Employers

Wednesday 11th November 2026 Commons Chamber

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I inform the House that Mr Speaker has not selected the amendment.

I call the shadow Secretary of State.

16:10

[Julia Lopez (Hornchurch and Upminster) (Con)]

I beg to move,

That this House believes that employers are working people and therefore condemns the Government for breaking the Labour Party manifesto commitment not to increase National Insurance by increasing employers’ National Insurance contributions; and calls on the Government to halve employers’ National Insurance contributions for under-25s.

Today, we debate a simple proposition: that employers are working people. One might have assumed it a blindingly obvious proposition, but it is one that Labour contorts itself to deny. But, then, Labour is not very good at answering obvious questions, like, “What is a woman?” or “Should someone identifying as a llama be taken seriously?”—remember that one?

Yes, the “working people” definition has really been flummoxing Labour Members. For two years, they have been bending themselves into funny shapes. The right hon. Member for Bristol North West (Darren Jones) said that a working person is

“anyone that gets a payslip, basically”.

The Secretary of State for Transport said that working people were “people on modest incomes”. The Chief Secretary to the Treasury confirmed that employers are not working people. Last week, the First Secretary cleared it all up by saying that working people

“do not have savings…and…rely on good public services.”—[Official Report, 4 November 2026; Vol. 792, c. 910.]

That might explain why the Budget hiked taxes on savers. It is a Cirque du Soleil of mental gymnastics—but why? Because in 2024 Labour decided, albeit briefly, that it would rather get elected to govern the country than continue its audition to lead the student union of Islington ring road university, so it made everyone a promise in its manifesto: no tax increases for working people. It got specific: there was to be no VAT hike and no extra rates of income tax, and Labour would not increase national insurance—no way. Just months later, up shoots national insurance to the tune of £25 billion a year. Suddenly, working people across the country are asking, “What the hell happened?”.

Labour told working people, “No, no, it’s all perfectly legit—it’s an increase in national insurance for employers, not employees.” I think that is what Labour MPs might normally call gaslighting, but since it is being done to people who contribute, work themselves silly and generally want the country to succeed, their feelings are of no concern to the Government.

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

I am afraid that I must disagree with my hon. Friend. I do not think the Labour Government were gaslighting the nation. So little is their understanding of business and their ability to read an Office for Budget Responsibility analysis that they did not realise that the nearly £27 billion hit on the nation’s economy would lead to a nearly £20 billion reduction in the money that ordinary people get in their pay packets, and that the net receipt to the Treasury would be about half that—about £10 billion. They cannot add up. Perhaps my hon. Friend needs to acknowledge that they have that disability.

[Julia Lopez]

I ask for my right hon. Friend’s forgiveness. I buy into his theory more than mine; I have overestimated the Government’s capabilities.

The Conservatives’ motion says that the House believes that employers are working people, and that increasing national insurance broke Labour’s manifesto. If this was just a debate about semantics, maybe we could all move on, but the 2024 Budget has cast a shadow over every employer in every postcode, driving up unemployment and pushing up costs for everyone. It is time to start unravelling that damage, and in particular the damage that this tax increase has done to young people.

[Jonathan Davies (Mid Derbyshire) (Lab)]

For what it is worth, I accept that employers are working people and they are an important part of our labour market and our economy. However, though I lament the increase to national insurance, it was necessary to get money back into the NHS, which was on its knees following the end of the last Government, and that was breaking the economy too.

[Julia Lopez]

The hon. Gentleman has no doubt been to his constituency and been denied access to pubs, salons and all the rest of it, and that has suddenly changed his mind about what constitutes “a working person”. I should ask: are his constituents seeing those better public services? Certainly, mine are not, and they wonder where all that money has gone because it has not gone on more stable public finances or better public services.

Let us start by acknowledging what it takes to be an employer. It takes someone who saved money to start a business of their own and who took a risk to expand it gradually to take on that first member of staff, then over time building a team. It takes long hours, personal sacrifice, financial peril, time away from their family.

