short-term let businesses had previously rented their properties out as a long-term let.
Anne Marie Morris
Is it not also clear, following the Renters (Reform) Bill, that there has been a haemorrhaging of landlords who do not wish to be in the private rented sector? As a consequence, they used to go to holiday lets, so holiday let individuals are hardly going to be going back to the private rented sector, which they wanted to leave and are leaving in droves.
Peter Aldous
My hon. Friend makes a good point that reinforces my arguments about the unintended consequences of this proposal.
My fourth point is that there is no statistical evidence to suggest that furnished holiday lets have a disproportionate impact on house prices. As part of the consultation on the proposed introduction of the new planning use class for short-term lets in England, the Great British Holiday campaign commissioned an economic impact study by Frontier Economics on the size, growth and economic importance of traditional holiday lets in rural and coastal communities—unfortunately just in England, but I am sure that is equally relevant to Scotland and Wales. Frontier Economics found that there was no relationship between popular holiday let areas and the growth rate of real house prices between 2015 and 2022.
My final home truth is that there would be unintended consequences of a change to this taxation regime.
Angus Brendan MacNeil
While listening to the hon. Gentleman, it occurred to me that extended family or community members who come back home to an island often use such holiday lets—I could give personal examples from the past year of people returning from New Zealand, Canada and even mainland Scotland. Such properties have a community health aspect to them, over and above the money that they are raising in the economy.
Peter Aldous
I thank the hon. Gentleman for that intervention. He is correct.
The unintended consequences of this taxation regime are that there would be thousands of job losses; a proliferation of empty properties, which could not be used for long-term lets for planning reasons; and a loss of billions of pounds to coastal and rural areas. According to PASC, of its members whose businesses would become non-viable and would have to be sold, 39% believed that the most likely buyer would be a second-home owner; 37% that the property would be bought by another holiday operator; and 16% that the purchaser would come from outside the area. In short, the policy would provide very limited assistance to the group that it is seeking to support: local people looking to rent a local home.
I will finish quickly and not take any more interventions to give the Minister an opportunity to respond. I have nine questions for him. First, what is the Treasury’s evidence to suggest that abolishing the holiday letting regime will encourage a significant number of businesses to convert from furnished holiday lets to the private rented sector, so as to justify the harm that it will cause to tens of thousands of small and microbusinesses? Secondly, why was there no consultation prior to the proposal, and will the Treasury now commit to a full public consultation due to the significant number of businesses that expressed concerns subsequently? Thirdly, has the Treasury considered the potential unintended consequences of abolishing the FHL regime, including the risk that it will lead to more empty second homes in rural and coastal areas? Fourthly, if the abolition of the FHL regime results in a reduction of furnished holiday lets, what evidence does the Treasury have to suggest that this vital bedstock of many rural and coastal economies will be sustained by other visitor accommodation?
Fifthly, will the Treasury consider the recommendations of the Institute for Fiscal Studies and reverse the mortgage interest relief restrictions that have stifled the supply of the homes that renters desperately need? Sixthly, why does the Treasury consider that a bespoke tailor-designed scheme for holiday lets that has operated successfully for 40 years should now be abolished if there is scant evidence to suggest that different tax regimes have resulted in private rental landlords switching to furnished holiday lets? Seventhly, will the Treasury ensure that the abolition of the FHL regime will not result in a group of people who are essentially entrepreneurs being retrospectively taxed at a rate that is 4% higher than the top rate of capital gains tax that applies to a passive investor of listed shares?
Eighthly, does the Treasury consider that the 5,000 new furnished holiday let properties in the UK that PASC guesses may have been created annually since 2016—so 40,000 properties—have had a significant impact on the current housing crisis when compared with the 30.1 million UK homes, 1.5 million empty or vacant homes and the commitment to build 300,000 new homes each year? Finally, will the Treasury align the VAT treatment of holiday lets with that of long-term lets if the policy intention is to align the tax treatment of furnished holiday lets and the private rented sector, or will actively managed FHLs now face a more punitive tax regime than a passive private rental investor?
In conclusion, the proposal does not create a level playing field. If it is to be equitable, it will be necessary to complicate the tax system, not simplify it, and it will have a very marginal impact, if any, on enabling local people to rent homes in their local area. The industry is asking that the Treasury undertakes a full public consultation of any legislation, which I personally think is being remarkably polite.
