Finance (No. 2) Bill

Committee of the whole House
Tuesday 13th January 2026 Commons Chamber

[2nd Allocated Day]

(Clauses 63 to 68 and 83 to 86, schedule 13, and any new clauses or new schedules relating to the subject matter of those clauses and schedules)

Further considered in Committee (Progress reported, 12 January)

[Caroline Nokes in the Chair]

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I remind Members that in Committee, they should not address the Chair as Deputy Speaker. I ask them please to use our names when addressing the Chair. Madam Chair, Chair, and Madam Chairman are also acceptable.

Clause 63

Tax to be charged on certain pension interests

Question proposed, That the clause stand part of the Bill.

[The Second Deputy Chairman]

With this it will be convenient to consider the following:

Clauses 64 to 68 stand part.

New clause 18—Review of the effect of sections 63 to 68—

“(1) HM Treasury must carry out a review of the effect of sections 63 to 68 of this Act (Pension interests).

(2) The review under subsection (1) must include an assessment of—

(a) the impact of those sections on individuals’ pension savings and beneficiaries, including on estate values and inheritance tax liabilities,

(b) the administrative effects on personal representatives, pension scheme administrators, and HM Revenue and Customs, and

(c) any behavioural effects on how pensions are used during life and on death.

(3) HM Treasury must lay before the House of Commons a report setting out the findings of the review under subsection (1) no later than six months after the date on which sections 63 to 68 come into force.”

This new clause would require HM Treasury to review and report on the effects of Clauses 63 to 68 of the Bill, which introduce inheritance tax charges on unused pension funds and death benefits, including their impacts on individuals, administrators, and behaviour, and to publish the findings to Parliament.

New clause 19—Report on the impact of inheritance tax liability on personal representatives in relation to pension assets—

“(1) The Secretary of State must, within 12 months of the passing of this Act, lay before the House of Commons a report on the impact of the changes to inheritance tax treatment of pension assets on personal representatives of deceased persons made under this Act.

(2) The report must consider—

(a) the legal obligations of personal representatives to collect the assets of an estate, settle all liabilities (including inheritance tax), and distribute the estate to beneficiaries,

(b) the extent to which personal representatives may be personally liable for inheritance tax due on assets, including pension funds, which do not form part of the estate and do not come into their possession,

(c) any risk of increased litigation arising from the imposition of personal liability on personal representatives in respect of inheritance tax due on pension assets,

(d) the impact of any such liability on the willingness of personal representatives, particularly those who are not beneficiaries of the estate, to distribute estate assets promptly,

(e) any practical difficulties faced by personal representatives where pension assets, lifetime gifts, or other chargeable assets are discovered after initial inheritance tax calculations have been completed, including the requirement to recalculate inheritance tax liabilities and re-apportion the nil rate band,

(f) any administrative and timing challenges associated with identifying multiple pension arrangements, particularly where a deceased person held several pension funds arising from different employments, and

(g) whether the existing six-month timeframe for inheritance tax reporting and payment adequately reflects those practical difficulties.

(3) The report must assess whether the current framework operates fairly and proportionately for personal representatives and whether legislative or administrative changes are necessary to reduce uncertainty, delay, or unintended personal liability.”

This new clause requires the Government to report on the impact of inheritance tax rules on personal representatives, including personal liability for tax on pension assets outside the estate and the practical difficulties of identifying and valuing multiple pension arrangements within existing time limits.

New clause 20—Administration of inherited pension pots—

“(1) HM Revenue and Customs must review the tax administration arrangements relating to inherited pension pots.

(2) The purpose of the review under subsection (1) is to ensure that—

(a) inheritance tax and related tax checks do not cause unreasonable delays in the payment of pension death benefits to beneficiaries, and

(b) bereaved families are able to receive pension benefits within a reasonable period following a member’s death.

(3) In carrying out the review, HM Revenue and Customs must have regard to—

(a) the cumulative administrative burden placed on personal representatives, pension scheme administrators, and beneficiaries,

(b) the interaction between inheritance tax reporting, clearance processes, and pension scheme payment rules, and

(c) any evidence of prolonged delays in the payment of inherited pension benefits.

(4) HM Revenue and Customs must publish the outcome of the review, including any proposed changes to its processes or guidance, within 12 months of the passing of this Act.”

This new clause would require the Government to address delays in the payment of inherited pension pots by reviewing HMRC’s tax administration processes, with the aim of preventing prolonged waiting periods for bereaved families.

New clause 22—Statement on inheritance tax on pension interests—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the charging of inheritance tax on pension interests made under sections 63 to 68 of this Act.

(2) The statement made under subsection (1) must include analysis of the impact on—

(a) pension saving levels,

(b) household saving decisions, and

(d) personal representatives.”

This new clause would require the Chancellor to make a statement on the effects charging inheritance tax on pension interests on pension saving levels, household saving decisions and personal representatives.

New clause 23—Consultation on changes to inheritance tax on pensions interests—

“(1) The Chancellor of the Exchequer must, before 6 April 2027, undertake a consultation on the potential impacts of the changes made by sections 63 to 67.

(2) The consultation made under subsection (1) must consider the extent to which the changes to inheritance tax on pension interests deliver better outcomes for UK savers and pensioners.

(3) The Chancellor of the Exchequer must lay before the House of Commons a report summarising the responses to the consultation.”

This new clause would require the Chancellor to consult on the potential impacts of the changes made by sections 63 to 67. The consultation must consider the extent to which the changes to inheritance tax on pension interests deliver better outcomes for UK savers and pensioners. A report summarising the responses to the consultation must be laid before the House of Commons.

New clause 24—HMRC guidance on inheritance tax on pension interests—

“(1) HM Revenue and Customs must, within six months of this Act being passed, publish comprehensive guidance on the implementation of sections 63 to 68.

(2) HMRC must establish a dedicated helpline for enquiries relating to inheritance tax on pension interests.

(3) The guidance published under subsection (1) must be reviewed annually and published in accessible formats.”

This new clause would require HMRC to publish comprehensive guidance on the implementation of sections 63 to 68 and establish a dedicated helpline for enquiries relating to inheritance tax on pension interests. The guidance must be reviewed annually and published in accessible formats.

15:57

[The Economic Secretary to the Treasury (Lucy Rigby)]

It is a pleasure to open this second day of our Committee stage debate. Yesterday the Exchequer Secretary to the Treasury, my hon. Friend the Member for Chipping Barnet (Dan Tomlinson), explained how the Bill gives effect to a Budget that took fair and responsible decisions to stabilise and strengthen the public finances, address the cost of living and renew our public services. We are clear about the fact that we will not repeat the mistakes of the last Government. That means no return to austerity and no completely irresponsible unfunded spending commitments, both of which, unfortunately, were features of the Conservatives’ time in power. This Government wholeheartedly reject those failed approaches and choose a different path, one of fiscal responsibility and one that will strengthen our economy so that it delivers for people throughout the country. Today the Committee will consider a further set of important and targeted measures relating to pensions, gambling duties and alcohol duty, which reflect this Government’s commitment to a tax system that is fair, modern, and aligned with the realities of today’s economy.

Our approach to changes in gambling taxation is fair and proportionate, as the Committee will hear later this afternoon, and, as my right hon. Friend the Chancellor explained in her Budget statement, those reforms will contribute significantly to the Government’s efforts to lift an additional 450,000 children out of poverty. The pensions clauses will ensure that generous tax reliefs continue to support the core purpose of pensions, which is to help people to save for retirement. They address long-standing inconsistencies, and will ensure that pensions are not used primarily as a vehicle for passing on wealth free of inheritance tax, but instead continue to protect the vast majority of estates and maintain strong incentives to save.

I turn to clauses 63 to 68. Pensions enjoy significant tax benefits, with gross income tax and national insurance contributions relief costing £78.2 billion in 2023-24. It is therefore crucial to ensure that these reliefs are used for their intended purpose, which is to encourage saving for retirement and later life. Changes to pensions tax policy by the previous Government over the last decade led to pensions being used, and increasingly marketed, as tax planning vehicles to transfer wealth, rather than holding true to pensions’ primary purpose, which is of course to provide a way to fund retirement.

As hon. Members will know, there are also long-standing inconsistencies in the inheritance tax treatment of different types of pensions. Most UK-registered pension schemes are discretionary, meaning members can nominate whom they would like to receive death benefits, but the scheme trustees are not obliged to follow members’ wishes. Under existing rules, any unused pension funds and death benefits from discretionary schemes are not subject to inheritance tax. By contrast, some pension schemes are non-discretionary, and these are subject to inheritance tax under existing rules.

The changes made by clause 63 mean that most unused pension funds and death benefits payable from a pension will form part of a person’s estate for inheritance tax purposes from 6 April 2027. Clause 64 ensures that personal representatives are responsible for paying any inheritance tax due. Clause 65 means that personal representatives will be able to request that the pension scheme administrator withhold paying a proportion of benefits where certain conditions are met. It also allows both personal representatives and pension beneficiaries to make pension scheme administrators pay inheritance tax due on pensions directly to His Majesty’s Revenue and Customs—again, provided certain conditions are met.

Clause 66 makes some consequential amendments to the Inheritance Tax Act 1984 to ensure that the existing exemption for spouses and civil partners and the treatment of payments to charities continue to apply. Clause 67 changes the income tax rules for pensions to provide for the payment of inheritance tax, including in respect of direct payment by pension schemes. Clause 68 ensures that the changes take effect from 6 April 2027.

These clauses ensure that pensions are used, as I have said, for their core intended purpose, rather than as a vehicle for passing on wealth free of inheritance tax. They also remove long-standing inconsistencies and deliver on the Government’s promise to this country to build a stronger and fairer economy.

[The Second Deputy Chairman]

I call the shadow Minister.

[James Wild (North West Norfolk) (Con)]

On behalf of His Majesty’s Opposition, I wish to speak to new clauses 22 to 24, tabled in my name and those of my hon. Friends. As the Minister set out, clauses 63 to 68 introduce measures to apply inheritance tax to unspent pension assets and other death benefits for deaths occurring after 6 April 2027.

This Labour Government have taken taxes to record levels, with £26 billion in additional taxes in this Budget and £66 billion since the election. These tax increases were not mentioned in Labour’s manifesto. Labour is increasing taxes on family businesses, farms, jobs, dividends, savings, motorists and now death. Removing the inheritance tax exemption for pensions could undermine efforts to encourage people to save at a time when people are not saving enough. And what do the Government do? They limit the salary sacrifice pension contributions scheme and introduce a new raid on people’s pensions pots.

The Minister did not refer to the impact assessment, but it is worth pointing out that it estimates that 10,500 estates will now become liable for inheritance tax, raising £1.5 billion by 2029, and 38,500 estates will pay more inheritance tax than was previously the case. That is why we oppose this extension of inheritance tax and the underlying principle, to which the Minister seemed to allude, that people’s money belongs not to them but to the state.

New clause 22 is straightforward. It would require the Chancellor to set out the impact of these measures on pension saving, household saving decisions and personal representatives. There is real concern—I am surprised the Minister did not address this—about the administrative burden being placed on personal representatives and the effect on the industry. Personal representatives will be required to identify every pension asset, calculate the inheritance tax due and ensure payment within six months, and they will be personally liable if they fail to settle all the liabilities due. In many cases, that deadline would be impossible to meet and must be extended. Furthermore, if a pension fund has to quickly sell illiquid assets, such as commercial property, it may not get the full market value, but the Bill does not introduce a relief where the underlying assets must be sold and the proceeds are less than the value of the assets at the time of death. Late payments will attract interest at 8%. By contrast, someone in self-assessment has 10 months to pay tax on the income they already understand.

Both the Association of Taxation Technicians and the Chartered Institute of Taxation have offered some practical solutions, the first of which is to extend the withholding periods. Personal representatives can ask pension administrators to withhold 50% of funds for up to 15 months, but that is simply not long enough for the complex cases I have referred to, particularly where business property valuations have to be agreed with HMRC. Will the Minister consider allowing HMRC to extend withholding in such complex cases?

Secondly, the Government should allow instalment payments for illiquid pension assets. Billions of pounds of pensions wealth are in illiquid assets. The Government allow inheritance tax to be paid over 10 years for illiquid estate assets. Why deny the same practical relief for pensions?

When this policy was announced, the Office for Budget Responsibility gave it a “very high” uncertainty rating and estimated that behavioural effects will cut the static yield by about 43%; the Government’s own forecasters accept that the changes may well significantly alter saving behaviour. The new clause would simply require the Chancellor to assess that impact and come to the House to make it clear.

New clause 23 would require the Chancellor to consult on the impact of clauses 63 to 67, and whether they deliver better outcomes for savers and pensioners. The truth is that the Government rushed the consultation out after the 2024 Budget and followed it with a very narrow technical consultation, which did not consider the principled question of whether this approach to pensions being brought within the inheritance tax framework was appropriate. As the Investing and Saving Alliance told the House of Lords Economic Affairs Committee in its inquiry to which the Exchequer Secretary also gave evidence:

“If we were consulted and listened to, we probably would not be having this discussion today, because I do not think pensions would be going into IHT.”

Both the chartered institute and the ATT have criticised the Government for consulting on pensions in isolation, rather than in the context of individuals’ wider inheritance tax position. Our new clause is explicit. Consultation must take place to assess whether these changes

“deliver better outcomes for savers and pensioners”

—wording that reflects the commitment the Labour party made in its manifesto.

New clause 24 is essential. It would require HMRC to publish comprehensive guidance on the new rules for pensions and to set up a dedicated helpline. Why does that matter? Because this measure will be incredibly complex in practice. The chartered institute has said that professional executors are already questioning whether they can continue to operate in the market at all. Some firms, we are told, are already leaving the market. If professionals step back, the burden falls on lay personal representatives: often grieving family members or friends, with more errors, delay and potentially a wider tax gap ensuing.

Professional indemnity insurers also need clarity, yet when is HMRC due to deliver detailed guidance? Not until spring 2027, just weeks before the changes take effect. That is completely outrageous and far too late. That is why the new clause requires guidance to be published within six months of the Bill being passed.

I want to touch on a broader concern that has been raised with me on the potential serious unintended consequences for unmarried couples. Today, couples can anticipate making financial provision for each other via pensions, but if this measure comes into force they will have to look at other options. If one member of an unmarried couple in their 50s or 60s dies with a pension at peak value, the survivor could lose up to 40% of that fund. Are Ministers talking to pension scheme administrators to mitigate the risks for such couples and to provide clear guidance?

These clauses increase taxes, add complexity, penalise saving and add stress for grieving families. Despite clause 67, we are also advised that there is still a risk of double taxation of inheritance tax and income tax, which could see beneficiaries paying an effective tax rate of 67%. Our amendments seek to mitigate their worst impacts. The Chancellor should assess the real impact on saving behaviour and personal representatives. She should consult properly on these provisions and she must provide clear guidance, backed by dedicated support. We should be incentivising saving and encouraging people to do the right thing. Extending inheritance tax does the opposite, and we will oppose the Government’s measures.

[The Second Deputy Chairman]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

This is a retrospective tax without transitional protection. It upends plans for those who have already made sacrifices to build up their pensions, undermines confidence in pensions planning, reduces long-term investment and causes people to rush to withdraw money from their pensions.

As has been mentioned, the chartered institute and the ATT have raised concerns about this group of clauses, which shoehorn pensions legislation into tax legislation. There are major worries about creating personal liability without control for personal representatives, whether executives or administrators. Personal representatives are legally obligated to gather all the assets, settle any liabilities, including inheritance tax, and distribute the remainder of the estate to the beneficiaries. They are personally liable if they do not set aside enough money to settle all financial liabilities, including IHT. Experts have warned that someone being personally liable for IHT on a pension fund that never comes into their hands leaves the door open to costly and protracted litigation and will understandably make personal representatives, such as professionals or friends of the deceased, much more cautious before they distribute all of the estate.

Even more concerning is the fact that if representatives discover a new pension fund after settling the initial IHT liability, this would have a knock-on effect on not only the estate but all other pension funds. It means that IHT will have to be recalculated for every part of the estate and every pension fund. It is far from uncommon for people to have had different jobs with separate pension plans, so the risk of miscalculation is obvious. If someone passes away before they have had the chance to consolidate their pension funds, tracking down the unused pots within six months of their death will be very difficult for executors and will mean that the initial IHT calculations could be wrong. The Government must recognise that and amend this measure. If they do not, and Ministers simply ask future executors to sign some sort of disclaimer form, they will soon find that nobody will want to take on that role.

Our new clauses 18 to 20 raise the clear need for significant reforms and are a means of pressing the Government to protect individuals from being liable for private pensions that they did not know about and could not reasonably know about either. Finally, there is widespread worry that family members might have to wait up to 15 months before they are able to access their inheritance, during what is bound to be a hugely straining period of loss and grief. The Liberal Democrats’ new clause 20 urges the Government to recognise that reality and take steps to address it.

[Lucy Rigby]

I thank hon. Members for their contributions to the debate on this group of clauses. Before I respond to the specific points that have been raised, I will reflect briefly on the core purpose of the Bill.

The Bill contains fair and necessary reforms to the tax system, which unfortunately have been ducked for far too long. They will help to strengthen our economy for the long term, ensuring that we can cut the cost of living and inflation, and restore our public services and the public finances to health. The Tories and Reform—who are increasingly indistinguishable, it might be said—have already set out their choice: a return to the chaos and instability of the past. That approach failed before, and we are not going back.

The clauses in this group restore pensions to their core and intended purpose, which is funding retirement. We are not allowing them to function as a tax-free vehicle for the transfer of wealth. Generous tax relief for retirement saving is preserved. The clauses ensure that pension wealth is treated fairly and consistently for inheritance tax purposes. They protect ordinary families, with more than 90% of estates still paying no inheritance tax at all each year after the changes.

Let me turn to the non-Government amendments in this group. New clause 18 would require the Treasury to review the effects of the changes to pension tax policy, including their impacts on individuals, administrators and behaviour. A report would need to be laid in Parliament no later than six months from when the Act comes into force. This new clause is not necessary. The Government have published a tax information and impact note on the changes in the normal way. It sets out the impact on individuals, and accounts for the impact on personal representatives.

As hon. Members know, the Government keep all tax policies under review through the monitoring of returns and communication with representative bodies and taxpayer groups. A review within six months of the policy taking effect on 6 April 2027 is not practical, not least because the data relating to inheritance tax in 2027-28 will not be fully available until the summer of 2030. That is the normal timescale, and it operates because tax liabilities data is available only with a long lag, partly because the filing of the relevant inheritance tax accounts is due 12 months after a death. For those reasons, new clause 18 should be rejected.