[Sir John Hayes (South Holland and The Deepings) (Con)]

My hon. Friend characterises a picture that might be seen in every constituency among small and medium-sized enterprises. Sometimes, people imagine business as consisting wholly of globalist corporate plutocrats, but the backbone of our economy is made up of those small and medium-sized firms of exactly the kind that she describes. On the issue of public services, why does the Labour party not focus on productivity? It is not wholly about what we spend; it is what we get for what we spend.

[Julia Lopez]

I agree with what my right hon. Friend says. That characterisation of employers is why Labour gets itself into such problems in the first place. He talks about the issues relating to national insurance and public services. The NHS also has to pay a higher national insurance bill because of the changes that the Labour Government have made, and that has caused all kinds of challenges across the public sector.

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

My hon. Friend is exactly right. One of the biggest problems when national insurance went up was that places such as hospices, pharmacies and care homes were not excluded. It is one thing to say that we are putting more money in, but all that money and more was taken elsewhere to pay for the staffing. Is that not part of the problem?

[Julia Lopez]

It is absolutely part of the problem. Labour did not think that through, and I have an example of that same phenomenon with the hospice in my constituency, as well as with a number of public sector organisations and charities.

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

To build on that point, the same applies to the education setting. I met some of my headteachers just last week. Despite employer national insurance going up, central Government grant covers only about 70% of the cost, so the additional 30% must come out of the existing school budget. That has led to teaching assistants being let go and made redundant in my constituency. Does my hon. Friend not agree that that detrimental increase in tax has hit everybody across every constituency?

[Julia Lopez]

I completely agree with my hon. Friend. It has been seen in my constituency and across Whitehall. It is an absolute dog’s dinner of a policy that has created problems for not just the private sector but the public sector.

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

The shadow Minister makes a point about the increases to national insurance—absolutely fine; that is a political point that she is entitled to make. Will she tell me, using the exact same logic that she has applied to the criticism of this levy, why in 2021 she voted for the hypothecated health and social care levy, which was a 1.25% increase on national insurance for both employees and employers? Why was that an acceptable increase, but this was not?

[Julia Lopez]

That was a policy that was put forward. My right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak) decided to change it because the economy was in a challenging state after the pandemic and we needed to think again about whether it was the right thing to put that pressure on employers, so we went back on that policy.

To return to what employers have been going through, they have the ongoing stress and responsibility of employing people and wanting so desperately to continue to provide opportunity for them. They have to think about the other families who are relying on them as small business founders who are pushing to provide a community with a great service and a happy experience. They are pub landlords, builders, restaurateurs, service firms, salon owners, café owners, shop owners. Work, work, work, work, work.

Employers are not just working people; they are uber-taxpayers. They made it through covid, they made it through an energy crisis, but many are now saying that they cannot make it through Labour. When Labour broke its manifesto commitment in its first Budget by increasing national insurance, it did so in a highly destructive way. Not only did it increase the rate, but it lowered the point at which employers start paying NI on an employee’s salary. Lowering that threshold hit part-time, entry-level and lower-wage jobs the hardest, making employees so much more expensive to retain. I do not know about you, Madam Deputy Speaker, but suddenly, countless businesses in my constituency started sounding the alarm, especially those employing people who need flexible, part-time hours because of caring responsibilities.

[Alison Griffiths (Bognor Regis and Littlehampton) (Con)]

I thank the shadow Minister for highlighting the impact on part-time workers. My constituency is a very seasonal area on the coast, but we also have students and OAPs, all of whom want part-time work, yet under this Government they are finding that so much harder to achieve.

[Julia Lopez]

My hon. Friend is absolutely right to highlight that challenge in seasonal working, which creates an extra burden for employers, many of whom have to work to fill the shifts they would otherwise have used temporary staff for, creating enormous pressure.

People are writing to me in despair because their adult child simply cannot get a first break in the workplace, and it is not for want of trying. Businesses warned the Government that this would happen. The hospitality, retail and care sectors all raised the alarm about the impact of higher employer national insurance. What was Labour’s response? The unemployment Act, which makes it riskier to employ people as well as more expensive. The national insurance increase came into effect in April 2025. By April this year, there were 210,000 fewer payrolled employees than a year earlier. There are now 1 million young people not in education, employment or training, and the Government are in denial about the reasons why.