I cannot see a case for changing the current regime. There should be no future finance Bill to legislate for these changes, and like the proposed taxes on Cornish pasties and static caravans, the proposals should be shelved. Instead, a consultation should take place so that a more targeted localised approach, as opposed to this rather blunt instrument, can be worked up by Government, the devolved Assemblies and local government. That way, more focused and localised solutions can be put in place where they are needed, so as to ensure that more properties are available for long-term rent by local people.
4.23pm
The Financial Secretary to the Treasury (Nigel Huddleston)
It is a pleasure to serve under your chairmanship, Dame Siobhain. I thank my hon. Friend the Member for Waveney (Peter Aldous) for raising this issue today. It is a topic that I have discussed previously with him and with many hon. Members who have participated in the debate, and I am happy to continue to discuss it. I should say up front that there are no plans for a consultation, but that does not mean that hon. Members cannot engage with me.
At the moment, there is broad recognition that the current system is contributing to some distortions. My hon. Friend mentioned having a bit of déjà vu. In my former capacity as Tourism Minister, I travelled around the country and stood in this Chamber discussing the issue. I had colleague after colleague and industry after industry making claims for and demanding the exact policy that we are introducing, so hon. Members need to recognise that there is another side to the argument.
Although my hon. Friend outlined a different pattern in his part of the country, there are parts of the country where the current regime, with beneficial rates for FHL properties, creates an incentive for a disproportionately large number of properties to be FHL—short-term rentals, rather than long-term rentals—which is causing problems. I have heard hoteliers and owners of B&Bs say that the current system is not fair and reasonable. I have heard owners of pubs, bars and restaurants complain that the large number of short-term lets and FHL properties is undermining their value proposition.
I gently say to hon. Members that we all have colleagues from different parts of the country and there is another side to the argument, although I understand the vehemence and strength of feeling in the Chamber today. I know the pattern is mixed across the country, but the problem is that we cannot do tax treatment, such as income tax relief, ward by ward or constituency by constituency. As hon. Members know, we have a whole range of other initiatives to encourage the supply of housing more broadly and limit the impact, including through local taxation and restrictions on housing.
We are proposing not to abolish FHLs, which play a vital role in our tourism ecosystem across the country, but to change their tax treatment to put them on an equal footing and create a level playing field with long-term lets. The problem is that if I were an investor thinking of buying a property in a certain area, it would make pure economic sense for me to get a short-term let rather than a long-term let. Therefore, in certain communities across the country, when a new property becomes available, there is an incentive for an investor to straightforwardly go for a short-term let rather than a long-term let because there is beneficial tax treatment. We are not eliminating the tax incentives but levelling the playing field so that the perverse incentive no longer exists.
Anne Marie Morris
If the Minister is unwilling to undertake a consultation, is he willing to look at a carve-out—an exemption—for properties that cannot be used in the private rented sector because of covenants on them? That was discussed by the Office of Tax Simplification. Will he look at that seriously?
Nigel Huddleston
I thank my hon. Friend for that point, which she has raised with me previously. I should put on the record that many hon. Members in the Chamber have raised concerns about the implementation of this proposal with me. The challenge is that one of the goals is simplification, and when we start moving into the area of carve-outs and exemptions, it opens up the system to challenges and potential abuse. I hear what my hon. Friend has to say. She will always hear from Ministers that we keep tax policy under review, but as soon as we start moving to an exemption here and an exemption there, it causes great difficulties. I also thank PASC for its constructive engagement with me on this issue and for giving me information.
I have had lots of correspondence and have engaged with colleagues, and I want to make this very clear. There is a belief that when we said we were abolishing the FHL tax regime, that meant we were abolishing FHLs. No, of course we are not. As I said, they play a vital role in the visitor economy, but we want to change the tax policy. The intention is for the tax reform to apply to all properties.
There will continue to be benefits. After the abolition of the FHL tax regime, a higher rate paying landlord with mortgage interest costs of £12,000 per year would still get up to £2,400 taken off their income tax bill through the relief. If they spend a further £8,000—for example, on insurance, letting agent fees and replacing domestic items such as sofas, fridges, washing machines—they could save a further £3,200 in income tax by using the reliefs that are available for all landlords. It is about levelling the playing field. There will still be tax incentives, but we do not want that distortion. When somebody buys a new property or an existing property, there is a false incentive that is causing some problems, because human behaviour that naturally seeks a better return on investment leads them towards short-term lets, rather than long-term lets. That is what we are trying to correct.