16:15

New clause 19 would require the Government to report on the impact of the reforms on personal representatives. That would include the personal liability for tax on pension assets outside the estate, and any practical difficulties of identifying and valuing multiple pension arrangements within existing time limits. The changes that the Bill brings about are consistent with the process that already exists for administering estates and paying any tax due. Personal representatives are already responsible for administering the rest of the estate, including non-discretionary pension schemes, which are already within the scope of inheritance tax.

The Government have acknowledged that there are some challenges for personal representatives. The changes announced at the Budget mitigate the risks to personal representatives by providing them with the ability to direct pension scheme administrators to withhold taxable benefits for up to 15 months from the date of death and to make payments of inheritance tax directly to HMRC. That, of course, will not apply to pension benefits exempt from inheritance tax, including those being left to a spouse or civil partner, pension funds under £1,000 and continuing annuities. The Government will also publish regulations this year to provide the right framework to allow personal representatives and pension schemes to exchange all necessary information for inheritance tax purposes. The changes announced at the Budget also protect personal representatives from the risk that pension pots emerge later. For those reasons, new clause 19 is not necessary and should be rejected.

New clause 20 would require the Government to review the tax administration arrangements relating to inherited pension pots with a focus on any delays in the payment in inherited pension pots caused by tax administration processes. HMRC would be required to publish the outcome of the review within 12 months of this Act being passed.

The Government do not want payments to pension beneficiaries to be delayed unnecessarily. In the vast majority of cases, payments will be made as soon as pension schemes have completed their discretionary processes. Pension benefits that are exempt from inheritance tax, such as payments to spouses and civil partners or death in service payments, can still be paid as soon as the pension scheme is ready to pay.

We do, of course, need to strike a fair balance between the beneficiaries of the pension and of the wider estate. That is exactly why we announced that personal representatives will be able to direct pension schemes to withhold 50% of the taxable benefits for up to 15 months if they reasonably expect inheritance tax to be due. Pension beneficiaries will therefore still be able to access 50% of their taxable pension benefits as soon as their pension scheme is ready to pay, and the remainder once the inheritance tax on the pension has been paid or the notice to withhold has been withdrawn.

As I have set out, to ensure that the process of calculating, reporting and paying inheritance tax does not take any longer than necessary, the Government will introduce regulations setting out deadlines for the parties involved to exchange information. New clause 20 should therefore be rejected.

New clause 22 would require the Chancellor of the Exchequer to make a statement on the effects of the policy on pension saving levels, household saving decisions and personal representatives within six months of the Act being passed. It is important to emphasise that the intended purpose of pension savings—indeed, it is one that the Government wholly support—is to fund retirement. That is why, to address the point made by the shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), we continue to incentivise pension savings with tax relief on both contributions to pensions and the growth of funds held within a pension scheme. Those reliefs totalled £78.2 billion in 2023-24.

Estates will continue to benefit from the normal nil-rate bands, reliefs and exemptions available. For example, the nil-rate bands mean an estate can pass on up to £1 million with no inheritance tax liability and the general rules mean that any transfers, including the payments of death benefits to a spouse or civil partner, are fully exempt from inheritance tax. As I said, 90% of UK estates will continue to have no inheritance tax liability whatsoever following the changes, and the reforms will only affect a minority with inheritable pension wealth. New clause 22 should therefore be rejected.

New clause 23 would require the Chancellor of the Exchequer to undertake a consultation before 6 April 2027 on the potential impacts of the changes. The consultation would consider the extent to which the changes to inheritance tax and pension interest deliver better outcomes to UK savers and pensioners. The Government launched a technical consultation on the day of the autumn Budget 2024, following the announcement of the policy, to draw on the expertise of the tax, legal and pension industries. That technical consultation was focused on the processes required to implement the changes and the Government have made changes as a result of that consultation.

As well as the technical consultation on the changes, there has been extensive and regular engagement with stakeholders, both from the pensions industry, and legal and tax representatives. I note the praise for HMRC officials from witnesses at the Economic Affairs Finance Bill Sub-Committee in the other place in respect of how they have engaged on these issues over the course of the last year. The policy problem with the inheritance tax treatment of pensions is well understood and we need to ensure that pensions continue to be used, as I said, for their core purpose, which is funding retirement, and that tax reliefs are directed to that effect. As I have set out, pensions will continue to enjoy significant tax benefits. For those reasons, new clause 23 should be rejected.

Lastly, new clause 24 would require HMRC to publish comprehensive guidance on the implementation of the policy within six months of the Bill being passed. It would also require HMRC to establish a dedicated helpline for inquiries relating to inheritance tax on pension interest. As I have set out, comprehensive guidance will be published in advance of April 2027 and HMRC will provide interactive tools to support personal representatives. Publishing guidance when policies go live is established practice, and it ensures that guidance is fully up to date when made available. HMRC will continue to work with industry on shaping that guidance and ensuring that the reforms are fully understood. People will be able to call the inheritance tax helpline for inquiries related to the reforms and, as we would expect, staff will be fully trained on each of the changes such that they can support customers. It is on that basis that new clause 24 should also be rejected.

The clauses we have considered preserve generous tax relief for retirement saving. I therefore urge the Committee to reject new clauses 18 to 20 and 22 to 24, and to support clauses 63 to 68.

Question put, That the clause stand part of the Bill.

16:22

Division 403

Question accordingly agreed to.

Ayes: 348

Noes: 167

Clause 63 ordered to stand part of the Bill.

Clauses 64 to 68 ordered to stand part of the Bill.

New Clause 24

HMRC guidance on inheritance tax on pension interests

“(1) HM Revenue and Customs must, within six months of this Act being passed, publish comprehensive guidance on the implementation of sections 63 to 68.

(2) HMRC must establish a dedicated helpline for enquiries relating to inheritance tax on pension interests.

(3) The guidance published under subsection (1) must be reviewed annually and published in accessible formats.”—(James Wild.)

This new clause would require HMRC to publish comprehensive guidance on the implementation of sections 63 to 68 and establish a dedicated helpline for enquiries relating to inheritance tax on pension interests. The guidance must be reviewed annually and published in accessible formats.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:38

Division 404

Question accordingly negatived.

Ayes: 184

Noes: 331

Clause 83

Rate of remote gaming duty

Question proposed, That the clause stand part of the Bill.

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

With this it will be convenient to consider the following:

Clauses 84 and 85 stand part.

Schedule 13.

New clause 21—Review of the impact of sections 83 and 84: free bets and freeplays—

“The Chancellor of the Exchequer must, within six months of the passing of this Act, undertake an assessment of the impact of implementation of sections 83 and 84 of this Act in respect of the treatment of free bets and freeplays for calculating general betting duty on remote bets.”

New clause 25—Statements on increasing remote gambling duty and introducing a new rate of General Betting Duty—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the increase in gambling duties made under sections 83 to 84 of this Act.

(2) The statement made under subsection (1) must include details of the impact on—

(a) sports and horseracing,

(b) the number of high street betting shops,

(c) the gambling black market,

(d) the employment rate, and

(e) the public finances.”

This new clause would require the Chancellor to make a statement about the effects of the increase in gambling duties.

[Lucy Rigby]

Clauses 83 to 85 and schedule 13 make changes to the gambling duties regime, to better reflect the modern gambling market and to raise more than £1 billion a year to support the lifting of the two-child benefit cap. I will first speak briefly to the broader context of the package, and I will then turn to each clause.

Gambling is a significant part of the UK economy, generating an annual gross gambling yield of around £16.8 billion in 2025, according to figures from the Gambling Commission. The industry has changed markedly in recent years, while the duty system has not changed since 2019. Most notably, there has been a structural shift from in-person to online gambling. Between 2015 and 2025, remote gambling grew by 80%, while land-based gambling has declined by 10%. At the same time, evidence of gambling-related harms has become even clearer.

The estimated cost to the Government and society of gambling-related harms in England alone is between £1.05 billion and £1.77 billion a year. NHS figures show that over 40% of gamblers using online slots, bingo or casino games are considered to be at risk, compared with less than 15% of those betting in person on horseracing. Referrals for gambling addition have risen sharply—NHS England has doubled the number of clinics for problem gambling. I am grateful for representations from so many MPs and campaigners on this matter, alongside those with constituencies where horseracing plays an important role in the community and, indeed, the local economy.

In the Budget, the Chancellor made it clear that changes to gambling taxation are fair, proportionate and for a purpose, as they will directly contribute to lifting an additional 450,000 children out of poverty. This Government are very proud of that. Unfortunately, the Opposition showed little regard for child poverty when they were in government, and it is entirely in character, albeit no less shocking, that they oppose this Government’s changes and would increase child poverty as a result. Reform UK is even more brazen.

[Jim Dickson (Dartford) (Lab)]

I thank the Minister for giving way during an excellent speech introducing what I think is an extremely positive change. Like many Members, I have campaigned for some years to ensure that the most harmful and addictive forms of gambling attract tax that is commensurate with those harms, so I welcome this measure, as I am sure do others who have campaigned on this issue. As a member of the Treasury Committee, which recommended this change in a report just before the Budget, I am very glad to see it. Will the Minister confirm that some of the revenue raised will be used to help the Government reach their objective of lifting half a million children out of poverty, and say how that relationship works? The Treasury clearly does not want to see a hypothecation of that sum, so how does the connection between the money raised by the tax and the lifting of children out of poverty work?

[Lucy Rigby]

The tax changes in the Bill disincentivise the most harmful forms of gambling. We have also introduced a statutory levy to pay for the prevention of some of those harms arising in the first place, and of treatment, and my hon. Friend makes an excellent point.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The Minister has said that the tax change will disincentive the most harmful form of gambling, but can she cite any evidence that will demonstrate that? I have no problem with taxing a profitable industry to pay for the wonderful policies that we announced for the sector, but the report from the Office for Budget Responsibility states that there will be a drive towards the black market as a result of these taxation changes. That is much more damaging, will raise much less revenue and, ultimately, will be much more damaging to our economy.

[Lucy Rigby]

My hon. Friend makes a good point. NHS figures show that over 40% of gamblers who use online slots, bingo and casino games are considered at risk, compared with less than 15% of those who bet in person on horseracing, so that is an important contrast, and the NHS figures bear that out.

Reform UK’s position on the two-child cap is even more brazen. The party went into the election promising to scrap the two-child limit but has now abandoned that position, and its Members will be traipsing through the Division Lobby with their ideological bedfellows, the Conservatives. Indeed, on any given day it is hard to keep track of who is supposed to be sitting on the Conservative Benches, and who has moved to the Reform Bench.

[Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)]

The hon. Member for Stoke-on-Trent Central (Gareth Snell) raised the important point that the OBR says that these measures will drive money towards the black market, potentially not benefiting the taxpayer and the Treasury as much as the Minister says. Will she explain what she will do to avoid the black market benefiting from these tax changes?

[Lucy Rigby]

The right hon. Member raises a good point, as did my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell), about the illegal market. We are reassured by the fact that the illegal betting market in the UK is relatively small, representing between 2% and 9% of legal online market stakes. The Gambling Commission is already tackling this risk and seeking to protect consumers. The additional £26 million that we will provide to the Gambling Commission over the next three years will go to better and further enforcement against the illegal market in this space. I hope that reassures him.

At the autumn Budget 2024, the Government announced a consultation on modernising the tax treatment of remote gambling, including a proposal for a single duty covering all remote betting and gaming. The consultation ran from April to July 2025. Respondents strongly opposed a single duty, arguing that remote betting and gaming significantly differ in operating costs and harms. The Government have listened to those concerns and are not proceeding with a single remote betting and gaming duty. Instead, the Bill implements a targeted package of rate changes that will raise over £1 billion a year. It focuses on remote gambling, which has grown significantly, it protects UK horseracing and it supports lower risk community-based activities by abolishing bingo duty.

I will now turn to the individual clauses in the Bill. The changes made by clause 83 will increase the rate of remote gaming duty, which applies to online games such as slots and roulette, from 21% to 40% on 1 April 2026. Remote gaming has relatively low operating costs and has grown rapidly in recent years, with gross gambling yield rising significantly above inflation, from £2.5 billion in 2015-16 to £5.2 billion in 2024-25, based on Gambling Commission figures. It is associated with higher rates of gambling-related harm, relative to other products. As we have discussed, NHS data shows that online slots and casino games have much higher proportions of problem gamblers than betting on sports, for example. By increasing the rate on remote gaming more significantly, this measure intends to reduce the incentive for operators to push customers towards higher harm products.

Clause 84 will increase the rate for remote betting. General betting duty is currently charged at 15% for both remote and in-person betting, but the betting market has changed significantly in how it operates. Clause 84 will create a new, higher rate of general betting duty that will apply to bets placed remotely, such as online sports bets, from 1 April 2027. The new remote rate will be set at 25%, while the existing 15% rate will continue to apply to bets placed in person in licensed betting premises. The new 25% rate will not apply to remote bets on UK horseracing. Those bets will remain taxed at 15%, in recognition of the fact that operators already pay the 10% statutory horserace betting levy on horseracing bets, creating a de facto 25% burden when the 15% levy is taken into account. The new remote rate will also not apply to bets placed via self-service betting terminals in UK-licensed betting premises, pool bets and spread bets.

Finally, clause 85 will abolish bingo duty, which is currently charged on the gross gambling yield from bingo, including in dedicated bingo halls. Bingo is a much lower-risk and community-based form of gambling, often providing an important social outlet, and it supports local venues, including around 250 bingo halls right across this country. Clause 85 and the associated schedule 13 will abolish bingo duty with effect from 1 April 2026. The Bill also makes consequential changes to ensure that bingo played in UK licensed bingo halls does not become liable to other taxes or duties as a result of that abolition. This Government know the importance of bingo halls in our communities, and we are proud to back them with this tax change.

17:00

[Dawn Butler (Brent East) (Lab)]

I congratulate the Minister on the changes that the Government have made, on tackling online harms and on excluding bingo halls, as she says. Bingo halls are often a community, and they involve a lot of people. Does she agree that this issue is about not just online, but offline? Will she consider ensuring that we make our high streets safer when it comes to gambling? Will she look at erasing the aim to permit from the Gambling Act 2005 as a next step?

[Lucy Rigby]

I confess to my hon. Friend that I will need to write to her on that specific issue, because I do not have notes in front of me to that end. We are on the same page in terms of the principles she raises and the values that she seeks to put forward, and I welcome her welcoming of this Bill.

Taken together, clauses 83 to 85 modernise the gambling duties regime. As I said, they raise more than £1 billion a year to support public services and lift children out of poverty. They also focus tax increases on higher-harm, fast-growing online products while protecting UK horseracing and land-based betting and supporting bingo halls.

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

For clarity, bet365 is based in the constituency of my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell), but—

[Gareth Snell]

He just read my notes!

[Adam Jogee]

It is one of the largest private sector employers in Newcastle-under-Lyme—that was not in my hon. Friend’s notes. [Laughter.] Can the Minister touch a little bit on the engagement with some of these companies to ensure that the workers, many of whom live in my constituency and the constituency of my hon. Friend the Member for Stoke-on-Trent Central, will not be adversely impacted?

[Lucy Rigby]

My hon. Friend raises an important point around jobs in the industry. He will be aware that employment in the gambling industry as a whole declined by around 20% between 2015 and 2023, so it is in gradual decline, and the trend predates this Bill. The jobs in his constituency are incredibly important, which is why the measures in this Bill deliberately focus on online gambling, rather than betting shops and casinos, which support more jobs and face higher operating costs, as I am sure the institutions in his constituency do.

[Sir Gavin Williamson]

In Staffordshire and Stoke-on-Trent Central specifically, 5,500 people are employed by bet365. It is not just a significant employer; it is the most significant employer. What actions or interventions is the Treasury looking at taking to try to offset some of the potential job losses that these policies will cause?

[Lucy Rigby]

As I said, employment is an important consideration that has been borne in mind for the purposes of this Bill, and there has been considerable engagement on all these issues. If the right hon. Member seeks further engagement, I am more than happy to have it.

I was just about to conclude.I commend clauses 83 to 85 and schedule 13 to the Committee.

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I call the shadow Minister.

[James Wild]

These changes were presented as some sort of simplification and modernisation, but clauses 83 and 84 nearly double remote gaming duty from 21% to 40% and increase general betting duty to 25%. We will have some of the highest rates of tax on gambling in the world. As we have heard from some Members, the industry has warned that that could have severe consequences for an internationally competitive sector that supports tens of thousands of jobs, underpins horseracing and other sports and already contributes significantly to the Treasury. It is questionable whether these measures will lead to stable, long-term revenue gains for the Exchequer, and there is a very real risk that they will result in job losses and greater use of unregulated operators in the black market. New clause 25 would require the Chancellor to come back to the House and explain what the consequences have been for revenue, sports and horseracing, high street betting shops, the black market, jobs and the public finances.

Of course, the origin of these changes owes much to Gordon Brown, who encouraged the Chancellor to hike taxes in order to increase welfare spending. Proponents of higher taxes often suggest that they will not have any consequences, but it is the role of us in this House to scrutinise potential changes and assess the impact after the event. Independent modelling from EY shared by the Betting and Gaming Council suggests that the impact of doubling remote gaming duty could be the loss of 15,000 jobs, and a further 1,700 jobs could be lost as a result of the increase in general betting duty. In total, 17,000 positions located in Stoke-on-Trent, Leeds, Sunderland, Manchester, Nottingham, Newcastle-under-Lyme, Norwich and other areas could be affected. Of course, those are simply projections—they could prove to be pessimistic, and we certainly hope that will be the case—but when unemployment has risen consistently under this Government due to the jobs tax and other costs, such warnings should not just be dismissed. That is why the Chancellor must account for the impact of her choices, as new clause 25 requires.

There has been some mention of horseracing. I was pleased to join colleagues across the House in support of the “Axe the Racing Tax” campaign. That is another tax that the Chancellor wanted to introduce, but she was forced into one of her all-too-regular U-turns.

[Alex Ballinger (Halesowen) (Lab)]

Does the hon. Gentleman accept that the proposal to harmonise gambling taxes, which the horseracing industry was most opposed to, was first proposed by his Government? It is something that they were proposing; we have just inherited it.