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

The shadow Minister talks about businesses having warned the Labour Government about the impact that Labour’s jobs tax was going to have. Does she, like me, think it is inconceivable that Treasury officials would not similarly have advised the Government that this would be a consequence of the jobs tax? Is it not particularly pernicious of Labour to have put the biggest barricade in front of younger workers, possibly accessing their first job in hospitality, which will have a lifelong damaging effect on their careers?

[Julia Lopez]

The hon. Gentleman is absolutely right to point that out. It is inconceivable that the Government would not have been told about the impact that this policy was likely to have.

Labour likes to point out that employers do not pay national insurance on workers under 21, but that misses the point. Employers are making decisions about their entire workforce, and when the cost of employing people rises and the risks associated with taking on a new starter increase, the first opportunity to disappear is the one that will no longer be created. Rather than take on an extra employee at junior level, employers are squeezing the staffing resource they have, but they are shedding younger workers, too. By 2027, employing a full-time minimum wage worker over the age of 21 will cost a business 20% more than it did when Labour entered office. For an 18 to 20-year-old, it is 31%.

Labour knows that there is a problem, but rather than tackle it at source, it offers up the youth guarantee, a bung to employers to take on a young person for six months. How about making it cheaper and easier to employ that young person in the first place? Soon we will get details of an unlimited youth mobility scheme with the EU to add to this mix, which will see young Britons competing for available work with peers from 27 other nations.

The cost of all this must be absorbed somewhere. Higher national insurance, soaring energy bills and a growing burden of regulation all feed through into the price of doing business and, ultimately, the price we all pay. The weekly shop costs more, a meal out costs more, getting your hair done costs more, activities with the kids cost more, as does going away for a few days. This is just one of the reasons that household finances are going backwards. Whether Labour is talking about employer national insurance or employee national insurance, everybody pays at the end of the day.

We Conservatives want more working people, because work is dignity, contribution, resilience and confidence, and we want that opportunity for as many young people as possible. We want to end the waste of a generation unable to showcase its talents, and we want to reduce the cost on a generation of workers that can bear no more tax on its shoulders. That means returning to some of the policies that are driving this destruction. Not only would we repeal the job-destroying provisions of the unemployment Act; we Conservatives would halve employer national insurance for under-25s. Our policy would permanently reduce the cost of employing young people and give businesses a real incentive to take them on. For an employer, it would be a saving of around £1,500.

This is part of a wider plan to tackle Labour’s youth jobs emergency. Our “Get to Work” scheme would stop young people leaving education and drifting straight on to welfare. It would create 100,000 new apprenticeships, cut red tape to save the Saturday job and reduce high street business rates to support the businesses that give young people their first step on the jobs ladder—a policy that would benefit not 70,000 high street businesses, as Labour’s policy would, but 250,000.

Aside from old prejudices about employers as the oppressors of workers, the reason that Labour contorts itself on the definition of working people is that it knows it has taxed them silly. In doing so, it has not just broken its manifesto commitment but completely undermined what Keir Starmer and his sparkling new Chancellor used to say was Labour’s No. 1 priority: growth. The consequences are there for all to see in the unemployment figures and the living despair of young people unable to secure a good job.

[Sir John Hayes]

My hon. Friend is making a fundamental point about the structural effects of this policy: of course, it affects profitability year by year, but it also undermines the capacity of businesses to reinvest and ensure structurally that they are fit for the future. A butcher in my constituency, Andrew Parsons of Bennetts Butchers, is closing the shop in a couple of weeks after more than 100 years of trading, because, as a result of the costs lumped on him by successive Governments but particularly by this one, he does not have the money to reinvest.

[Julia Lopez]

My right hon. Friend tells us a terrible story that is unfortunately being played out in constituencies across this country. People are having their buffer eroded and then they are simply not able to invest in their businesses in the way that they would have hoped. It was all so predictable.

Let me close by reading out what I said to my constituents immediately after the 2024 Budget:

“Labour said in the election they did not need to hike taxes to pay for their plans, beyond those they had already announced. We now know this was not true—they have gone on a borrowing and spending spree that makes a mockery of the idea that they are concerned about the state of public finances they inherited. 