Peter Aldous highlights the East of England’s leading role in delivering the UK’s energy security and transition to renewables. He urges the Prime Minister to ensure the Government is fully co-ordinated to provide the supporting infrastructure needed to protect coastal communities, and deliver exciting job opportunities for local residents.
Peter Aldous (Waveney) (Con)
Q8. The east of England is playing a lead role in delivering the UK’s energy security, and without our contribution the country will not be able successfully to transition to a renewable energy supply system. In recent months, our coast has taken a battering, and projects such as the Lowestoft flood defence scheme have been postponed. Will my right hon. Friend ensure that Departments are fully co-ordinated, so as to provide the region with good supporting infrastructure, proper protection for coastal communities, and every opportunity for local people to take up exciting new jobs? (902605)
The Prime Minister (Rishi Sunak)
We are levelling up across the United Kingdom and investing in places that need it the most, including, as my hon. Friend rightly highlights, our coastal communities. Almost £1 billion of levelling-up funding has been allocated to the east of England, including £75 million for coastal places. I know that he welcomes the town deal for Lowestoft in particular. I will ensure that he gets a meeting with the relevant Minister to discuss how we can further support his region with its role in our energy security, and, in particular, its coastal communities.
Peter Aldous writes for The House Magazine.
Peter Aldous raises concerns at the drop in level 2 apprenticeship starts in recent years and asks the Education Minister what the Government is doing to reverse this decline as this is so vital in promoting social mobility and levelling up.
Peter Aldous (Waveney) (Con)
Research by London Economics and the Association of Colleges highlights that in recent years there has been a significant drop in level 2 apprenticeship starts. Will my hon. Friend the Minister outline the specific work being carried out to reverse this decline in an area that is so vital in promoting social mobility and levelling up?
The Minister for Skills, Apprenticeships and Higher Education (Luke Hall)
At levels 2 and 3, apprenticeships make up 65% of all starts so far this year and there are almost 140 apprenticeships at level 2. We published data last week to show that level 2 apprenticeships rose by 2.5% in terms of attainment. We will do everything we can to make sure people have access to high-quality apprenticeships, and we have also invested £50 million over two years to boost starts in growth sectors including engineering and manufacturing. I am always happy to meet my hon. Friend.
Peter Aldous calls for a rebalance of Government policy on hospice funding to meet the increasing demand for palliative care and he urges the Government to join the Norfolk and Waveney ICB partnership with St Elizabeth East Coast hospice to build a new hospice to fill the void in the Waveney and Great Yarmouth area.
Peter Aldous (Waveney) (Con)
I congratulate my hon. Friends the Members for Hastings and Rye (Sally-Ann Hart) and for Darlington (Peter Gibson) on so ably leading this debate and setting the scene.
While it is important to recognise the great work done across the eastern region by East Anglia’s children’s hospices, in the Great Yarmouth and Waveney areas, as represented my right hon. Friend the Member for Great Yarmouth (Sir Brandon Lewis) and me, there is at present a hospice vacuum. Throughout the rest of Suffolk and Norfolk, there are locally based hospices well embedded in and providing great services for their communities.
The good news is that plans are being carefully prepared to fill this vacuum and this void. A local partnership is evolving to build a local hospice led by St Elizabeth hospice, including the local NHS, councils, a community interest company, volunteers and fundraisers. For it to be successful, to open the hospice and then to run it, the national Government must join this partnership, and I hope my hon. Friend the Minister, who is currently not in her place, will in her summing up accept this invitation. The Waveney and Great Yarmouth areas desperately need a hospice. We have an ageing population and pockets of deprivation, and as Chris Whitty has highlighted, there are acute health inequalities in coastal communities that a hospice can help level out and remove.
As I have mentioned, a well-researched case for the hospice has now been prepared, though it is important to recognise the work done by so many over the years in supporting those in need of end of life care and their families—from the late Margaret Chadd, who founded East Coast hospice and had the vision of building a hospice on land bought at Gorleston, to Roberta Lovick, who founded the Louise Hamilton Centre, from which such great support is provided to patients with life-limiting conditions and their families; the James Paget University Hospital, where the Louise Hamilton Centre is based; and East Coast Community Healthcare, the Lowestoft-based community interest company that, in partnership with St Elizabeth, operates six specialist beds in Beccles Hospital, as well as providing care both in people’s homes and in care homes.