[James Wild]

We are debating the measures in this Bill, which was introduced by this Government. I was not involved in the changes that the hon. Gentleman refers to, and I certainly would not have supported hitting the horseracing sector in the way that was proposed. I do not remember that being in a previous Finance Bill introduced by a previous Government; it is this Government who sought to bring forward those measures, but they were roundly rejected, because horseracing supports around 85,000 jobs and contributes £300 million in tax revenue every year.

Despite the Government’s climbdown in exempting horseracing from the higher rates, the industry could still feel the consequences of this Government’s approach to gambling duties. When the online betting sector is squeezed, sponsorship is likely to be reduced, and because racing’s funding depends heavily on those partnerships and that sponsorship, we could see an impact on racing. In my area of Norfolk, we are very fortunate to have Fakenham races—I went there to support the British Horseracing Authority’s campaign against the Government’s plans. That venue is synonymous with the area and its identity, and is a source of local employment, not just at the track itself but for the farriers, the pubs, the hotels and the whole ecosystem that supports racing. That is why these clauses in the Bill continue to pose a risk to the sector and other sports, and that risk needs to be accounted for.

I now turn to the black market, an issue that was raised by the hon. Member for Stoke-on-Trent Central (Gareth Snell) and my right hon. Friend the Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson). The Government have acknowledged the risks associated with taking this approach, which is why they quietly set aside £26 million for the Gambling Commission to combat expansion of the black market, but the same EY analysis suggests that over £6 billion in stakes could migrate to the black market, doubling its current size and undermining the progress that has been made through the existing regulatory framework. The Office for Budget Responsibility has identified potential leakage of around £500 million in lost revenue as activity shifts away from properly regulated markets. Those projections—which again could be wrong, but could also be right—raise legitimate questions about the overall effectiveness of the Government’s approach.

When taxes rise too far, behaviour can change and the yield can go down, which is what we will see with a number of the tax rises that the Government have included in their Finance Bill. Rather than reducing demand, activity will move to unregulated markets where consumer protections are weaker, fraud risks are higher, and tax revenue is not collected. I am not sure we have heard a convincing response from the Minister about how that will be addressed and whether those risks have been taken properly into account.

Let us look at what happened in the Netherlands, where the Dutch Government raised their remote slots tax rate to 34% last January. Within months, gross gaming revenue fell by a quarter and gambling tax receipts dropped to just 83% of the previous year’s figure, leaving a €200 million shortfall from the projections. Somewhat predictably, the Dutch regulator then reported a huge growth in the number of people accessing unlicensed domains, rising from 200,000 to a million. That should serve as an example of why we should be cautious about the Chancellor’s plans. Experience suggests that changes have unintended consequences, and those risks must be carefully assessed. In winding up, will the Minister provide a bit more clarity about how that will be monitored and what steps the Government will take if there are unintended consequences and those projections prove to be accurate?

There is some debate and confusion in the sector and some of the professional bodies about the treatment of free bets and free plays. The sector and those bodies have raised concerns about that. The Budget costings document calculates gambling duty using the gross gambling yield, which is the revenue retained by operators after paying out winnings to customers. However, current law uses a wider measure, which also counts the value of free bets and free plays. That means there is a potential mismatch. Will the Minister clarify that? I am sure she has had representations on it directly.

We need to strike a balance with the levels of taxation. The industry is warning that these increases will impact on sports and lead to job losses and more black market activity. New clause 25 seeks transparency and an answer to those concerns. It asks the Chancellor to assess the impact of these rises on horseracing, the black market, jobs and the public finances. That is the minimum that Parliament should expect, and I hope Members will support our new clause.

[Lizzi Collinge (Morecambe and Lunesdale) (Lab)]

I rise to speak to clauses 83 to 85 and schedule 13, which respectively outline: an increase in tax on online gaming, such as online slots or casino games; a new rate of general betting duty specifically for online betting, such as placing a bet on a football match; and, removing bingo duty.

Online gambling has evolved quickly, and legislation has simply not kept up. Before, someone might have popped down to their local high-street betting shop or organised a trip with their friends to the casino. It was confined to a specific place that people had to go to and then at some point leave. That does not mean that there were no problem gamblers—of course there were—but it did impose necessary social and physical limits on gambling. Online gambling has changed that beyond all recognition. Now, that casino fits into someone’s pocket. Online platforms know people’s habits, when they use their phone most and when they have not gambled in a while, and the platforms can tailor notifications to pull people back in. The technology is designed to prey on human instinct, using algorithms that make betting time-sensitive, compulsive and constantly available. In case the opportunity to gamble ever slips someone’s mind, gambling companies will be sure to remind them in a commercial break for sports matches, on the side of buses and emblazoned on the microphone at premier league post-match interviews.

People might see some of the seemingly generous offers they are given. For their first £5, the betting companies might give them £100 or even £200 credit to gamble with. That feels like a lot of money to most people, but it is pennies compared with what the companies are making from their current customers and what they might make from you, once you are hooked.

As someone who, to be frank, does not like gambling—I do not gamble, and I do not understand why people enjoy handing their money over to betting companies—I detest the tactics used by gambling companies to pull people in. As online gambling has evolved exponentially, the online platforms have been able to get away with dodging responsibility for problem gambling or for paying their fair share into the Treasury. As my dad always says, “You never meet a poor bookie.” That is why I support clause 84, which will introduce a new higher rate of tax on remote betting, so that online bets are more expensive compared with in-person betting. Those taxes will be paid by the platform, so that we can catch up, finally, with the reality of the gambling world, which has moved far beyond the traditional model of shops and casinos that the tax system was designed around.

Clause 83 raises the rate of remote gaming duty, the tax on online slots and casinos. That reduces the incentives for operators to push the most harmful forms of online gambling, making the system fairer and safer for everyone. I represent Morecambe, a seaside town with a host of gaming businesses on the front and a bingo hall. The evidence shows that it is not the penny slots or the weekly bingo games that drive the majority of problem gambling, and I am pleased that the new remote gaming and betting duties recognise that.

17:15

A focus on the evidence base is clear from the Government’s responsiveness to feedback from the consultation on gambling, in which it was shown that different forms of gambling carry different levels of harm and, of course, costs to operate. Instead of imposing a flat rate across the sector, this Government will be taking a more nuanced approach, imposing the highest rates on remote gaming, which carries the biggest risk of harm, while protecting lower-harm forms of gambling such as the local bingo hall. Part of the revenue raised will go into research on, prevention of and treatment of gambling harms. That replaces a voluntary system that some operators exploited, contributing as little as £1 a year. The new levies will take into account differences in operating costs and the different levels of harm across gambling activities. It is estimated that £810 million will be generated from these measures in 2026-27, rising to £1 billion by 2030-31. This is money that, as well as tackling gambling harms, can go into our NHS, our social care and our schools. People will still be free to gamble if they choose, but these measures discourage the most harmful forms of online betting and gaming, while supporting lower-risk, community-focused activities. The abolition of bingo duty supports that too, as well as protecting jobs and local social spaces. This measure is informed by Labour values.

We have a long-standing principle that the polluter pays. In this instance, online gambling platforms are polluting people’s lives, harming their health, draining their wealth and breaking up families. This must end, and clauses 83, 84 and 85, along with schedule 13, will go some way to achieving that.

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Daisy Cooper]

We Liberal Democrats have long campaigned for the doubling of remote gaming duty, and we are grateful to the Government, who have finally listened and taken that on board. This measure will raise vital revenue in a fair way, while addressing the eye-watering profits of the big online gambling companies and standing up for the thousands affected by problem gambling. According to the latest figures from the Gambling Commission, the online gambling giants saw revenues reach an eye-watering £7.8 billion in 2024-25. Meanwhile, Public Health England has estimated that gambling costs the UK economy about £1.4 billion a year through a combination of financial harms and the impact on physical and mental health, employment, education and crime. About 300,000 adults in Britain experience problem gambling, as well as roughly 40,000 children. Those figures are stark. This measure finally takes action that should have been taken a long time ago, and it will raise about £1.8 billion a year by 2029-30 to fund our public services fairly.

Buried in the fine print, however, is a detail that makes it seem as if the Government are giving the big online gambling firms a get-out, and I should be grateful to the Minister for some clarification. According to the “Budget 2025 Policy Costings” document,

“The tax base for this measure is the Gross Gambling Yield”,

which is the revenue retained by gambling operators after they have paid out winnings to customers. The tax base for remote gaming duty as defined in the Finance Act 2014 is a larger tax base. It is known as the gross gambling revenue, and includes the notional stake value of free bets and free plays. Can the Minister explain why today’s tax measure will apply to a narrower tax base than the one currently targeted by remote gaming duty? How much tax revenue has been forgone by this narrowing of the tax base? Was it unintended, or was it a result of influence from the sector? Did any of the big online gaming companies meet any Ministers and discuss these measures while they were being considered?

New clause 21, tabled in my name, seeks to clarify this situation by requiring the Chancellor, within six months of the passing of the Act, to undertake an assessment of the impact of the implementation of sections 83 and 84 in respect of the treatment of free bets and free plays for calculating general betting duty on remote bets, so we can clearly see the impact of this difference.

[Alex Ballinger]

I want to speak in support of clauses 83 and 84 on gambling taxation. I of course strongly welcome these steps on remote gaming duty, which cover online slots, online casino games and other high-risk remote gambling products.

Ahead of the Budget last year, I was one of more than 100 Labour MPs, alongside Gordon Brown, who wrote to the Chancellor calling for a different approach to gambling taxation and one that recognises the reality of the modern gaming industry. We highlighted how taxing the social ills caused by online gambling could pay for the abolition of the two-child benefit cap, and I strongly welcome the action the Chancellor has taken to lift hundreds of thousands of children out of poverty on the back of these changes. For us, fairness was not just about asking those with the broadest shoulders to contribute more, but about ensuring those whose business models generate the most harm make a proper contribution to the cost of that harm. That is why clause 83 is so important, as it targets the most addictive and dangerous forms of gambling: online slots and casinos.

As a country, we are experiencing record levels of harm caused by gambling. The Gambling Commission’s figures tell us that 2.5% of adults, which is more than 1 million people, are suffering from serious gambling harm. There are many types of gambling harm—debt, family break-up, crime and, at the most severe end, suicide—so it is extremely worrying that the Royal College of Psychiatrists has seen a threefold increase in the number of those referred for gambling treatment since gambling moved online during the pandemic.

In my own area, the Dudley-based Gordon Moody charity, which provides gambling treatment centres all over the west midlands, has seen a large increase in referrals, most worryingly among younger people involved in online gambling. This is not a coincidence, because online slots and casinos are designed to be high speed, continuous, psychologically manipulative and, for many, overwhelmingly addictive. So the Chancellor’s decision to increase remote gaming duty targeted at these most harmful forms of gambling is absolutely the right thing to do. It sends a clear message that the tax system must reflect the level of harm caused.

There is another reason why this change—as well as clause 84, which increases general betting duty—is the right thing to do: many online gambling operators, particularly large global operators, have spent years offshoring their profits, booking revenues overseas, minimising their UK tax liabilities and contributing very little in meaningful employment or investment in our communities. In one example, at the end of last year the online operator Sky Bet moved its headquarters to Malta specifically to avoid UK corporation tax, cutting its contribution to the Treasury by tens of millions of pounds. In another example, an unnamed online bookmaker was investigated by the Gambling Commission for illegally directing customers to offshore-based platforms —indeed, to the black market itself—to avoid paying UK tax and to avoid UK regulations. Increasing these online duties means that it will be harder for unscrupulous operators to avoid tax by moving operations offshore. Online gambling in the UK will be taxed fairly in the UK.

Raising remote gambling duty to 40% and general betting duty to 25% for remote bets also puts us on a footing much closer to that of other European jurisdictions and many states in the United States. Until the Budget, the UK was behind the curve in taxing these highly harmful online products. For us, the Chancellor’s move is a matter not just of revenue, but of fairness, responsibility and aligning our tax system with the reality of modern online gambling.

However, taxation is only one element of harm reduction. Raising duty alone will not of course prevent gambling addiction, stop children being exposed to online gambling advertising and ensure that families receive the support they need when a loved one falls into crisis. If we are to tackle these harms, we need a public health approach. That means proper funding for treatment, and I welcome the steps already taken under the statutory levy. However, it also means serious investment in prevention, community education and early intervention, and a modern regulatory framework that puts people, not profits, first and is fully independent of the gambling industry.

I want to highlight another pressing issue for the Minister, which is the continued prevalence of the B3 gaming machines on physical premises. These high-intensity machines, so often located in areas with higher deprivation, continue to cause significant harm, yet they remain under-regulated and undertaxed relative to the risks they pose. If we are to take harm seriously, B3 machines should be included in the next phase of gambling tax reform.

Finally, the most recent gambling Act was introduced more than 20 years ago, in a completely different era: before the smartphone, before the explosion of data-driven behavioural targeting, and before 24/7 online casinos in your pocket. A new Act is clearly needed. Our laws have not kept pace with technology, they have not kept pace with the scale or sophistication of online gambling operators, and they have not kept pace with the reality of the harm we now see every day in communities across the country. I welcome the measures in the Bill, but I urge the Government to move quickly to update advertising rules, strengthen affordability checks, protect children and vulnerable people, and ensure that tax policy, regulation and public health strategy on gambling are all aligned.

The measures on remote gaming duty and general betting duty are excellent steps in the right direction. They acknowledge the reality of harm, strengthen fairness in our tax system and take us closer to a modern framework that puts the wellbeing of the public first.

[The Second Deputy Chairman]

I call the Chair of the Culture, Media and Sport Committee.

[Dame Caroline Dinenage (Gosport) (Con)]

I would like to speak in support of new clause 25, which would require the Government to assess the effects of an increase in gambling duty, because just as I believe individuals have a right to spend their hard-earned money as they like, I believe it is important that they do so in a sensible, regulated and safe environment.

Whatever we may think about gambling companies, gambling is already a very heavily regulated sector. Since the gambling White Paper was published in 2023 by the previous Government, the industry has already absorbed over 62 policy changes. Those changes include a limit on slot stakes, financial risk checks on transactions, tightened market rules and the statutory levy. The sector is so well regulated that the Culture, Media and Sport Committee warned the previous Government that the finance risk checks should be as minimally intrusive as possible. The Committee concluded that the Government must strike a careful balance: preventing harm for all, while allowing those who gamble safely the freedom to continue to do so. I have concerns that this vast increase in taxation on online betting and gaming does not strike that balance.

The combination of an existing regime of strong regulation and a sudden jump in the levels of remote gaming duty from 21% to 40% is the kind of environment that I believe risks pushing people into the black market. As a floor, 40% is very high for remote gaming tax by international standards. It has been suggested that such high taxes could double the size of the online black market. Does the Minister recognise research from the Netherlands, highlighted by the shadow Minister, which found that after steep tax rises were introduced on remote slots, visits to black market domains increased fivefold over a three-year period? That is what we have to worry about if we are concerned about the oversight of those making bets and playing slots. That is why I am supportive of new clause 25, tabled by the Opposition. It requires the Chancellor to assess and report back on the effects of the increase in gambling duties on the number of high street betting shops, the black market, the employment rate, the public finances, and sports and horseracing.

On sports and horseracing, I was glad to see a carve-out from general betting duty for UK horseracing. I was among many Members calling for that in recognition of the unique place horseracing occupies in British cultural life, as well as the 85,000 jobs and £4 billion contribution to the economy that horseracing offers.

The Government have slightly dressed up their raid on gambling companies as being driven by concerns around gambling harms. In November 2024, I spoke to the Bacta convention about the then recently announced statutory levy and my concerns about how it would be distributed to organisations that conduct harms research. The Committee recommended the year before that the Government ensure that service providers, which were operating via the voluntary funding system, were adequately supported to make the transition to the statutory levy. However, we have now received very concerning reports that voluntary organisations in particular are facing a funding cliff edge, with delays and a lack of information about the transition to levy payments from the NHS.

I am not entirely sure the Minister is listening to what I am saying, but I am hoping she will be able to address that point. She has not looked at me once while I have been speaking, but hopefully she is furiously writing notes about what I am talking about and will be able to address those concerns. Hopefully, she will tell me that she will discuss them with colleagues and act to ensure that no charitable organisation currently operating within the gambling harm prevention sector will have to fold due to delays with levy funding.

The Chancellor is looking around for money and believes that she can raise it from gambling companies, but, as with many of her other measures, such as national insurance rises, she will be a victim of the law of unintended consequences if she is not careful. On this occasion, the consequence will be that more people are dragged into the black market, where they will quite simply find better offers than those offered by gambling companies.

17:30

The black market is completely unregulated. There is no maximum stake limit, and there are no financial vulnerability checks, deposit limits, prompts or transparent spending summaries. Having taken the opportunity to speak with many who have been impacted by problem gambling—in some cases, families who have been impacted in the most substantial way, as their relatives have taken their own lives—I can say that the black market is a wild west that any vulnerable person could easily be drawn into. These measures could represent a one-way ticket to that town. The Government already recognise that in their own statistics. As the Minister said, they are earmarking an additional £26 million for the Gambling Commission to investigate the issue, so clearly they recognise that it is a problem that needs to be kept an eye on.

This is really important. While the Chancellor believes that she is potentially pocketing a cool £1.1 billion from this increase, there is a risk that in reality she will lose out on the tax receipts from up to £6 billion diverted back to the black market. She might think that she is the winner, but in actual fact, under her watch we will all be losers.

[Gareth Snell]

As has already been pointed out by a number of colleagues, my constituency is home to bet365. My hon. Friend the Member for Halesowen (Alex Ballinger) said something about there being no meaningful employment in gambling, but I would say to him that there are thousands of people in my constituency and in that of my hon. Friend the Member for Newcastle-under-Lyme (Adam Jogee), who put food on the table for their children as a result of the job they do in the industry. There are 109,000 people who go to work in the sector, whether it be in a betting shop, a casino, a bingo hall, or a high-tech company like the one in my constituency. To say that the work is not meaningful makes this sound like an ideological change rather than a taxation change.

[Alex Ballinger]

The point that I was trying to make was not at all that people who work in the gambling industry are not involved in meaningful employment. The online sector represents less than 10% of jobs yet makes enormous profits, so in fact, if online companies are taxed more, gambling companies are incentivised to put more people in the land-based gambling sector, which could increase employment and would be good for people in my hon. Friend’s constituency.

[Gareth Snell]

That is nonsense, frankly. Some 7,500 people work for that company in my constituency. If they were all my constituents, that would mean one in 10 people in my constituency were getting paid a salary that is greater than the average for the region. Whether we like gambling or not, that company and the people it employs are driving the economic regeneration of north Staffordshire, because those jobs are the ones that give people money to spend on our services, shops and social activities.

I am sure we do not want to make this a debate about the moral rights and wrongs of gambling—that is not the nature of the debate we are having today—but I do think we need to consider the reality of the circumstances that the communities that host these companies will face as a result of the tax changes. I congratulate my hon. Friend the Member for Halesowen on being successful in his campaign to get to where we are today, but the consequence is going to be felt in my constituency with job losses. There are people who will not have a job this time next year, either because the company that they work for will have to reduce the number of people who work for them, or—worst of all—will move overseas.

There have been lots of comments about moving profits overseas and the prospect of bad actors, but the company in my constituency is probably an exemplar of how to keep the money in the UK. The owners of the company are paid incredibly well, but they still pay PAYE. They make a contribution to the state that is about equal to my entire local government budget. The idea that these are not meaningful organisations is slightly disrespectful to the people in them, and the economic damage that would occur in my city if such companies were to disappear overnight, which they could do, would be devastating. Frankly, it would cost the Government significantly more in the bail-out that would be needed than they would raise through the tax.

I think it was my hon. Friend the Member for Dartford (Jim Dickson) who made the point that we do not do hypothecated taxes in this country. When it comes to spending, I support every measure that the Government brought forward at the Budget. The lifting of the two-child benefit cap will benefit 4,500 people in Stoke-on-Trent Central. My city has one of the highest rates of child poverty of anywhere in the country, so the benefit to those families will be enormous and immediate. However, everything goes into one big pot and then goes out from the other pot, and we should be careful about making the moral argument that specifically taxing gambling is the only possible way to fund how we deal with child poverty. That is a slight misapprehension.

Having visited bet365 and seen the work that it does, I know that it is worried about the impact that the changes will have on the black market. It—as does the entire sector—spends a lot of its time and energy doing research and development to try to work out how to keep people playing and betting in the regulated sector, where there is support for people at risk from gambling, including lock-out mechanisms for problem gamblers, and where the tax receipts from the people who bet go back into the UK. To have £6 billion going into the unregulated sector could be a huge loss to the Treasury.

We are all only one or two clicks away from being in an unregulated gambling app. For Safer Gambling Week, the Betting and Gaming Council asked people to look at two comparable gaming sites, because without realising, people can easily find themselves on one site that is not regulated, whose revenue stream almost certainly goes into dark activity—probably funding some organised criminal activity—and not a regulated sector product, with all the support and safety measures that come with that. Because these things can now proliferate on phones, access to them for people of all ages is now much easier.

There is a genuine concern that we must think about: if that £6 billion is going into the unregulated sector and, as the result of the tax changes—as the OBR recognises—there will be an increase in unregulated activity and problem gaming, is the £26 million for the Gambling Commission enough? Will the £1.1 billion raised by the statutory levy be sufficient? As the hon. Member for Gosport (Dame Caroline Dinenage) said, there is genuine concern from some charitable organisations on the ground that they have not yet had their funding for this or confirmation about how they will be able to spend it. Does it just get sucked into the NHS pot to be spent on a medical solution? That might be the solution, but that means that some of the carefully crafted mechanisms to deal with problem gambling will simply lose out as a result of big structural changes to tax.

[Alex Ballinger]

I agree with my hon. Friend—I am also concerned about the black market in online gambling—and I welcome the extra money that the Chancellor has introduced for the Gambling Commission, which has powers including blocking ISPs and blocking payments, among other things, to crack down on unregulated gambling.

Does my hon. Friend share my concern about unregulated online gambling companies advertising in the UK, including in the premier league? Does he agree that the Government should be doing something about that so that we can better support the regulated sector?

[Gareth Snell]

Absolutely, we do need to do that. I am an old-fashioned state regulator; I like the idea that the state can regulate things. I like the idea of tax and spend as well, which is what we are doing in the Budget. It is a good thing—[Interruption.] I was so close—I raised the hopes of the hon. Member for North West Norfolk (James Wild) and then dashed them.

We should think about some of the changes that came in through the White Paper, including the whistle-to-whistle ban on promoting certain products, the premier league’s voluntary opt-out on gambling company sponsorship, and the soon-to-be banning of gambling companies on football shirts. Again, that uniquely affects Stoke-on-Trent, because bet365 sponsors Stoke City. Therefore, should we ever make it to the premiership—we came so very close at the beginning of the season, but we are not quite there now—we would have to have a complete change of kit.

There is more that we can do about the unregulated sector, but that should be a collective effort. We should also not kid ourselves that what we are doing today is about trying to get on top of the unregulated sector. We are talking about the taxation of the regulated sector. As a consequence, we may inadvertently push more people into the unregulated sector. The consequence of that will be bad for society and bad for people who are problem gamblers. It will also be a challenge for the Gambling Commission to them try to regulate, and we need to be up front about that.

I recognise that there are some very addictive games that people can get hooked on and spend an absolute fortune, because, as my hon. Friend the Member for Halesowen said, they are affected psychologically; they get drawn in, spending more money to make the experience worth while. But we may be in a perverse situation, because the machine gaming duty rate for a land-based product will be 20%, but the remote betting duty—for products where people can bet on a football match using one of the apps at home—will be 21%. Although we recognise that the gaming side is much more damaging than the betting side, we are going to have a lower rate for land-based gaming than for remote betting, when we recognise that betting as a product presents a safer, more cost-intensive situation. Was that by design, or is it a consequence that the Treasury has not considered? Will the Minister address that point?

The Minister has said that this is a fair levy, taking the gaming rate to 40%. That will make us an outlier compared with our European neighbours. The next on the list are Czechia at 35%, the Netherlands at 34% and Denmark at 28%. There is a point at which the taxation of a product becomes so de minimis in its return that it ceases to have an effect. I have never believed in the Laffer curve—I am sorry to disappoint the hon. Member for North West Norfolk again—but I can see that we will get to a point where we are trying to squeeze an increasingly large amount of money out of a shrinking tax base because more people are taking their spend elsewhere.

That would be damaging for everybody. It would be damaging for my constituents, because if the demand for the service and products made by the companies in my constituency dry up, the jobs also dry up. It would also be bad for the Treasury because the amount of money it can raise from the regulated sector will decrease, and that is not something that we want to see. Has the Minister looked at the evidence from the Netherlands? When the Netherlands increased its rate, which it did for good reason—a decision around tax and spend in order to raise money to pay for parts of its social programmes—it actually saw a huge spike in the use of unregulated products, with something like a fivefold increase over three years, and a huge decrease in the expected rate of return for its revenue.

There are similar examples in other European countries. I do wonder whether we have looked at those before making some of the decisions that we are making today. Do we have a contingency? It is not that we are hypothecating taxation in this country, but we have said that these changes are, quite rightly, to fund the reduction of child poverty through the removal of the two-child benefit cap. If the revenue rates from the changes decreases, where will the additional money come from?

Finally, will the Minister touch on the impact on Gibraltar? The decisions on gambling tax rates that we make today will have an effect on Gibraltar. Nigel Feetham, the Minister for Justice, Trade and Industry in Gibraltar, has repeatedly pointed out that 3,500 people in Gibraltar derive their job from the gambling sector. It makes up 30% of GDP there; one third of Gibraltar’s tax receipts comes from the gambling sector. He has said only this week that the change will remove tens of millions of pounds from the Government of Gibraltar’s budget. There is absolutely no way they can replace that from domestic sources in any reasonable time.

Given that Gibraltar is one of our important overseas territories, will the Minister set out and explain what conversations the Treasury has had with counterparts in Gibraltar? What are the contingencies if we find ourselves inadvertently creating a massive black hole in the budget of the Government of Gibraltar? Again, if we have to bail them out in some way, where will that money come from? If it is taken out of the revenue that is expected to be raised from this particular rate, that then undermines the figures in other parts of the Budget, which, in its entirety, I support.

[Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)]

My constituents know all too well that there are some gambling companies that thrive on making vast profits from addiction, distress and despair, often delivered straight into people’s homes through online platforms and their mobile phones—quietly but devastatingly tearing families apart. That is why I speak today on clauses 83 to 85 and schedule 13.

Remote gaming, including online slots and casino games, is the most addictive and fastest growing part of the gambling industry. Those products are deliberately engineered to keep people playing, spending and losing long after the fun has gone and the harm has begun. In Wolverhampton North East, through my constituency casework, I see the real-world consequences of parents trapped in spiralling debt, children going without the basics and relationships breaking under unbearable strain. The Bill addresses that harm head-on.

17:44

From 1 April 2026, the rate of remote gaming duty will rise from 21% to 40%, targeting the most harmful and addictive parts of the market. For remote betting, a new rate of 25% will be introduced from 1 April 2027, while bets on UK horseracing are protected and remain at current rates. This reflects the lower harm of these products and recognises the contribution of operators to the statutory horserace betting levy. These targeted increases are not just about raising revenue; they are about disincentivising harmful practices and holding companies to account.

Just as important—especially for my bingo-loving constituents—is what the Bill does not tax. By abolishing bingo duty from 1 April 2026, this Government are recognising that not all gambling is the same. Bingo halls such as the one in Wednesfield are community spaces. They are places of friendship and connections, especially for some of our older residents, so supporting lower-risk activities while cracking down on the most harmful ones is exactly the balanced approach that our communities expect.

These changes will raise over £1 billion a year to support the public finances and Labour’s mission to lift half a million children out of poverty, which will affect more than 4,200 children in my constituency of Wolverhampton North East. They will protect families from harm, support communities and make sure that those who profit from misery finally pay their fair share.

[Lucy Rigby]

I am grateful to hon. Members for their contributions to today’s debate, and particularly to my hon. Friends the Members for Wolverhampton North East (Mrs Brackenridge), for Morecambe and Lunesdale (Lizzi Collinge) and for Halesowen (Alex Ballinger) for their heartfelt speeches in favour of these measures. I also note the comments of the hon. Member for Gosport (Dame Caroline Dinenage), which I can assure her I did listen to in full, and of my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell), both of whom, I accept, have tremendous expertise in this area.

As I have set out, we believe that the measures in clauses 83 to 85 deliver fair reforms to our system of gambling taxation because they reflect the reality of how gambling has changed in our country, the harms that now exist and the need for the tax system to keep pace as these changes continue. The Government’s objective is to strike a balance by raising revenue fairly while avoiding further pressures on land-based operators. New clauses 21 and 25 ask the Chancellor to review the impact of and make a statement on the effects of the increase in gambling duties.

[Carla Lockhart (Upper Bann) (DUP)]

The Minister will know that Northern Ireland has some of the highest rates of gambling, with 3% of adults classified as problem gamblers and 5% at moderate risk. I welcome her efforts in this regard, and the money that the proposals will raise. Will she give a commitment to the Committee that she will enter into conversations with the Communities Minister in Northern Ireland about Northern Ireland getting its fair share of this levy, to ensure that organisations that help those with gambling addictions are able to avail themselves of this funding to help people in that situation? I spoke recently to a constituent who had started gambling at the age of six, and it really struck a chord. Those people need help and I just ask her to do that.

[Lucy Rigby]

The hon. Member raises an important point. Before I commit to her that I will take that forward, I would like to check what discussions have already taken place. I hope she will accept that that is necessary from my point of view.

Both the proposed new clauses focus on the impacts of the changes to the gambling duty and ask for a commitment to update Parliament within six months of the Bill being passed. First, this Government did not announce, and are not proposing to make, any changes to the treatment of free plays or free bets through this Bill. Furthermore, the Bill does not make any changes to the duty charged on bets placed on horseracing in high street betting shops.

Secondly, on the illegal market, which has been raised a number of times, the Gambling Commission is already tackling that risk and is protecting consumers, but we recognise that modern technology makes it easier for illegal websites to target consumers. To strengthen enforcement and protect consumers from dangerous illegal sites, we are providing an additional £26 million to the Gambling Commission over the next three years. I hope I can assure my hon. Friend the Member for Stoke-on-Trent Central that the £100 million a year in the form of the statutory levy is ringfenced for prevention, treatment and research in this area.

The Government published a tax information and impact note for this measure at the Budget. As is set out in that note, consideration will be given to monitoring and evaluating the expected Exchequer impacts of the policy after at least two years of monitoring data has been collected and analysed. More broadly, the Government continually monitor the operation of all taxes and keep them under review to ensure that they deliver on their intended outcomes and, indeed, are fit for purpose. For those reasons, the proposed statement and the impact assessment are not necessary.

The measures in clauses 83 to 85 deliver fair reforms to our system of gambling taxation. They reflect how gambling has changed in our country, the harms that now exist and the need for the tax system to keep pace as those changes continue. The shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), raised levels of employment. He will know that right across the piece, the OBR expects that employment levels will rise in every year of the forecast. Costings were also raised, including by my hon. Friend the Member for Stoke-on-Trent Central. The OBR has taken account of behavioural impacts within its costing. Of course, those costings have been certified and scrutinised in the usual way.

The Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), asked about engagement with industry. I can confirm that the Government, as I hope she would expect, engaged with a number of stakeholders, including from the gambling industry, as part of the consultation process. My hon. Friend the Member for Stoke-on-Trent Central also raised Gibraltar. Of course we recognise that Gibraltar has a gambling industry that very much faces the UK. I can assure him that there has been engagement, not by me, but by some of my colleagues in the Treasury, with Gibraltar to that end.

[Daisy Cooper]

I am grateful to the Minister for confirming that she has consulted and that Ministers have had engagement with the industry. I was specifically wondering whether in the course of that consultation with the industry, there was discussion about using a different measure and choosing a different tax base for the calculation of this particular tax, because it seems as though the tax base could have been bigger if they had used the measure already in the Finance Act, rather than this new measure that seems to shrink the tax base. Did the Treasury have a particular reason for using a different measure for calculating this remote gaming duty?

[Lucy Rigby]

It was not me who had those engagements, but as I said, I confirm to the hon. Member that we are not proposing to make any changes to the treatment of free plays and free bets through the Bill, which I hope reassures her in that regard.

I urge the Committee to reject new clauses 21 and 25 and agree that clauses 83 to 85 and schedule 13 should stand part of the Bill.

Question put and agreed to.

Clause 83 accordingly ordered to stand part of the Bill.

Clauses 84 and 85 ordered to stand part of the Bill.

Schedule 13 agreed to.

New Clause 25

Statements on increasing remote gambling duty and introducing a new rate of General Betting Duty

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the increase in gambling duties made under sections 83 to 84 of this Act.

(2) The statement made under subsection (1) must include details of the impact on—

(a) sports and horseracing,

(b) the number of high street betting shops,

(c) the gambling black market,

(d) the employment rate, and

(e) the public finances.”—(James Wild.)

This new clause would require the Chancellor to make a statement about the effects of the increase in gambling duties.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

17:54

Division 405

Question accordingly negatived.

Ayes: 187

Noes: 351

Clause 86

Rates of duty

Question proposed, That the clause stand part of the Bill.

[The Chairman of Ways and Means (Ms Nusrat Ghani)]

With this it will be convenient to consider the following:

New clause 8—Review of impact of section 86 on the hospitality sector—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before the House of Commons a report assessing the impact of the measures contained in section 86 on the hospitality sector.

(2) A report under subsection (1) must include an assessment of the impact of section 86 on—

(a) levels of employment across the United Kingdom within the hospitality sector,

(b) the number of hospitality businesses ceasing to trade, and

(c) the number of new hospitality businesses established.

(3) In this section, ‘the hospitality sector’ means persons or businesses operating in the provision of food, drink, accommodation, or related services.”

This new clause would require the Chancellor of the Exchequer to review and report on the impact of the alcohol duty measures in Clause 86 on the hospitality sector, including effects on employment and business viability.

New clause 9—Review of cumulative impact on the hospitality sector—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before the House of Commons a report assessing the cumulative impact on the hospitality sector of—

(a) the measures contained in section 86 of this Act, and

(b) changes to taxation and business costs affecting that sector introduced outside this Act since 2020.

(2) For the purposes of subsection (1)(b), changes to taxation and business costs include, but are not limited to—

(a) changes to employer National Insurance contribution rates or thresholds,

(b) changes to business rates, including reliefs and revaluations, and

(c) any other fiscal measures which materially affect operating costs for hospitality businesses.

(3) A report under subsection (1) must include an assessment of the impact of the matters listed in that subsection on—

(a) levels of employment across the United Kingdom within the hospitality sector,

(b) the number of hospitality businesses ceasing to trade,

(c) the number of new hospitality businesses established, and

(d) the financial sustainability of hospitality businesses.

(4) In this section, ‘the hospitality sector’ means persons or businesses operating in the provision of food, drink, accommodation, or related services.”

This new clause would require the Chancellor of the Exchequer to assess and report on the cumulative impact on the hospitality sector of alcohol duty measures in the Act alongside wider fiscal changes, including employer National Insurance contributions and business rates.

New clause 26—Statements on increasing alcohol duty—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the increase to alcohol duty made under section 86 of this Act.

(2) The statement made under subsection (1) must include details of the impact on—

(a) the hospitality sector,

(b) pubs,

(c) UK wine, spirit and beer producers,

(d) the employment rate, and

(e) the public finances.”

This new clause would require the Chancellor to make a statement about the effects of the increase in alcohol duty.

[Lucy Rigby]

I am pleased to open this session—the sixth and final session in Committee of the whole House on the Finance (No. 2) Bill—on clause 86, which concerns alcohol duty. This Government’s approach to alcohol duty is one of proportionality. Indeed, we are taking a fair and coherent approach to alcohol taxation as a whole. The measures in the Bill take account of the important contribution of alcohol producers, pubs and the wider hospitality sector, the Government’s commitments to back British businesses, and the need to maintain the health of the public finances.

Clause 86 makes changes to alcohol duty rates from 1 February 2026. Specifically, the clause changes the rates of alcohol duty for all alcoholic products in schedule 7 to the Finance (No. 2) Act 2023 to reflect the retail prices index.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

The Minister says that she has considered carefully the fairness of the changes in this clause. Has she considered at all the compound effect of this and all the other taxes that are currently killing hospitality businesses?

[Lucy Rigby]

We take all impacts on the hospitality sector and the pub sector extremely seriously, and this Government are proud to be backing British pubs across the piece.