Building on the work of these local people and organisations, a framework is emerging through which a local hospice can be built. The cornerstone of this is, as we have heard, the Health and Care Act 2022, which sets out the legal requirement for ICBs to commission palliative and end of life care. The Norfolk and Waveney ICB has responded by carrying out a review of palliative and end of life care. This was completed last autumn, and it highlights the need for nine urgent and six medium to long-term actions. Last March, St Elizabeth hospice merged with East Coast hospice, and straightaway set about conducting a feasibility study into the viability of building up hospice facilities on the Gorleston site.
The study has just been completed, and the conclusion reached is that a hospice should be built in stages. Expressions of interest are now being invited from architects. That is an exciting landmark for which so many people have strived for many years. St Elizabeth is confident that it can successfully fundraise for a hospice capital appeal, but it is for the ongoing revenue cost of providing core clinical services for a full in-patient unit, as well as outreach community services, that national Government support is required. The Norfolk and Waveney ICB—indeed, all ICBs—need central Government support and a fundamental rebalancing of national policy, so that they can meet the projected growth in demand for palliative care.
It is good news that after so many false dawns over so many years we now have a coherent and well thought-through plan for filling the hospice void in the Waveney and Great Yarmouth area, but while we should be sanguine, we should also be realistic. We are not even at the starting point of the rest of England, as we have heard from other colleagues who have a hospice up and running—we do not. That is why the Government need to join the partnership that has evolved, and support Norfolk and Waveney ICB so that it can commission hospice services on a long-term, multi-year basis. I urge the Government to join us on that exciting journey.
Peter Aldous with school pupils at the Big Plastic Count Youth Empowerment Day in Westminster where they talked about the results of the Big Plastic Count and efforts to cut plastic production.
Peter said:
“It was great to meet with these young people and hear what they had discovered during the Big Plastic Count. It is a sobering reminder that it is more important than ever that we commit to a global target to cut plastic production.”
© Quetzal Maucci / Greenpeace
Peter Aldous calls for closer dialogue between the Government and the offshore oil and gas industry to rebuild the UK’s reputation as a prime destination for investment in the energy sector to ensure energy transition is home-grown not outsourced.
Peter Aldous (Waveney) (Con)
I am interested in clause 19, which sets out how the energy security investment mechanism will operate: the energy profits levy will cease if the six-month average prices for both oil and gas fall below certain thresholds. That provision follows on from the Chancellor’s announcement in his spring Budget that the energy profits levy would be extended to 2029, though it would be disapplied when energy prices return to normal. My interest in the issue stems from my role as a constituency MP—activity in the North sea energy sector is vital to the local economy—and from chairing the British offshore oil and gas industry all-party parliamentary group. I have no particular issue with the mechanisms in clause 19, though I am worried that the current short-term approach to fiscal policy for the oil and gas sector undermines other Government objectives—in particular, the objective of enhancing the UK’s energy security, which would bring new, well-paid jobs to coastal communities such as Lowestoft, and the objective of delivering our net-zero targets.
I acknowledge that the Chancellor has an unenviable role and faces a significant dilemma. He is, in many respects, between a rock and a hard place. He needs to balance the books, and to support those families who continue to struggle with the cost of living crisis. It is thus understandable that he looks to energy companies to pay more as oil and gas prices have risen. They have been at very high levels; however, it should be pointed out that they have now fallen back to long-term averages. There is a significant risk that in pursuing such a course, he could imperil the inward investment that is needed to create long-term, sustainable jobs in coastal communities for those very people who are struggling to make ends meet.
The North sea has been the UK’s economic saviour for nearly 60 years. Some might say that we are nearing the end of that particular story. That is not the case. The North sea is transitioning from being a source of fossil fuels to the long-term home of renewables. That transition needs to take place as quickly as possible, but in a smooth and seamless way. It requires a stable and long-term fiscal policy, which I am afraid we do not have at present. The decision to extend the levy for a further year was unexpected by industry and presents a significant further challenge to investor confidence.