The changes we are making will help to ensure that, as a country, we live within our means, that we balance the books and that we properly fund the public services we all rely on. On Second Reading, concerns were raised about the impact of alcohol duty on the hospitality sector and British pubs. We have made it clear, as I just have, that we are steadfast supporters of British pubs and the wider hospitality sector, including through the introduction of the new pro-growth licensing policy framework that was announced at the Budget.

[Mr Joshua Reynolds (Maidenhead) (LD)]

The Minister just said that the Government are pro-pubs, but any pub she speaks to in my constituency will tell her that this Government are not pro-pubs. The amount of profit left at the end of a pint for a pub is minuscule, and it is so far from reality to say that the Government are pro-pubs. How does she respond to all the pubs across the country that are crying out for change?

[Lucy Rigby]

I was talking about our new pro-growth licensing policy framework, which was announced in the Budget. If the hon. Member is referring specifically to business rates, as I think he might be, we have made it clear that we are continuing to talk to the sector about any support beyond the existing £4.3 billion support package that the Chancellor announced in the Budget.

[Tonia Antoniazzi (Gower) (Lab)]

I thank the Minister for speaking about an imminent decision on business rates, but this is not just about business rates. The Victoria Inn in Mumbles in my constituency has not banned me as a Labour MP—it has not banned any Labour MPs—but it would like to extend an invitation to those on the Front Bench to visit Mumbles, come to the pub and have that conversation, because it is a positive conversation about how the Government are listening and moving forward.

[Lucy Rigby]

I am grateful to my hon. Friend for that invitation. It is one that I will be taking up, as I would love to join her in that public house in her constituency.

Importantly, continuing to freeze alcohol duty would primarily support cheaper alcohol in the off-trade—for instance, alcohol sold in shops and supermarkets—and have only a small indirect impact on the hospitality sector. That is because, as hon. Members will know, alcohol duty is paid by producers, not by pubs, and 73% of alcohol consumed in the UK is purchased from shops, rather than in pubs, restaurants and bars. The Government’s decision to uprate alcohol duty in line with inflation is therefore not only prudent for the public finances; it also balances important considerations, and the contribution of alcohol producers, pubs and the wider hospitality sector, with the need to support public services such as the NHS.

[Jim Shannon (Strangford) (DUP)]

I appreciate the Minister giving way. I have noticed that more and more of my constituents are drinking non-alcoholic beer, and that there the number of people taking alcohol is reducing. That sometimes puts pubs under particular pressure, but people can still go out socialising and have a meal and a non-alcoholic drink. Would it be possible to promote that through this Bill, because I believe we should be looking at that growing market?

[Lucy Rigby]

I am grateful to the hon. Member, as always, for his intervention. I was about to talk about the strength-based duty system introduced by the previous Government on 1 August 2023, following the alcohol duty review. The new alcohol duty system taxes all alcoholic products according to their strength, so duty increases with alcohol content, which represents a progressive shift. The reforms introduced two new reliefs: the draught relief, which reduced the duty burden on draught products sold at on-trade venues; and small producer relief, which replaced the previous small brewers relief and aims to support small and medium-sized enterprises and new entrants.

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

The Minister rightly refers to draught beer and cider relief, and she said earlier that her concern about freezing alcohol duties was that most of the benefit would be going to supermarkets and other places that sell beer cheaply. Surely she recognises that what the Chancellor should have done is reduce the draught rate, as happened last year, so that the full benefit would have gone to licensed premises, as they are the only venues that can sell the draught drinks covered by that rate.

[Lucy Rigby]

My point was that the benefit of the decision not to update alcohol duty will be felt mostly in the off-trade, which is a point that the hon. Gentleman appears to understand.

The small producer relief aims to support SMEs and new entrants by permitting smaller producers to pay reduced duty rates. Clause 86 maintains the generosity of the small producer relief, compared with main duty rates. The changes introduced by the clause maintain the real-terms value of alcohol duty, and balance the need to support alcohol producers, pubs and the wider hospitality sector with the need to support the public finances. Further to that, the changes also support smaller producers by maintaining the generosity of small producer relief. I therefore commend the clause to the Committee.

18:14

[The Chairman of Ways and Means (Ms Nusrat Ghani)]

I call the shadow Minister.

[James Wild]

It feels like we are getting warmed up for scrutinising the 536 pages of the Bill upstairs in the Public Bill Committee shortly. It is good to see that the popularity of the topics we are debating has increased as we move on to alcohol duty, which clause 86 increases in line with the retail prices index from 1 February.

I am proud to confirm that His Majesty’s Opposition are big supporters of beer, wine, spirits and hospitality businesses. As such, we oppose these tax rises. This £26 billion tax-raising Budget piles pressure on households and businesses that are already struggling because of the decisions of the Chancellor. Prices are high, growth is sluggish and now the Chancellor has chosen to impose another duty hike.

Our new clause 26 would therefore require the Chancellor to publish a statement on the impact of increasing alcohol duty on the hospitality sector, on pubs, on UK wine, spirit and beer producers, on jobs and on the public finances. These sectors are already being hammered by this Government’s economic choices. A Government who say that the cost of living is their priority are raising alcohol duty, putting more cost on to people and businesses that keep our rural communities and high streets alive.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

May I start by wishing everybody taking part in dry January good luck? I admit that I am not one of them. It is fantastic that the shadow Minister is talking about the impact of these changes, but I am surprised that his list did not include alcohol harm. Many charities and campaign groups are pleased that the Government are trying to move people away from drinking at home to drinking in the hospitality sector. Does he accept that that is a good thing and its benefits should be evaluated?

[James Wild]

Indeed. When we brought in the new duty system, we focused on the strength of alcohol in terms of the tax. We want to encourage more people into the hospitality sector, but the Government seem to have a policy of driving people away from going into pubs—and not just Labour MPs.

In government, we recognised the importance of those sectors to jobs, to our communities and to growth, and the simplified duty system, including the two new reliefs—draught relief and small producer relief—were warmly welcomed. My hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) made the point that the Government are choosing not to implement similar measures on draught relief. At the 2023 autumn statement we froze alcohol duty rates, and we extended that freeze in the spring Budget of 2024. I am proud to support that record: we had a Government working with the sector, not against it. It gives me no pleasure to say that this Government have chosen a very different path.

[Sir Edward Leigh (Gainsborough) (Con)]

My hon. Friend and I both represent large, rural constituencies. Could Members across the House think creatively about how we are going to save the great British rural pub? That could be by giving special credence to those who sell draught beer, rather than selling it in supermarkets, or through national insurance—all that sort of thing. Otherwise a great institution, which most people have to drive to, will be in danger of extinction. Are those pubs not part of our history?

[James Wild]

They absolutely are. I would be happy to come to my right hon. Friend’s constituency to discuss this over a pint in one of those small rural pubs, which are the hub of our villages and hamlets. Once they are gone, it is very difficult to replace them. The Government clearly have the hospitality sector in their crosshairs, and clause 86 is just the latest salvo.

This is no small corner of the economy. Some 3.5 million people are employed directly in the sector, which invests £7 billion a year, yet the industry is being punished by the Chancellor’s decisions and this clause. UKHospitality’s “#TaxedOut” campaign has highlighted the nearly 90,000 jobs lost in this sector. With unemployment now above 5%, young people in particular are paying the price. That is a consequence of the Chancellor’s damaging tax rises, which were supported by Labour Members.

Higher alcohol duties, the jobs tax, energy bills and soaring business rates are layering cost on cost. It is little wonder that UKHospitality has called the Government’s approach a “hammer blow”.

[Ian Roome (North Devon) (LD)]

Does the shadow Minister agree that as a result of this policy, lots of local pubs, including lots more in the hospitality industry, will go out of business?

[James Wild]

That is very clearly the risk.

The British Beer and Pub Association has said that the proposed increases will be damaging to the sector, and we may well see more closures as a result. New clause 26 would shine a light on the real impact that these decisions will have on rural pubs, jobs and businesses. I hope the Minister will consider the new clause and not simply dismiss it by referring to the tax and information impact note, as she did with an earlier group of amendments. That is a prediction of what will happen; it is not a review of what the actuality is.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

This new clause is even more important given the fact that the Government, the Chancellor and the Prime Minister understand the impact that the Bill will have on pubs. They have said that they will bring forward measures to help and support pubs, yet we have not seen those measures, because they are not in this Bill. We therefore need to have some form of accountability to be able to understand the impact of not only the measures before us, which we can vote on, but the proposed ones that will come in to support the measures that the Government are already looking to put in this Bill, which will have an impact. Does that make sense? Does my hon. Friend agree?

[James Wild]

I think that makes sense, and I certainly agree with my hon. Friend.

The Government are having to try to put in place solutions to deal with problems that they have created. If Labour MPs were welcome in pubs across the country, they would hear quite how difficult—

[Gareth Snell]

I am!

[James Wild]

I am sure that the hon. Member is welcome, but let us be clear that some are not.

If I go into a pub, I do not think I will find many publicans who think that this Government are pro-pub. We have a Chancellor who said that she did not understand the impact that her Budget, the revaluation and the removal of the discount on business rates would have. That is staggering. Frankly, it shows once again that she does not understand business and was not listening when the sector and many others warned that that was precisely the impact that her policy would have.

The Chancellor is reportedly about to do a U-turn on her business rates raid. She has not come to the House yet to inform us or the sector, but what is being briefed is likely to be wholly inadequate. On the radio this morning we heard Ministers saying that the impact will be limited to pubs, but the hospitality sector, leisure businesses and retail all face huge increases in business rates.

[Mr Joshua Reynolds]

Does the shadow Minister agree that if this Labour climbdown is happening, it is not enough for there to be a smaller increase than the one that was planned? There needs to be no increase in business rates.

[James Wild]

The hon. Gentleman tempts me on to my next paragraph.

Instead of tinkering, the Chancellor should adopt Conservative party policies and abolish business rates for pubs, hospitality businesses, retail and leisure businesses, as well as slashing the average pub’s energy bill by £1,000. That is real help—the Minister can have those ideas for free.

The duty increases will also have an impact on the UK’s world-class wine and spirits producers, which together generate £76 billion in economic activity. Across our wine sector, there are more than 1,000 vineyards, including some excellent ones in North West Norfolk, which I recommend. Despite that success, we see the Government putting yet more costs on to the sector; some 60% of the price of a bottle of wine already goes to tax. Instead of listening to calls from the sector to freeze duty, the Chancellor has decided to increase it, and she has failed to fix the small producer relief so that it works for wine makers and distillers.

The picture is no rosier in the spirits sector. The Scotch Whisky Association has said that the increase piles additional pressure on to a sector already suffering from job losses, stalled investment and business closures. It estimates that the lost revenue to the Treasury as a result of the previous rise in spirits duty amounted to about £150 million. The UK Spirits Alliance has called the Budget

“a sad day for the nation’s distillers, pubs and the wider hospitality sector.”

WineGB joins its ranks in pointing out that higher prices will likely lead to lower sales and reduce the Treasury revenue, so the sector could not be clearer. The only people still pretending this is good economics are those on the Government Benches.

When the Government should be backing businesses, they are instead choosing to add to their costs. Increased taxes have consequences—they depress demand and revenue. In October, YouGov found that one in four regular drinkers was likely to reduce their alcohol spend this year due to price increases, and the Wine and Spirit Trade Association has called for the OBR’s forecasting assumptions to be reviewed. The Government are putting themselves and the UK on the wrong side of the Laffer curve, which the hon. Member for Stoke-on-Trent Central (Gareth Snell) should read more about—he will be persuaded. Ministers should take fresh advice on the impact of these changes.

The UK’s brewers, producers and hospitality businesses are resilient. Frankly, in the face of this Government’s onslaught, they need to be. They are at the heart of our communities, creating jobs, driving local growth and giving many young people their first opportunity in work. Now is the time to support the sector, not tax it more, which is why we will be voting against these measures this evening.

[Laurence Turner (Birmingham Northfield) (Lab)]

I draw attention to my chairship of the GMB parliamentary group, a union that represents workers in the distillery and retail trades. I will limit my comments to the uprating of excise duty, but I welcome this Budget more generally. It represents the right choice—investment and renewal over austerity and decline.

Clause 86 of the Finance (No. 2) Bill represents a simple uprating of alcohol duty in accordance with the retail prices index. In that sense, the clause represents continuity with the policy of successive Governments over many years, going back to the early 1970s, and of course the principle of excise duty predates that by many more years. Having noted the shadow Minister’s comments, it is telling that none of the amendments we are considering today would actively reverse that increase. The effects of the escalator is also softened to an extent by the reduction for draught products, which, combined with pre-existing changes to the tax system, amount to a somewhat more favourable regime for the drinks most sold in pubs. This direction of policy is welcome, given everything we know about the attendant health and social harm that can be the result of solo drinking.

It is worth noting that the increase is in line with international best practice. It is timely that just today, the World Health Organisation published a new report titled “Global report on the use of alcohol taxes”. That report says that

“specific excise taxes need to be regularly adjusted for inflation or their real value risks erosion over time.”

It also establishes that the UK’s effective tax take is firmly in line with many other European countries, including Belgium and much of central and eastern Europe, and of course it is significantly lower than in Scandinavia. As such, uprating the duty strikes the right balance between the different objectives of encouraging social activity, supporting the hospitality and manufacturing industries, and not encouraging excessive consumption. It is true that there have been changes in alcohol consumption rates among the general public, changes that have been particularly marked since covid. As the 2024 living costs and food survey found, there has been a notable fall in real-terms alcohol consumption, both in and out of the home, which is why specific measures are needed to support the pub trade.

If I may, I will say a few words about the revaluation 2026 process. I have raised questions about this before, and the Minister has indicated that—as the phrase goes—discussions are ongoing, so in the interests of time I will not repeat my questions today. However, I would like to note two things. First, the Valuation Office Agency has been genuinely independent since the days of the increment value duty, and secondly, valuation 2026 has been coming for a long time. It was the last Government who changed the law to introduce three-year valuation exercises, and as successive annual reports of the VOA make clear, the risk of valuations in individual sectors that are not of sufficient quality was foreseen. A delivery plan was developed before the 2024 general election to mitigate that risk, as the VOA saw it. Presumably the Government of the day did not have concerns about the VOA’s approach, because if they did, they would have raised them on the record.

I will make two further brief points, the first of which is about the tax system’s treatment of different types of alcohol sales. Something needs to be done about the sale of high-strength drinks on our high streets in proximity to betting shops. If you were to go to Northfield high street, Ms Cummins, you would see a succession of small betting shops immediately next to off-licences where very low cost, but very high strength beers and ciders are sold. There is a revolving door between those premises, and it is a major contribution to some of the antisocial problems that we have on our high streets. I hope that future exercises will look at different treatments, whether that is powers for local authorities or changes to the tax system to try to remedy the problem.

18:30

[Dave Doogan]

I remember precisely the dynamic that the hon. Member sets out in his local high street. We used to have it in Scotland, too, until we introduced minimum unit pricing, which took the very large volume, high-strength alcohol products off the shelf in Scotland, or at least put them way up in price. He can check with the hon. Member for Edinburgh South West (Dr Arthur), who I am sure would endorse that SNP policy.

[Laurence Turner]

I sit on the same Select Committee as my hon. Friend the Member for Edinburgh South West (Dr Arthur), and I know better than to speak for him. I have a degree of personal sympathy with the case that the hon. Member for Angus and Perthshire Glens (Dave Doogan) sets out. I also think there is something to be said for giving more powers to our councils, because these decisions—particularly when they relate to areas at risk of complex interactions between homelessness, lack of mental health provision and the sales of these at times dangerous products—are best made locally, in addition to national policy setting.

My final point is that there have been calls outside this place for uprating to be moved to a different inflation index, principally the consumer prices index or the consumer prices index with housing. That important matter has not been raised in this debate, so I will touch on it briefly. Although CPI and CPIH are both of use as macroeconomic indicators, RPI remains the only measure that is in general circulation and is updated regularly that actively seeks to measure the cost of living as it is experienced by working people. Criticisms can be made of the retail prices index, but it is important to place on record that in the early 2010s, regular changes to the methodology for RPI were discontinued. That is behind the formula gap that has led to the widening between the headline rates of RPI and CPI. I am not convinced that moving to a different rate at this time is appropriate, given some of the limitations of CPI and its twin CPIH, which we can discuss on another occasion.

The Office for National Statistics has been developing the alternative household costs indices measure. That is particularly useful, because it captures the different rates of inflation experienced by households of different income levels. I hope that in future we can look at the HCIs as an alternative means of uprating the various charges, levies and escalators that the Government apply. We are not in that place yet, and it is important that the ONS makes progress in this area.

On the whole, I welcome the Minister’s statement. Compared with some of the other debates we have had in this Parliament—particularly on the Product Regulation and Metrology Bill, where it was suggested that there was some secretive and sinister plot to change sales of the pint to some metric measure—this has in contrast been a sober debate. I look forward to voting for the Finance Bill tonight.

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

I call the Liberal Democrat spokesperson.

[Daisy Cooper]

Clause 86 increases the rate of alcohol duty in line with RPI inflation. On paper, that measure might look like a normal, simple uprating policy, but it must be seen for what it really is: in the broader context, it is yet another tax on struggling hospitality businesses and financially stretched customers.

Hospitality is being hammered over and over again with sky-high rents and soaring energy bills, the Government’s unfair jobs tax, and now this business rates bombshell buried in the fine print of the Budget. It matters, and hospitality really matters. It is the only element of pre-pandemic spending that has not recovered. The sector employs huge numbers of young people and part-time workers, often giving people their very first job and their way into longer-term employment.

This is one of the sectors that make life worth living. We all remember the place where we fell in love, or had our first date. I remember the music venue where I found my favourite band. I remember the pub where I sat with my girlfriends and one told me that she was not going to survive her stage 4 cancer—and I remember the spa day that we had when she did. Hospitality is part of who we are as human beings. It is unique in what it contributes to our economy, and we must do everything to support it.

[Mr Lee Dillon (Newbury) (LD)]

If this debate had taken place before Christmas, I would have had to declare an interest, but my father has now sold his majority share in our local pub in our home town, which I think goes to the core of today’s debate: publicans are leaving the sector. My hon. Friend has been talking about the importance of hospitality. My father’s pub used to host bingo nights on Thursdays and bingo on Sunday afternoons, and on those occasions we would see people there who would never go at other times of the week. Does my hon. Friend agree that the sense of community that pubs build is crucial, and is under threat from this Labour Government?