Energy companies are making investment decisions on projects that quite often have timescales of the order of 40 to 50 years. The fact that in the UK there have been four fiscal changes in the past two years deters investment and deflects it elsewhere. Such businesses are globally footloose, and they will go to countries where the fiscal regime is favourable and has a large degree of certainty about it. In the past, the UK has ticked that particular box, but we are not doing so at present. It should also be emphasised that, as well as operating worldwide, those businesses have interests in a wide variety of energy technologies—not just oil and gas, but the low-carbon businesses of today and tomorrow: offshore wind, hydrogen, and carbon capture, usage and storage. If they find the fiscal regime unfavourable for oil and gas, they will invariably not invest in those renewables, which are so vital for our future.
The initial feedback following last month’s Budget is that those concerns are well founded: investment decisions are being delayed and funds could well be diverted elsewhere. Offshore Energies UK, which provides the secretariat for the British offshore oil and gas industry APPG, has identified that £200 billion of investment that was awaiting the green light may not now happen. Cornwall Insight concludes that prolonging the levy
“could weaken investor confidence, at a time when the UK is seeking record levels of investment to deliver the transition to net zero.”
We are at risk of imperilling the next chapter of the North sea—an ongoing story that can not only deliver economic regeneration, but provide over the remainder of this decade 50 GW of offshore wind, 10 GW of hydrogen, and four carbon capture, usage and storage clusters, as well as supporting the home-grown oil and gas industry and helping us to meet our decommissioning commitments. In short, it could unleash an enormous amount of economic activity that can cascade right around the UK. To be fair to the Government, clause 19 does seek to address those concerns, but I urge them to map out a long-term strategy for offshore energy, building on the success of the 2021 North sea transition deal. They are now adopting a similar course in the nuclear sector. We need to get back to doing the same in the North sea.
It is appropriate to comment on the Opposition’s alternative proposal to extend the windfall tax. There is a real worry in the energy industry that that could exacerbate the worries that I have underlined. Offshore Energies UK has highlighted that those proposals could lead to the loss of 42,000 jobs and the wiping out of £26 billion-worth of economic activity. A concern that I hope the Opposition will allay is that they are looking at removing the capital and investment allowances that are vital to securing inward investment.
We are where we are, and I fear that some damage has been done. However, there is work to do to rebuild the UK’s reputation as a prime destination for investment in the energy sector, and we need to get on with that task without delay. The industry has noted the Government’s commitment to honour the sunset clause, and I urge the two Ministers on the Front Bench—my hon. Friends the Members for Mid Worcestershire (Nigel Huddleston) and for Grantham and Stamford (Gareth Davies)—to provide the further reassurances that are needed to reinforce that message, both this afternoon in their responses and as the Bill progresses through Parliament.
The importance of ongoing and meaningful dialogue between the Government and industry cannot be overemphasised. In the period from 2012, after the last windfall tax, up to 2021, when the North sea transition deal was agreed, that interaction was very much taking place. It has been lost over the past three very eventful years, but it needs to be restored as quickly as possible. If it is, we can still embark on a new golden era for the North sea: an era of home-grown energy transition, not an outsourced one; of reindustrialisation, not deindustrialisation; and of enhanced energy security and economic prosperity.
Peter Aldous MP visited William Hill to place a £50 charity bet on the 2024 Grand National, with all winnings going to a good cause of their choice.
And even if the horse doesn’t win, BGC members will still donate £250 to Peter’s nominated charity, ensuring no one misses out.
The Betting and Gaming Council (BGC), the standards body for the regulated UK betting and gaming industry, invited MPs to visit either a Paddy Power, William Hill, Ladbrokes, Coral or Betfred shop in their constituency to place the free charity bet ahead of the world’s greatest steeplechase.
If the bet is successful, all winnings will go direct to the MPs’ nominated charity, and if it does not, the charity will receive a £250 donation from the BGC.
The Grand National is the most popular horserace in the world and this year takes place on Saturday, 13th April, at Aintree Racecourse. The sporting spectacular is watched by around 600 million people across 140 countries, and it’s estimated over 13 million adults in the UK will have a flutter on the outcome.
Peter Aldous MP said:
“The Grand National is one of those great sporting moments when the whole nation comes together. I was delighted to visit William Hill to meet the staff and customers, take up BGC's generous offer of a charity bet, and also discuss the incredibly important work they have been doing on safer gambling.
“Betting shops employ tens of thousands on hard-pressed high streets and support our local economy through business rates contributions. And for regulars, they provide a community. I was delighted to visit and hear more about their place in our constituency.”
Betting and Gaming Council CEO Michael Dugher, said:
“Millions of us from all different backgrounds will once again come together to watch the Grand National and have a flutter on the world’s most famous horserace.
“It is an occasion like no other and demonstrates once again sport’s unique ability to bring the whole nation together. Betting shops support tens of thousands of jobs, bring vital revenue to the UK’s hard-pressed high streets, and support the national and local economies through tax and business rates. They also provide vital community for millions of betting and gaming fans.
“I also want to say a huge thanks to all MPs, including Peter, who have made the time and effort to meet with their local constituents working in high-street shops; for supporting so many good causes and local charities and for promoting the Grand National, which remains one of Britain’s biggest and best cultural and sporting events seen around the world.”
Betting shops support 42,000 jobs on the UK’s hard-pressed high streets, contribute £800 million a year in tax to the Treasury and another £60 million in business rates to local councils.
Meanwhile, a study by ESA Retail found that 89% of betting shop customers combine their trips to the bookies with visits to other local businesses.
According to previous industry research by the Betting and Gaming Council, approximately £250 million will be staked on the Grand National. Meanwhile, a 2023 report by Liverpool Business School found the 2022 Grand National had a total economic impact of over £60 million on the local economy.
The Grand National is expected to generate a further £3 million in tax revenues for the Treasury and £2 million via the horse racing levy to support the sport.
Following the Government statement on the Ombudsman’s investigation into the way that changes to the state pension age were communicated to women born in the 1950s, Peter Aldous calls on the Government to work with Parliament to quickly agree a mechanism for remedy and points out that failure to comply with the Ombudsman’s recommendations would be unprecedented and go against our system of democratic checks and balances.
Peter Aldous (Waveney) (Con)
I am most grateful to my right hon. Friend for his statement. The Parliamentary and Health Service Ombudsman is itself WASPI, having been conceived in the 1950s. Does my right hon. Friend agree that a failure by Government to comply with its recommendations would be almost completely unprecedented over the past 70 years, and would in effect drive a coach and horses through an integral part of our system of democratic checks and balances? With that in mind, will he confirm that his Department will work in full haste with Parliament to agree a mechanism for remedy? Will he outline the work he is carrying out to address further concerns that have been raised over systematic failure by the DWP over several decades to properly communicate future pension changes?
The Secretary of State for Work and Pensions (Mel Stride)
At the heart of this matter is the imperative to ensure that we fully and carefully examine the findings contained in the report. I will not be drawn today on where we may end up in respect of those findings, but I assure my hon. Friend that we will engage fully and constructively with Parliament on these matters.
On the publication of the Parliamentary and Health Service Ombudsman’s report on women’s state pension age, Peter Aldous calls on the Government to respond quickly and put in place a mechanism, working with Parliament, to ensure that this injustice, which has gone on for many years, is remedied as quickly as possible.
Peter Aldous (Waveney) (Con)
Thank you very much, Mr Deputy Speaker. I will conclude on the point that, I think, four other Members have made, including the hon. Member for Salford and Eccles (Rebecca Long Bailey), with whom I co-chair the all-party parliamentary group on state pension inequality for women. We have had the ombudsman’s report this morning. It makes grim reading for the DWP in relation to its maladministration over many years. Its findings on recommendations for compensation may disappoint many women, but the main issue coming out of the report is the need to lay the report before Parliament due to the low confidence that the ombudsman has in the Government coming up with a quick solution.
I thank my right hon. Friend the Leader of the House for her assurance that a DWP Minister will make a statement as soon as possible. May I urge her to convey to the Department the need to go much, much further much more quickly to put in place a mechanism, working with Parliament, to ensure that this injustice, which has gone on for many years, is remedied as quickly as possible?
The Leader of the House of Commons (Penny Mordaunt)
I can certainly give my hon. Friend the assurance that I will raise this matter with the Department. Indeed, I will be doing so on behalf of all Members who have spoken about it this morning. I thank him for all the work he has done with the all-party parliamentary group and on this issue specifically. As I said in my previous answers, I am sure the Secretary of State will want to update the House at the earliest occasion.