[Daisy Cooper]

My hon. Friend is absolutely right. Pubs are irreplaceable, and when a pub goes a community falls apart. Pubs are vital as part of the social fabric: they are the glue that holds our communities together, and we must protect them. We tabled new clause 9 because we want the Government to look at and

“report on the cumulative impact on the hospitality sector of alcohol duty measures”

alongside all the other “wider fiscal changes”, including the higher national insurance contributions and the business rates changes. This really matters.

[Dr Al Pinkerton (Surrey Heath) (LD)]

Back in November, the Chancellor promised to support the great British pub by introducing permanently lower tax rates in more than 750,000 retail and hospitality properties. In my constituency, the Half Moon will experience an 157% rise in business rates, the Inn at West End an 87% increase and the Frog in Deepcut an increase of 128%. Does my hon. Friend agree that this feels less like support and more like last orders?

[Daisy Cooper]

I agree 100% with my hon. Friend. One of the points that I have made repeatedly to other Ministers is that businesses heard the promise that there would be permanently lower business rates, and made decisions based on the fact that they had heard the word “lower”. The Government gave themselves powers to introduce a lower multiplier for retail, hospitality and leisure—20p less—and it was understood by the hospitality industry that if they used those powers, that would effectively cancel out the loss of the RHL relief. Businesses made investment decisions. They made hiring decisions. They made all sorts of decisions based on what they thought was going to happen. But the Government have not used those powers that they gave themselves, using a multiplier of minus 5p rather than the maximum of minus 20p.

[John Milne (Horsham) (LD)]

I recently met Richard, a publican in my constituency, and he told me the trade had never been so tough. He said:

“The truth of the matter is, for the first time I’m thinking I shouldn't have bothered taking the risk of going into business. I should have stayed with the big brewer, taken my salary and relied on my pension.”

He is right, isn’t he?

[Daisy Cooper]

I hope so very much that he is not, but I understand why he said that, and I hear the same from many hospitality owners and pub landlords on my own patch.

It is because we Liberal Democrats care so deeply for hospitality, and recognise the vital role that it plays in every community in the land, that we were campaigning ahead of the Budget for an emergency VAT cut for hospitality accommodation and attractions until April 2027 —a measure that would have brought growth into every corner of our country, saved jobs and our high streets, and given a real boost to consumer confidence. That is why, since the Budget, we have been fighting tirelessly against the Government’s devastating business rates hikes, and pressing Ministers to implement the full 20p discount for which they legislated last year.

[Dr Luke Evans]

The hon. Member rightly points to the cumulative effect, but I am interested to see that her new clause 9 does not mention the Employment Rights Bill or the impact of the national living wage increase. Is it by design that the Liberal Democrats have not put those in, because they do not agree that they will have an impact on hospitality, or was it an oversight, and they are other cumulative effects that need to be considered when holding the Government to account?

[Daisy Cooper]

I am grateful for that question, but if the hon. Member reads the explanatory statement closely, he will see that it says “alongside wider fiscal changes”. The Government could of course widen that to other legislative changes, if they chose to do so. However, on that basis, I hope the hon. Member and his colleague will be supporting the new clause when we push it to a vote later.

[Dr Arthur]

As an important point of clarity on the living wage, which of our constituents on low pay does the hon. Member think do not deserve that uplift in living wage? Is she saying they do not deserve it?

[Daisy Cooper]

Absolutely not. During the passage of the Employment Rights Bill, we Liberal Democrats said repeatedly on the record in both Houses that we supported a higher minimum wage. The problem we are hearing from businesses, particularly small businesses, is that they are getting lots of changes from the Government all at once. It is business rates changes, higher contributions, wages, the new regulation and now alcohol duty as well. It is the cumulative impact of all of the employment changes and the fiscal changes that means business owners and pub landlords just cannot cope.

This is about the cumulative impact. We have made very clear which measures we support and which ones we do not, but the cumulative impact is felt by small businesses. That is why, during the passage of the Employment Rights Bill, we tabled a number of amendments asking the Government to report on the impact on small businesses in particular. I hope that has clarified the matter for the hon. Member.

[Dr Arthur]

A wide range of concerns has been developed, and I get the point that these are costing the hospitality sector money—I absolutely get that—but all that the Lib Dems are promising is a review. What I do not hear is what they would do to resolve this and how much it would cost, apart from the broad assertion that they would cut VAT in some undefined way. What is this going to cost, and where is the money coming from?

[Daisy Cooper]

I have explained all those measures in this Chamber before, but I am happy to spell them out again, including the remarks I made a few minutes ago.

The very first thing we called for was for the Government to use the powers they gave themselves in the Budget last year. I would love to know the costings for that measure, and I have tabled written parliamentary questions to ask the Government to give me those numbers. If the Government will not answer written questions, how on earth are opposition parties supposed to come up with modern proposals? We have tabled written questions time and again, but we have not received any answers.

On the VAT point, we have costed it. We said it would cost £7 billion over 17 months, and we would fund it with a windfall tax on the big banks, which is a proposal backed by the Institute for Public Policy Research and independent economists. So we have answered all of these points and explained where the money would come from. The suggestions are fully costed and fully funded. We have made those points in this Chamber on several occasions, as I am sure the hon. Gentleman will see if he has a look at Hansard. My point is that, if we are going to put questions to the Government asking them for data so we can make informed policy suggestions, I very much hope that they start to answer them.

On that matter, it has been reported in various newspapers, on the BBC and in other places that the Chancellor and Ministers did not understand—those sources have quoted the Chancellor and Ministers as saying they did not understand—the impact that revaluation would have on business rates bills, especially for pubs. I find that impossible to believe, and I cannot understand how that can be the case. We know for a fact that, at the very least, the Valuation Office Agency gave the aggregate data to the Treasury. We know that because it says it in black and white—or in black and slightly red—on page 81 of the Red Book. It says that the VOA gave that data to the Treasury.

I tabled a number of written questions asking the Government whether they had received that information broken down by sector, and I did not receive any answers. I wrote a letter to the Leader of the House and I made a point of order, but again, that information was not forthcoming. Then we had a bombshell revelation today when the VOA, in giving evidence to the Treasury Committee, confirmed upon questioning that it had given data drops on the sectoral impact starting a year ago. It also confirmed to the Treasury Committee today that 5,100 pubs have seen their rateable values at least double. It therefore seems, if the VOA did provide that information to the Treasury, that the Treasury should have had that information. It is not clear to me why I did not receive data-rich answers to my written questions asking for that breakdown by sector. It is also not clear to me how the Chancellor and Ministers can say that they did not know or did not understand the impact that the revaluation would have on bills if they had had that data over the course of the past year.

I urge Ministers when they come to the House, as they are indicating they will, to provide some kind of a U-turn—we do not know what that looks like—to bring some clarity to all those questions. In the meantime, I hope the Government do support new clause 9, because we need to see the cumulative impact not just of alcohol duty changes, but their impact alongside national insurance and business rates.

18:45

[Sir Edward Leigh]

The hon. Lady is giving a very good speech. I hope, as the Liberal Democrat spokesman, she will say just a tiny bit more about rural pubs. I think a lot of urban Members do not understand the context. Where I live here in Westminster, it takes me one minute to walk to my local—one minute. Where I live in the Lincolnshire Wolds, it takes me one hour to walk to the pub—one hour. Everybody who accesses pubs in rural England has to go there by car. We do not ride horses any more, and it is too dangerous to walk on the road or take a bicycle. The Government have to understand that the rural pub is in real danger from the alcohol limits and other measures.

[Daisy Cooper]

I am incredibly grateful to the right hon. Member for making that point. I am the MP for St Albans, which is a small city, but I am a Suffolk girl born and bred. I know how valuable rural pubs are. They provide all sorts of services: they look after older people and single people; they are a fantastic community hub; and they provide employment for young people—one of my first jobs, aside from apple picking, was working in a pub—so I understand the vital importance of pubs in every single village, town, parish and hamlet up and down the United Kingdom. I am grateful to him for making that point.

In closing, I hope that when the Government respond this evening they provide answers to some of these questions. What did Ministers know and when? If the VOA sent that sector information on valuations, when was it sent? When did it send the information on pubs, specifically? If the VOA did tell Ministers that rateable values had at least doubled for more than 5,000 pubs, how is it possible that Ministers did not know? Why have we still not had a statement from the Government on what they are trying to do? Will their announcement extend to the rest of the hospitality industry, or just to pubs? Will the Government now use the full powers that they gave themselves? I cannot cost this, because I have not been given the numbers despite repeated attempts to get them. Will the Government consider a VAT cut?

Finally, the only rumour we have heard about what the Government may be considering are the changes to licensing laws, so let me close with this point: if your pub is empty, you do not want to keep it open for longer, paying more money to keep the lights on, the radiators heated and the staff behind the bar. That is not an answer to this problem.

[Jacob Collier (Burton and Uttoxeter) (Lab)]

As the MP representing the home of British brewing, Burton-upon-Trent, it will come as no surprise that I will speak to clause 86, and focus my contribution on pubs and hospitality. For me, this not just political; it is personal. As a Burtonian, I grew up with the smell of hops permeating the air and Burton’s famous water flowing from the taps. My very first job was in a pub. This industry is who we are.

Pubs are woven into the very fabric of our country. They are the heart of our high streets and villages, and are among our last shared spaces. When we talk about growth, and supporting wellbeing and employment, pubs and hospitality sit at the heart of that conversation. Yet this is an industry that has faced years of challenge. Navigating the pandemic, absorbing high energy costs and managing rising prices have left many venues operating on very low margins, if any at all.

That is why the decisions we make in this clause matter so much. We must look carefully at the overall effect of alcohol duty and how it interacts with consumer behaviour. There is a case for strengthening differential rates of duty between supermarkets and pubs, known as draught relief. Drinking in a pub is not the same as drinking at home. Pubs are supervised, regulated spaces. Landlords ensure responsible drinking, with pubs providing social connection and supporting mental health in our communities. Pubs give character to our high streets and town centres, yet the tax system makes it cheaper to buy alcohol in bulk from a supermarket than to go down the local pub. If we are serious about encouraging people back into our town centres, into these shared protected spaces, alcohol duty must work in favour of pubs.

I encourage Treasury Front Benchers to read the letter from those of us on the all-party parliamentary beer group, which calls for the multiplier to be increased from around 13% to 20%. Our proposal is supported by the Campaign for Real Ale, the Society of Independent Brewers and Associates and the British Institute of Innkeeping. This is not about encouraging more drinking; it is about encouraging better drinking in places that strengthen our local communities and our local economies.

I recognise that the Government have put in place the permanently lower multiplier on business rates for retail, hospitality and leisure businesses, but any wins in this space have been wiped out in many cases by the new rateable values published by the VOA. In my constituency, the rateable value of the Devonshire Arms—the Devvie, my favourite pub—is set to increase by over 60%. Down the road at the Roebuck, the rise is more than 70%. At this rate, I am not going to have much of a pub crawl.

We must stay true to the manifesto commitment we made to level the playing field between online retailers and the high street. An average 76% increase for pubs compared with just 14% for online retailers means that we must think again on this policy. It is no good having transitional relief in place when the bill at the end of the three years is simply unaffordable.

Industry voices are clear that further support is needed in the short term while longer-term changes and reforms are worked through. Operators such as Punch Pubs, which is headquartered in my constituency, have called for a higher business rates discount—up to the maximum permitted—to help offset the valuations and the cumulative tax burden that pubs face. UKHospitality has similarly warned that even after reduced multipliers and the transitional relief that the Government have put in place, the average pub faces a significant increase to its business rates bill, alongside other cumulative impacts that hon. Members talked about earlier.

The Government are right to listen to Labour Members who have been raising the voices of pubs, brewers, restaurants and small business owners. I want to thank those publicans, business owners and representative bodies that have engaged positively with me; it is only through working together constructively that we can bring about change.

Businesses that I speak to want to invest and grow, but they need the space and certainty to do so. I really welcome the recent hospitality investment that my constituency has seen—from Lowe’s on Carter Street to Nathan Dawe’s expansion of Isabel’s and Bespoke Inns’ redevelopment of the Hart and taking on of Tutbury Castle. Such businesses need to be supported by Government so that we can meet their ambitions. We must create more well-paid jobs and revive our high streets and town centres.

That means a fair approach to alcohol duty under clause 86, a recognition of the difference between pubs and supermarkets, and targeted support on business rates while deeper changes are delivered. If we get this right, the reward is clear: thriving pubs, stronger high streets, more resilient local economies, and communities that are not just better off but happier and more connected. That is why pubs and hospitality must continue to be listened to, supported and championed in this House and by this Labour Government. I shall continue to do that.

[Mike Wood]

It is a genuine pleasure to follow the hon. Member for Burton and Uttoxeter (Jacob Collier), who made some excellent points. Before I begin, I will disclose that although I do not have any relevant interests to the debate in the Register of Members’ Financial Interests, I have received hospitality below the threshold from UKHospitality, the British Beer and Pub Association, CAMRA and the British Institute of Innkeeping; there may be others.

People up and down the country may be justified in asking what the Government have against pubs. Many things are causing so many pubs to struggle and to question whether they can survive beyond the very short term—the enormous increases in business rates, the increases in employer national insurance that particularly hit those who employ part-time workers, and the ever-growing burden of regulation, not least in the Employment Rights Act 2025, that affects many pubs and hospitality venues—but I think that this clause in the Bill really sums it up,

The Government did have a choice. The Chancellor could have built on a success of the previous Conservative Government—in fairness to her, she actually did so last year—by reducing that draught duty rate so that duty on beer and cider sold on draught in pubs was paid at a lower rate, perhaps at the same time as extending the differential with supermarkets and off-sales that might be sold at or below cost price. But she chose not to do that; she chose to increase duty on top of all the extra burdens that are threatening the survival of our community pubs, bars and other hospitality venues. By increasing duty by RPI rather than the lower rate of CPI, the Chancellor is threatening to return us to the bad old days of the previous Labour Government’s hated beer duty escalator, under which the duty rate increased year after year.

I think the hon. Member for Birmingham Northfield (Laurence Turner) suggested that this measure is somehow in keeping with the policy of successive Governments, but nothing could be further from the truth. In just 19 months, the Government will have increased beer duty by more than it went up in the 12 years running up to the last general election. This is a massive increase in duty in a short period. Indeed, the duty paid on a pint in a pub was actually lower in July 2024 than it had been 12 years earlier because of policy decisions made by Conservative chancellors.

[Paul Holmes (Hamble Valley) (Con)]

I am sure that, like me, my hon. Friend has been to quite a few pubs in his constituency. Many of my publicans are saying that because of the decisions the Government are making, they have a choice, which is to try to get more customers or to lay off staff. This is affecting pubs who are busy—pubs at their capacity are now really worried about whether they will be able to survive another year. Has he heard that from his local publicans?

[Mike Wood]

My hon. Friend is right, although that is not really a choice that many pubs are able to make, because it is taken for them. We saw the same thing when the previous Labour Government’s beer duty escalator was in force. We know that increases in alcohol duties have a minimal impact on overall alcohol consumption, but they do have an impact on how people drink and what they drink.

Higher alcohol duties lead to a shift from people consuming alcohol in well regulated, licensed premises like a community pub—where they will typically drink medium-strength beer and cider—to people drinking more stronger alcohol at home without the protective framework of a licensed pub. That makes no sense on either a social and health or an economic and community basis. It is the wrong thing to do yet again. It is yet another burden that our overstretched pubs and hospitality venues simply cannot afford. It is the wrong thing to do and that is why, as well as supporting our own new clause and opposing the clause, I will certainly support the new clauses tabled by the Liberal Democrats. There is a better alternative.

19:00

Of course, we need to sort out genuinely lower business rate bills for hospitality venues, which is what the Chancellor promised she was doing and the Business Secretary apparently thought they were doing, despite the Treasury publishing all the data on the day of the Budget that made it clear that the median rateable value of pubs was going up by a full third, which more than offset the reduction in the business rates multiplier. The Government certainly need to address that, but they can make a start tonight by dropping the plans to increase alcohol duty and, in particular, to increase that duty on draught beer in our high street and community pubs.

[Gareth Snell]

It is a pleasure to follow my county colleagues, the hon. Member for Kingswinford and South Staffordshire (Mike Wood) and my hon. Friend the Member for Burton and Uttoxeter (Jacob Collier). Stoke-on-Trent and Staffordshire as a county are rich in the heritage of brewing. Burton is a prime example of that, but in Stoke-on-Trent we too have some wonderful small brewers, such as Titanic, which has sadly shared with me the business rate increases that it faces, with a 450% increase in some of its venues.

That is a challenge that those venues have to face, and I hope the Government will look seriously at finding a realistic workable solution. The value of pubs in our communities is not just about the pints that they sell, but about the people they look after, such as the old gent nursing a pint for a couple of hours and being looked after by the bar staff. We lose that at our peril.

I will restrict my comments to the differential between cider rates and beer rates. One of the things that the Treasury has done for many years, including under the Conservative Government, is to keep an unfair differential between the rate of duty applied to cider and that applied to beer. That came in during the coalition Government and I can only presume that it had something to do with the number of Lib Dem seats in the south-west. The point remains, however, that a small beer producer—a small brewery—in the UK will pay more in duty on the pints it produces than a global cider manufacturer, because of the differential points at which the relief comes in.

[Mr Dillon]

Under this Government, we also have the situation whereby champagne in France is taxed at 40% less than sparkling wine is taxed in this country. If we are levelling the playing field, does the hon. Gentleman believe that the Government should also level the playing field for English sparkling wine so that it can compete with champagne?

[Gareth Snell]

There is a danger here of getting into the inevitable jokes about champagne socialism, but I understand the hon. Gentleman’s point. He is right: there needs to be fair play. If we even out the taxation across the sector, that means that we can have targeted support in other areas where we know that there should be an unfair advantage for certain things. For instance, as the hon. Member for Kingswinford and South Staffordshire said, we should encourage and support making greater use of the draught relief for those selling alcohol in a pub.

Currently, 61% of cider producers produce less than five hectolitres of alcohol, which means they get a 100% reduction in the duty they pay. That is why we could increase or level out the rate of alcohol duty on cider and beer producers without impacting the small cider producers in this country. It would only impact the global manufacturers which, frankly, are taking a profit and making, I would argue, a substandard product, or trying to hide a mass-produced product behind a local label, which is often the case.

Under the Government’s proposal, the duty will be £10.39 per litre for cider and £22.58 for beer, and that differential grows every year. Because it is uprated by an inflation percentage, over the past few years the rate between the two in cash terms has just got bigger and bigger. It is a disadvantage to small brewers, who produce good quality beer, that they pay a rate of alcohol duty equivalent to the global cider manufacturers. SIBA estimates that the levelling of that figure could generate £360 million per year. That money could either go towards reducing the rate overall for all levels of duty, or it could further reduce the draught relief so that there is a clear and meaningful differential between those selling alcohol in pubs and those selling it in supermarkets.

There are some brilliant pubs in my constituency, the Greyhound in Hartshill being the one that I frequent the most. It is a community venue, and if it has to pay greater levels of duty on alcohol as a result of this Budget, I am sure it will find a way of doing so, but if there was a way of encouraging more people to go to that pub because the rate of duty on that pint was lower and it was subsidised by the big cider producers selling to the supermarkets, it seems to me that that would be a fair thing to do.

There is also a non-tax measure that the Government could introduce to support small brewers across the country, and it would cost the Government nothing. The market access review is currently sitting on a desk in the Department for Business and Trade, and it would guarantee that small brewers could have access to pubs in their locality to guarantee guest ales. I believe that Scotland already has this mechanism and that it is working well—unless someone can tell me otherwise. If we could replicate that in England and Wales, it would mean that those small independent brewers would have an opportunity to sell more beer in pubs, where a lower rate of duty would be applied to the product. That would help them with their business. It would give publicans an opportunity to increase the range of beers they sell, which would then help to attract more people into those pubs. It would mean that we would have more small independent brewers in this country selling more pints of beer, which supports them as employers and as good companies, such as Titanic in my own city.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

It is a privilege to speak in this debate. I want to speak about the pub and hospitality sector in my constituency in the Scottish Borders, but also more broadly about the impact of these changes on an important industry that is the lifeblood of the Scottish economy. We are debating the hike in alcohol duty, which the Treasury has described merely as “uprating”, but for Scotland this technical change will have a real impact on our iconic industry. It will be a hammer blow to the Scottish whisky industry as well as to the pub and hospitality sector.

The Treasury is hiking these taxes to fill the black hole in its balance sheet, but the Scottish whisky industry is a global brand that not only supports the Scottish economy but is very important to the UK economy, and it is really important that the Treasury and the Government understand the impact that these changes will have on this global brand.

It is important to remember the numbers associated with the Scottish whisky industry. It contributes £7.1 billion to the UK economy. It also supports 41,000 jobs in Scotland, some of them in our most fragile and vulnerable communities in the highlands, in Moray, in the Borders and all over Scotland. The whisky industry has a footprint and an impact. Whether it is the distilleries or the farmers who are growing the crops that go to be distilled, the whisky industry is a key part of the Scottish economy as well as the key part of many local economies, in that it provides local jobs in remote communities and supports local events and, often, local services such as the local school, the village shop and many other key parts of the community.

The Minister and the Chancellor claim that the rise in alcohol duty will boost revenue, but history says something very different. Indeed, the Treasury’s own data says something very different, because when duty was hiked by 10.1% in 2023, spirits revenue did not go up; it actually plummeted. Before colleagues seek to intervene, I appreciate that it was a Conservative Chancellor who made that change, but Scottish Conservative MPs argued strongly for it not to happen. We accepted the representations that the Scottish whisky industry, the Scotch Whisky Association and many of our constituents were making against the tax rise.

The evidence has backed up what the industry was saying. When we put up taxes, the revenue generated actually falls. According to the Scotch Whisky Association, that tax hike actually cost the Treasury £150 million as consumers pull back and stop spending as much as they did. By doubling down, the Labour Government will compound the situation. The Chancellor and this Government are trapped in a doom loop where higher taxes lead to lower sales, which lead to lower tax receipts, which lead to—you guessed it—even higher taxes from elsewhere as they scramble around to try to fill the gap. It is not possible to tax a sector into prosperity.

I want to touch briefly on the impact on our high streets and pubs, because it is not just the distilleries that will suffer as a consequence of this tax hike. From the highlands to the Borders, our hospitality is screaming out for “breathing room” because all it is getting from this Government is a tightening of the noose. The Scottish Government are compounding matters in Scotland with their anti-job policies. Taken with the UK Government’s policies, that is making things even worse.

[Dave Doogan]

The hon. Member refers to his belief that the Scottish Government are engaged in anti-jobs policies. Can he therefore explain why unemployment in Scotland is substantially lower than it is in England?

[John Lamont]

I am grateful to the hon. Member for making that point, but by any measure the Scottish economy is not doing well. Scotland is, by any definition, the most highly taxed part of the United Kingdom. While paying all this extra tax, none of my constituents—I am sure his constituents would agree—feel that they are getting any extra benefit from it. Our NHS and our education system are not performing well; there are potholes on all our roads; and our local authorities are underfunded. Taxes are going up in Scotland, but public services are going down. But of course we have an opportunity in a few weeks in Scotland to replace a failing nationalist Government with a pro-UK Scottish Conservative Government.

The hospitality and pub sector in Scotland is having to deal not just with these higher rates of alcohol duty, but with national insurance hikes, the jobs tax and the national living wage hike, as well as all the other red tape being imposed on it. Pubs are finding it more and more difficult to do business, which is why numbers are falling as a direct consequence of decisions that this Government have taken. In fact, in 2025 we saw a record number of licensed premises handing back their keys because they could no longer make their balance sheets work.

As colleagues have mentioned, pubs are more than just where people go to have a drink and more than just the value of a drink; they provide social value to the local community. I represent 90 to 100 different communities in my constituency. Not all of them have a pub, but for those that still do, the pub is a focal point. It is where people go not just to have a drink, but to meet friends and chat to neighbours. It might be the only conversation and contact someone has that day, over a social pint or a can of cola.

I want to mention a couple of the excellent pubs in my constituency: the Black Bull in Duns, the Cobbles in Kelso, the Ship Inn in Melrose, the Plough Hotel in Yetholm and the Office Bar in Hawick. One pub I must mention that has bucked the trend—I said earlier that lots of pubs are closing—is the Blackadder in Greenlaw, which has just reopened and is going from strength to strength. But the pub highlights the huge challenges that the Government are imposing on it. Despite the fact that it has made this effort to open and get people back in the pub, the challenges being imposed on it—largely, I have to say, by the UK Government—are clear, and it is finding it so difficult to continue the service it is providing and keep the business running.

We are fast approaching the point when people in Scotland and across the UK will no longer be able to go down to their local to enjoy a drink, and when the only people who can afford Scotland’s national drink—a glass of whisky—will be those living outside Scotland, as opposed to those living in Scotland.

I just wish that the Chancellor, the Minister and the Government would reflect on all the voices highlighting these issues and crying out for help, and that they would recognise the service that these important local businesses are providing to their communities. They should listen to all the publicans who have decided to ban Labour MPs from their premises because they do not agree with the policies that they are proposing. They feel so strongly about this issue that they have decided to make a stand. I encourage the Government to think again. If they cannot think again tonight, they should at least recognise that a cumulative assessment of all these changes would allow them to come back to the Chamber better informed and justify the choices that they are making in this Budget.

19:15

[Mr Paul Kohler (Wimbledon) (LD)]

The line about alcohol duty in clause 86 may look technical, and even innocuous, but outside the Chamber, in places such as my constituency of Wimbledon, it lands with a thud. Before I go further, I should declare an interest: I am the chair of the all-party parliamentary group for the night time economy and the owner of a speakeasy, CellarDoor, in Covent Garden. I have owned CellarDoor for nearly two decades—through the financial crisis, Brexit and covid—yet nothing compares to the crisis that hospitality is now facing.

One constituent, a Campaign for Real Ale supporter, wrote to me asking why pubs have been hit yet again through changes to business rates. Another told me that the rateable value of his small unit off Haydons Road in Wimbledon has risen from just over £15,000 to more than £22,000. Another constituent, who runs venues in London and Birmingham, thought the Budget would bring relief. Instead, he is facing sharp increases in operating costs in the years ahead. Admittedly, the Chancellor has belatedly indicated that she will offer some form of business rate relief to pubs, but what about the rest of hospitality—the restaurants, cafés, bars and music venues?

[Adam Dance (Yeovil) (LD)]

Gareth, who runs the Cow & Apple in Yeovil, has told me that he feels that the assessments and consultations on how the proposals in the Finance (No. 2) Bill will impact the viability of the rural hospitality sector were not good enough. Does my hon. Friend agree that that is why we need to pass the Liberal Democrats’ new clause 9, which calls for a review of the impact on the hospitality sector of these alcohol measures and broader Budget policies within six months?

[Mr Kohler]

Indeed I do. It is death by a thousand cuts. Those who run hospitality businesses have been hit by cost after cost after cost. The Government must listen.

Alcohol duty brought in about £12.5 billion in 2024-25. Hospitality, by contrast, contributed over £60 billion to the economy in 2023 and supported over 2.5 million jobs—over 7% of the workforce. Yet UKHospitality estimates that 89,000 jobs—nearly 100,000—were lost in the nine months after the October 2024 Budget. Official figures show that 366 pubs closed in the year to December 2025. That is one pub every single day. The roots of this crisis lie in years of Conservative mismanagement, Brexit labour shortages, a broken business rates system, energy price shocks, commodity price increases and a cost of living crisis. Many in the sector hoped that the change of Government would bring a change of direction, yet things have only got worse with the rise in employer national insurance contributions.

The cumulative effect is undeniable: rising costs for shorter opening hours and fewer staff. Offering us easier or longer opening hours does not help if we do not have customers coming through the door. Investment is deferred, and too often doors close for good. When that happens, high streets lose more than businesses; they lose employment, footfall and the social infrastructure on which communities depend. That is why the Lib Dems are calling for an emergency cut in VAT for hospitality to 15% until April 2027, real reform of business rates and a proper review of the unworkable wine duty system. Such measures would protect jobs, support high streets and, in time, strengthen the public finances rather than weaken them.

The hon. Member for Edinburgh South West (Dr Arthur), who is no longer in the Chamber, asked where the money will come from. We keep telling Labour: get rid of the red lines and negotiate a customs union with the EU, which would raise £25 billion a year for the Exchequer. Businesses in Wimbledon and across the country are not asking for our pity; they are asking for a tax system that reflects the pressures they actually face. If Ministers are serious about protecting jobs, strengthening high streets and growing the economy, they should reverse this tax increase and introduce an emergency VAT reduction for hospitality.

[Steve Darling (Torbay) (LD)]

I will focus on Liberal Democrat new clause 9, which would require an assessment of the cumulative impact of the proposals on the hospitality industry.

One must bear in mind that, after a medley of challenges, our hospitality industry fears the future—it is in crisis mode—so it is not prepared to invest or take a chance by improving its offer, and it is hunkering down and hoping for the best. I reflect on the international pandemic, which had a massive impact; Torbay’s tourism and hospitality industry has still not recovered to pre-pandemic levels. The outrageous second invasion of Ukraine almost four years ago caused a shock in our energy costs. I am afraid that there have also been self-inflicted wounds, such as the national insurance hike and the ensuing employment challenges.

David from Rock Garden in Torquay told me that his utility bill has risen to £3,000 a month, which dwarfs his rental costs. Ofgem is asleep at the wheel; it must back local businesses and drive the changes that we need. Our hospitality industry is horrified by the proposals for business rates. The Government must apply the full 20% rate of relief to ensure that there are protections. I am afraid to say that many people in the hospitality industry scoff at proposals that simply deregulate around the edges, because if they do not have paying customers in their premises, they are set up to fail.

[Caroline Voaden (South Devon) (LD)]

Will my hon. Friend give way?

[Steve Darling]

I will happily give way to my Devon colleague.

[Caroline Voaden]

As his constituency neighbours mine, my hon. Friend may be aware that three much-loved venues—Wild Artichokes, the Old Warehouse and the Old Bakery—closed in the town of Kingsbridge last week. The owner of one of those venues told us that part of the problem was the cumulation of challenges faced by the hospitality industry—not just the lack of people coming through the door and spending money because of the cost of living crisis, as my hon. Friend just said, but the rises in business rates and employer national insurance contributions, which have made it impossible for businesses to continue. Does he agree that it is a tragedy that such venues are closing every day, and that something must change before the hospitality industry is devastated?

[Steve Darling]

My hon. Friend is spot on. We need the Government to wake up, smell the coffee and recognise the challenges that our hospitality industry faces.

Some national chains, such as Wetherspoons, use their buying power to drive down the cost of a pint—many customers reflect on prices when they cross the threshold of a venue. The reality for lots of independents—because it is independents that are really important—is that £6 a pint is the minimum they can achieve with all the costs that are involved. When we compare that with the cost in a supermarket, it is really scary. The Minister rightly highlighted the difference we see today, with more than 70% of the alcohol consumed having been purchased at a supermarket. I feel we need to have a national debate about whether we have got the balance right and how we can ensure that we are driving greater footfall towards our hospitality industry.

[Victoria Collins (Harpenden and Berkhamsted) (LD)]

I want to reiterate how important that is. In my constituency, it is too little, too late for many—the Lussmanns has closed in Berkhamsted, as has the Elephant and Castle in Wheathampstead—and we need support from the Government to ensure that more do not close. Does my hon. Friend agree that actions such as the Lib Dems’ proposal to reduce VAT to 15%, at least until April 2027, would be a step towards protecting hospitality before it is too late for others?

[Steve Darling]

I do not know those venues, but I suspect some of them may well be on the high street. We, as Liberal Democrats, know that our constituents see our high streets as the beating heart of our communities. By backing our hospitality industry, we are backing our high streets.

Anthony from Otto in Torquay shared with me how independents are powered by families; they put people first. The reality is that an independent is not going to get a regional chippy in to do some work for him. He is going to take on the chippy who he plays football with on a Sunday morning. He has some skin in the game; he might know that chippy’s kids, because they go to the local sixth form with his kids. As independents, they have a level of skin in the game. That is why we need to ensure that we set up an economy that supports independents. What I found extremely scary when talking with a number of these people this weekend was that they were saying, “Why are we doing this? We could be managers of a local supermarket and sleep at night.” I hope the Minister will listen to these pleas and ensure that the Government do this cumulative impact assessment.

[Robbie Moore (Keighley and Ilkley) (Con)]

I rise to speak to clause 86 and new clause 26, tabled in the name of the official Opposition, which requires the Government to carry out a review of the impact of the increased level of alcohol duty on our pubs and hospitality sector. All these measures will have a cumulative impact on our hospitality and pub sector, because this comes on the back of the huge amount of tax revenue that will be raised from the last Budget—£26 billion-worth, or £64 billion-worth if we take into account the last two Budgets. Alcohol duty alone will bring in an additional £400 million a year—a raid on our pints, spirits and glasses of wine. Alcohol duty is set to rise by an inflation-busting 3.66% at the start of February, equating to a 2p increase on the price of a pint in a pub.

When I am out in my constituency speaking to the landlords of the Dog and Gun in the Worth valley, the Craven Heifer in Addingham, the Airedale Heifer in Keighley or the Black Hat in Ilkley, they all talk to me about the cumulative impact of not only the alcohol duty increase but rising employer’s national insurance, soaring energy costs, increasing minimum wages, the business rate relief reduction not being at the level that was initially indicated and, of course, the tourism tax that is coming down the line. The tourism tax will impact areas like Haworth in the Worth valley and Ilkley in my constituency, where a tax will be collected and go into a generalised pot to be redistributed by the Mayor of West Yorkshire, but I suspect it will not go back into places like Ilkley or Haworth, which are effectively being used as cash cows for the rest of West Yorkshire.

These are all detrimental impacts over and above the alcohol duty. At a local level, on-street parking charges in Ilkley are set to increase at the end of this month. All these things are making it much more difficult for places like the Flying Duck and the Black Hat in Ilkley, where people like to go and enjoy a drink. Disposable income is getting less in my constituency. Labour-run Bradford council has increased council tax by 14.99% in the last two years. People have less money in their pockets, and then we have a Labour Government hitting our pubs and hospitality sector, and boy do they feel it.

19:30

Why is there still the linkage between increasing alcohol duty and RPI, when the Government specifically acknowledge that the RPI reference has flaws? Why are the Government not referencing it against CPI, which is the official measure of inflation—the Minister did not quite refer to that in her contribution. That is why new clause 26 is so important and must be accepted this evening: it would allow a proper assessment of all the impacts of cost overheads on our pub and hospitality sector that I have mentioned.

Drinkers in Britain already pay around 54p of duty per pint pulled in the pub. The British Beer and Pub Association states that Britain, and England, has the third highest level of tax in Europe when it comes to drinking a pint in a pub, after Finland and Ireland. That is outrageous when we know all the positive impacts that pubs have on those rural communities, and on people who like to go to the pub to enjoy it.

The Government should be working with our hospitality sector, and with pubs across our constituencies, not against them as we have seen. In addition to the questions I have asked about RPI and not using CPI, what assessment have the Government made of the cumulative impact on our pubs and wider hospitality sector to date? Given the number of U-turns that have happened—we have seen another today, with the Government and Prime Minister rolling back on digital ID—will the Economic Secretary to the Treasury enlighten me about this? When fiscal changes have been made outside the budgetary cycle, such as the changes to agricultural property relief and business property relief, how has tax revenue to the Treasury been recalibrated? How much will those measures cost, and how will that impact the Government’s spending plans? We suspect—it has not been announced formally, but it has been trailed in the press—that there will be changes to business rates, which would of course be welcome. All Conservative Members want to see business rates scrapped in full. I cannot for the life of me understand why the Labour Government will not follow the Conservative party in that call, but if such a change takes place outside a fiscal event, where on earth will the Government get the money from to meet their spending plans?

On behalf of the many pubs and hospitality venues that I represent across Keighley, Ilkley, Silsden, and the Worth valley, which have been kind enough to come to me with their concerns, I say this to the Government: get a grip. If they do not, I fear for many of the pubs and hospitality venues that will quickly go out of business under this Labour Government.

[Dave Doogan]

With clause 86, the Treasury in Westminster continues to treat Scotland’s vital Scotch whisky sector as a cash cow, with duty rising again in line with inflation in the Budget. As the Scotch Whisky Association warned, the previous 3.65% increase to spirit duty reduced revenue by 7%, costing the Treasury £150 million, so it seems an opportune moment to remind the Minister that her ambition, and that of her colleagues, should be to increase tax receipts, not erode them.

Dewar’s, Blair Athol, Edradour and Glencadam—just some of the distilleries in my constituency of Angus and Perthshire Glens—are four of the many distilleries striving to deliver global excellence, all while being gouged year after year by the Treasury in London. Through the hiking of duty, for the third time in two years, in the November Budget, a sector that is already mitigating job losses, stalled investment and business closures will face substantial additional headwinds. If the Labour Government genuinely value industry in Scotland beyond the grasping hand of the Treasury, they should work with us to amend or remove clause 86. That would have been a lot easier if SNP amendment 30 had been selected for debate. Nevertheless I can but appeal to the Minister’s better and last-minute judgment on this matter.

A Scottish coalition of drinks, tourism and farming representatives warned in October that duty increases had already contributed to around 1,000 job losses, and claimed that duty can make up around 70% of the cost of a bottle of Scotch. That same coalition emphasised spirits’ outsized role in hospitality margins, as they represent a smaller share of sales but a larger slice of profits, meaning that duty uprating can squeeze already extremely fragile margins in venues, especially in Scotland’s towns and rural areas where footfall is thinner.

I cannot emphasise enough to the Minister that this tax rise could be the final nail in the coffin for many hospitality businesses that are already on the margins of solvency, especially those in rural settings, such as my constituency and those of many other hon. Members. I do not hold with banning Labour MPs from pubs, because pubs are about being in the company of people from all walks of life. If people wish to select the company that they keep, they can do that in their own house. In a public house, we convene with the whole community and visitors alike—that is the magic of it.

[Gideon Amos (Taunton and Wellington) (LD)]

The hon. Gentleman is making a strong case for the whisky industry. Does he recognise that the cider industry in my part of the world in Somerset is deserving of good treatment because of its support for agriculture? It used to benefit from a duty of 40% that of the wider beer and drinks industry, but that has crept up. The average is now about 75%, and the duty on some classes of cider is now more than the duty on beer. Does he accept that that differential should be restored to support agriculture?

[Dave Doogan]

I have heard a range of cases from right hon. and hon. Members about that differential, and I would certainly like to see nothing happen that would jeopardise the drinks, hospitality or agricultural sectors in the west country, but I will leave that to be divined by others with a more material interest, if the hon. Gentleman does not mind.

Pubs are revered institutions, and they are under threat as never before across these islands, so let me put the situation in simple terms. Let us not forget that before the election hospitality was already struggling with the post-covid recovery, the highest taxes since the war, a punitive and unrelenting business rates regime, the disastrous misadventure of Brexit and labour shortages, and 16 years of the UK without any meaningful economic growth. On top of all that, we had the highest energy costs in the developed world.

Since the election, Labour has added to that. At the outset of the debate, I expressed my concern and the Minister was kind enough to take my intervention on the compound effect, which many other Members have mentioned. She should really take cognisance of that, because since the election, Labour has added to the hospitality sector’s pain with a massive rise in employer national insurance contributions, even higher energy bills, even greater economic despondency pervading across society, an entrenched cost of living crisis keeping people at home, an increase to the minimum wage with no increase in revenue to support the payment of that wage, and no respite or consideration for the VAT millstone around hospitality’s neck. Labour should really listen, because on top of all that, there is now a 25% increase in unemployment, with 352,000 people now unemployed who were not before Labour came to power.

[John Lamont]

As the hon. Member will know, the Scottish Government announced their Budget today. I am sure he is aware of the comments from UKHospitality Scotland’s executive director, who said that the Scottish Government Budget had

“not sufficiently addressed the challenges that hospitality businesses in Scotland face”,

and that the majority

“will still be paying higher business rates bills in April”.

How does he reflect on those comments in the light of what he was just saying?

[Dave Doogan]

I reflect on the fact that, following the Cabinet Secretary for Finance and Local Government’s Budget today in Scotland, 93% of hospitality, retail and leisure businesses in Scotland will be paying no rates or reduced rates. That is because the SNP is responsive and closer to people in Scotland.

Further to that, not wishing to shoot the hon. Gentleman’s fox again, he spoke about the taxation rates for people in work in Scotland. I am sure his constituents will be grateful to know that 55% of taxpayers in Scotland are paying less tax than they would if they were part of the fiscal regime in the rest of the United Kingdom.

The problem with the figure for unemployment, which is a scandal—352,000 people are unemployed who were not unemployed before Labour came into power—is that unemployed people cannot afford to go to the pub or go out for a meal. It is against that backdrop that the Minister seeks to defend this latest hike in alcohol duty. That is totally unforgiveable.

I do not think the Minister believes a word that I am saying, and she certainly will not refer to anything I say in her winding-up speech, which I take as a kind of contrarian compliment. I do not know whether she has a local that she goes to; if she does, she can take my list of 12 life-threatening headwinds for pubs, all caused by the UK Government—mostly by Labour—and see if the landlord and landlady in her pub disagree with my analysis. She should do that before she introduces the 13th headwind—unlucky for pubs—with clause 86.

The SNP will back new clause 9, because, as many Members have said, we really need to review the way in which alcohol is purchased and consumed in the United Kingdom and the fiscal burden that follows that. Off-sales are getting far too easy a run of it, and on-sales will disappear before our eyes. I also support new clause 26.

It is too late today, as we have not been able to stop Labour coming to assault our pubs, but I look forward to standing up for Scotland’s hospitality sector again on Report. I hope the Minister will then have had a change of heart, or at the very least be in possession of a revised cost-benefit analysis that stacks up for hospitality.

[Dr Luke Evans]

I have come here to talk about duty, but not duty in the conventional sense. I feel that I owe a duty to the cafés, restaurants and pubs in my constituency to tell the Government just how poor their impact is and to hold them accountable. That is why I support new clauses 9 and 26.

Let me start with new clause 9, on the review of the cumulative impact. I agree with the Liberal Democrat spokesperson that there is a cumulative impact, but I would go further, as I have done, and call it a toxic concoction. It is true that the Conservative Government raised taxes, and I can imagine that in the future another Conservative Government may need to do the same, but the toxic concoction that this Government have set out on, with the Employment Rights Bill, raising the minimum wage and the reduction in support on hospitality exemption all at the same time, is compounding the problem. I am here to use my voice and do my duty to ask the Government to be accountable and able to show their workings, and these two new clauses are an attempt to do that.

We saw the Government come forward in their first Budget and say that they did not need to raise any further taxes, yet the subsequent Budget in 2025, which we are debating now, brought taxes further forward by £26 billion. The Chancellor said that the slate was wiped clean, by her own admission, but it seems that she has hospitality in her sights, and it is not clear why. What does she have against cafés, hotels and restaurants? She seems to be softening, because she has heard from her Back Benchers about the impact that all this is having on pubs.

[Graham Stuart (Beverley and Holderness) (Con)]

To come to the rescue of the Chancellor, it turns out that she simply did not understand the impact, according to the Business Secretary. Perhaps the Minister, in her winding-up speech, will be able to confirm that the Chancellor literally did not know what the impact of her own policies would be on hospitality businesses. The Minister may be able to tell us whether the Business Secretary was right to identify that failing of understanding by the Chancellor.

[Dr Evans]

My right hon. Friend is very charitable, because the Chancellor has said that she does not know. However, we also know that the documentation released in the Budget says that the Treasury did know. What has gone wrong?

As we have heard today in Committee, the rateable value of 5,100 pubs will double, but the Lib Dem spokesman missed the other point: one in eight pubs will see an increase of more than 100% in their rateable value. The Government have a question to answer. Did they wilfully ignore that and choose to impact hospitality, or were they mistaken and not competent in seeing that there was a problem?

[Steve Barclay (North East Cambridgeshire) (Con)]

Does my hon. Friend agree that new clause 9 would actually be helpful to Government Back Benchers? Given how frequently No. 10 is U-turning, including yet another U-turn on digital ID just today, having an assessment of the cumulative impacts will help them when they come to their next potential U-turn in this area.

19:45

[Dr Evans]

My right hon. Friend has served in government, so he understands why it is important to have a fixed point that all of us in this House can reference, as well as—most importantly—his constituents who own a pub, a café or a hotel and are going to be impacted. That is why I want to see new clause 9 passed, because it will go a long way towards helping us understand the impacts those people are facing. If the Government are going to do something for pubs, as is rumoured, I simply pose the question, “Why pubs, and not cafés, restaurants or hotels?”

Turning to new clause 26, if my memory serves me right, the biggest cheer that the 2024 Budget got from Labour Members was when the 1p reduction in the pint was announced. What do we see this time around in the Budget? A 2p increase—that did not get cheered. Again, maybe Labour Members did not see it, or maybe it was hidden in the detail, which brings us to where we are today. This seems to be the problem: whether we are debating thresholds, as we did last night, or pubs, rateable values and duty today, either the Government do not know what they are doing, or they are wilfully pulling the wool over our constituents’ eyes. Fortunately, though, the Opposition are here to point out the wrong that is happening—to do our duty as an Opposition and hold the Government to account by tabling amendments such as new clause 26. That is why I will be supporting new clauses 9 and 26. Until we see some support for pubs, this is the only way that we in this House can hold the Government accountable and apply transparency to what is actually going on in the Treasury, in No. 10, and in the country.

[Calum Miller (Bicester and Woodstock) (LD)]

I would like to place clause 86 in the wider context of the Budget’s impact on the hospitality sector and, in particular, the village pub. I was very grateful to the Under-Secretary of State for Business and Trade, the hon. Member for Halifax (Kate Dearden), for agreeing to meet two landladies from my constituency in December. The Minister heard from Becky, who runs the Red Lion and the White Hart in Eynsham, and from Donna, who runs the Oxfordshire Yeoman in Freeland.

As other Members have highlighted, village pubs are at the heart of their communities, but Becky and Donna described how hard it is to make the books balance. Donna gave the example of the work she does in her community. She has a number of regulars, and when one of them does not come in on a given day, she will give them a call to check he is all right and suggest he comes in—not because he is a big drinker, but because it is somewhere to be warm and sociable, and she knows that he has mental health challenges. In other ways, these two publicans are contributing to the lives of their communities.

Becky put in front of the Minister some of the cost increases she has faced. A fillet of fish cost her £2.30 in June 2023; when she saw the Minister in December 2025, the latest cost was £4.90. As well as these food prices more than doubling, energy prices have rocketed, but the greatest anxiety for these two publicans came from tax and regulation. Labour costs have increased with employer NICs—Becky gave the example of her employer NICs, which in gross terms have increased by more than four times over three years. Both publicans have had to release staff, with Donna now working more than 80 hours a week, serving as both the pub’s chef and general manager. She places orders on Mondays and Tuesdays when covers are lower, and she is in the kitchen Wednesday through Sunday.

Meanwhile, business rates represent a bombshell. Becky faces an increase in business rates at the Red Lion of nearly 120%, but she is outdone in my constituency by the 223% increase at the Lion in Wendlebury. Finally, Becky highlighted the impact of VAT on the hot food sold in her pub. Before the Budget, Liberal Democrats called for a 5% cut in VAT to offer some relief to the hospitality sector. Take that fillet of fish that has gone up by over 100% over two and a half years. Over the same period, the Treasury’s VAT take on that food has gone up by the same amount, an incredible increase in revenue with no relief for publicans.

The Minister asserted earlier that the Government were backing British pubs, despite the many hits to their bottom line. She also said that the structure of duty increases and reliefs is intended to support pubs by raising the relative price of alcohol consumed at home, compared with that consumed in a pub. Other Members from all parties have made proposals to go further, but many pubs have sought to diversify and increase the share of income and profit from food. Those that have tried are now being hobbled by the impact of VAT, which is another multiplier of costs. Becky and Donna are but two examples of the many publicans across my constituency who are holding on by their fingertips.

[Dr Luke Evans]

Does the hon. Member share my concern that often the only way that publicans can get around this issue is to either reduce their hours, reduce their staffing or take on more themselves, when they are already working 24/7 to try to deal with the costs? With this kind of change, the impact will be irreconcilable.

[Calum Miller]

I wholeheartedly agree with the hon. Member. Both the publicans I am talking about are working in excess of 70 hours a week. They have laid off staff, meaning fewer jobs for those who might be able to engage in entry-level occupations. It is hitting employment as well as other aspects of the economy.

Too many local pubs in my constituency, as in so many others, have shut, and other publicans are considering leaving the sector. When they go, communities lose a key institution that brings people together at the heart of their villages. That is why I strongly support the Liberal Democrats’ new clause 9, which would ensure an assessment of the cumulative effect of this Government’s careless assault on the hospitality sector.

[Lucy Rigby]

I am grateful to all Members for their contributions to today’s debate. Almost all of them have spoken passionately about their local pubs. I specifically acknowledge the contribution of the hon. Member for Angus and Perthshire Glens (Dave Doogan), just to deny him the pleasure of my not doing so.

We are taking a prudent and responsible decision to uprate alcohol duty in line with RPI. That is fully assumed in the OBR’s baseline forecast, so failing to uprate would come at a real cost.

[Mike Wood]

Will the Minister give way?

[Lucy Rigby]

I am going to make some progress. Based on HMRC’s ready reckoner, freezing alcohol duty would cost the Exchequer around £400 million a year. That money, despite the Opposition’s best efforts to pretend otherwise, would have to be found elsewhere. This is one of the measures that assists in ensuring that our economy is strengthened and our future prosperity more secure. Indeed, it does that without taking the axe to public services or to investment. Those policies from the Conservatives had catastrophic consequences for all our constituents.

[Dr Luke Evans]

Will the Minister give way?

[Lucy Rigby]

I am going to make a bit more progress.

New clauses 8, 9 and 26 would require the Government to publish reports on the impacts of alcohol duty. The shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), invited me to refer to our tax information and impact note, and I will take him up on that invitation. As is usual practice, our note was published at the Budget. It outlined the anticipated impacts of this measure for alcohol producers and the hospitality sector. Because this uprating maintains the current real-terms value of the duty, the Government do not expect it to have significant macroeconomic impacts, including to the employment rate or hospitality businesses’ costs, where a duty on drinks will have comparable relative bearing as now.

[Daisy Cooper]

Will the Minister give way?

[Lucy Rigby]

I will make some progress.

On the impacts on the public finances, HMRC publishes data on alcohol duty receipts quarterly. That data is reviewed alongside other evidence by the OBR when it produces its forecasts of alcohol duty receipts, as it did most recently alongside the November Budget. The Government’s view, as is evident from OBR-certified policy costings in recent years, remains that freezing or cutting alcohol duty rates reduces duty receipts.

The hon. Member for Angus and Perthshire Glens raised the importance of producers of Scottish whisky, and I agree with him about that. This Government are supporting key Scottish industries, including whisky, such as through our free trade agreement with India, which will boost exports of whisky and add £190 million a year to the Scottish economy.

[John Lamont]

Will the Minister give way?

[Lucy Rigby]

No, I will make some progress.

The hon. Member for Keighley and Ilkley (Robbie Moore)—he represents a wonderful place in the world, which is where I was between Christmas and new year—referred to the difference between CPI and RPI. As he knows, we are uprating alcohol duty by RPI, as with many other taxes expressed in cash terms. He will know that RPI is widely used, and moving away from it is fraught with difficulty.

I want to address the important points about business rates and employer national insurance contributions. We have discussed this already and, as Members will know, the Bill does not contain measures on either of those subjects, so I will not accept an amendment relating to them. I reiterate, however, that pubs are at the heart of our communities and we want them to thrive. As I have said, today we have heard some heartfelt references to particular pubs and the role that they have played in each of our lives. I could tell my own stories in that regard, but none of us would get home in time.

As Members know, in the Budget the Chancellor introduced a £4.3 billion support package to give relief to those seeing increases in their business rates bills. As I said earlier, we have made it clear that we are continuing to work with and talk to the sector about that support, and about what further support we can provide and what action we can take.

[Dr Luke Evans]

rose—

[Lucy Rigby]

I want to make this point. The Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), asked several questions. We will come forward with a support package—any further support that we will make available—when we are able to do so. As for her point about VAT, I know that an answer has been given to the parliamentary question asked by one of her colleagues about exactly that point, but I gently say to her—as, indeed, I have said to other Members during the debate—that if we want to cut taxes, the money has to come from somewhere. That has not been acknowledged at all.

I therefore propose that new clauses 8, 9 and 26 should be rejected and that clause 86 should stand part of the Bill.

Question put, That the clause stand part of the Bill.

19:56

Division 406

Question accordingly agreed to.

Ayes: 344

Noes: 173

Clause 86 ordered to stand part of the Bill.

New Clause 9

Review of cumulative impact on the hospitality sector

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before the House of Commons a report assessing the cumulative impact on the hospitality sector of—

(a) the measures contained in section 86 of this Act, and

(b) changes to taxation and business costs affecting that sector introduced outside this Act since 2020.

(2) For the purposes of subsection (1)(b), changes to taxation and business costs include, but are not limited to—

(a) changes to employer National Insurance contribution rates or thresholds,

(b) changes to business rates, including reliefs and revaluations, and

(c) any other fiscal measures which materially affect operating costs for hospitality businesses.

(3) A report under subsection (1) must include an assessment of the impact of the matters listed in that subsection on—

(a) levels of employment across the United Kingdom within the hospitality sector,

(b) the number of hospitality businesses ceasing to trade,

(c) the number of new hospitality businesses established, and

(d) the financial sustainability of hospitality businesses.

(4) In this section, ‘the hospitality sector’ means persons or businesses operating in the provision of food, drink, accommodation, or related services.”—(Daisy Cooper.)

This new clause would require the Chancellor of the Exchequer to assess and report on the cumulative impact on the hospitality sector of alcohol duty measures in the Act alongside wider fiscal changes, including employer National Insurance contributions and business rates.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

20:10

Division 407

Question accordingly negatived.

Ayes: 181

Noes: 335

New Clause 26

Statements on increasing alcohol duty

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the increase to alcohol duty made under section 86 of this Act.

(2) The statement made under subsection (1) must include details of the impact on—

(a) the hospitality sector,

(b) pubs,

(c) UK wine, spirit and beer producers,

(d) the employment rate, and

(e) the public finances.”—(James Wild.)

This new clause would require the Chancellor to make a statement about the effects of the increase in alcohol duty.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

20:22

Division 408

Question accordingly negatived.

Ayes: 172

Noes: 334

The Deputy Speaker resumed the Chair.

Bill (Clauses 1 to 10, 62 to 69 and 83 to 86 and Schedules 1, 2, 12 and 13), as amended, reported, and ordered to lie on the Table.