Many of the taxes on ordinary working people have been disguised by heaping pain on business. Labour may think it’s clever politics. But the result will be job losses, higher prices and closures…this approach is all wrong, warping the incentive structure in our economy. It won’t work and as they come back for more taxes, the number of people willing to take the risk of starting a business or save for their families will simply get smaller and smaller.”

We are now living that future. Have these tax rises given us robust public finances? Have they delivered better public services? Do people feel better off? On all counts, the answer is no, yet this new Prime Minister believes that the solution to the resulting welfare crisis is to give Labour more taxes to spend. It does not work. Employers are the funders of services, the drivers of growth and the engines of opportunity. Many are not just working people themselves but working people on steroids, and they are fed up of being the cash machine for Labour’s faux benevolence. Their requests are simple: give us the chance to grow our businesses and build a future pipeline of young people to whom one day we might well pass our life’s work. It is time for this Government to start undoing the damage they have wreaked and halve the jobs tax on the young people whose aspirations Labour is burying right now.

16:27

[The Financial Secretary to the Treasury and Paymaster General (James Murray)]

The Budget of two weeks ago was a Budget to steer Britain through the economic storms we are facing. It provided breathing space now on the cost of living and the cost of business with fresh hope for the future, and it was built on fiscal discipline, which underwrites every promise this Government make. When the Chancellor stood at this Dispatch Box two weeks ago, he faced a choice: he could have followed the route of the Conservatives—sacrifice stability, borrow irresponsibly and make unfunded promises straight out of Liz Truss’s playbook—but instead he chose a responsible route to keep the public finances under control, protect working people, back businesses and invest in Britain’s future.

[Dr Evans]

I have asked this question a number of times over the past couple of years: could the right hon. Gentleman define “working people” for the House?

[James Murray]

Working people are those millions of people across the country who put so much in every day but have not been getting back what they deserve. Those are the people this Government are backing, and that is why, at this Budget, the Chancellor chose to prioritise breathing space for families and businesses, including on the cost of energy. He set out how we will tackle the long-term challenges facing our country. For families, that will mean a £100 household energy payment to support 20 million households—80% of households in England—along with an extension of the VAT cut for electricity bills and a further extension to the fuel duty freeze.

[Dr Neil Hudson (Epping Forest) (Con)]

I am grateful for the Minister giving way—I have a huge amount of respect for him. He is always the brave Minister who has to pad up and go out to bat to defend the indefensible, such as the jobs tax, the family farm tax or the family business tax. I wonder if the Minister could enlighten me: if there is a pub landlord hiring local people and serving beer to customers—who may or may not own black Labradors—are they a working person?

[James Murray]

Of course they are. If the hon. Member wants to talk about defending the indefensible, I wonder how he ever stands up in this place to talk about the previous Conservative Government because that must be an insurmountable challenge. I hope that he would welcome what the Chancellor announced at the Budget to give breathing space to businesses because it will mean that more than 70,000 small retail, hospitality and leisure properties are taken out of paying business rates altogether, that pubs will have a 20% cut in their business rates from next April and that business rates for retail, hospitality and leisure premises of all sizes will either fall or be frozen in real terms. In addition to business rates, many firms will benefit from our freeze on red diesel duty and from the reduction in energy bills by up to 25% for more than 10,000 eligible businesses from next April through the British industrial competitiveness scheme. That is what breathing space for businesses looks like, alongside the breathing space for families.

As I said earlier, the bedrock of our approach—our lodestar—to the public finances is fiscal discipline. That is why the Budget set out how we will fully fund all new policy and breathing space measures for families and businesses. In deciding his approach, the Chancellor rejected broad-based tax rises, instead taking decisions about tax changes that are fair, proportionate and targeted. That included having banks help pay for the energy help for households this winter through a temporary increase to the bank surcharge and an increase in machine games duty for higher-stakes machines to help fund cuts for business rates.

[Graham Stuart]

Could the Minister confirm that, under the current regulatory regime, the £1.5 billion that will be taken over 15 months in this doubled bank tax could be lent out to a maximum of £25 billion? There is a risk that having withdrawn £1.5 billion from the banks’ equity, £25 billion—it is the maximum—in lending to the UK businesses we are talking about could be lost?

[James Murray]

I am sure the right hon. Gentleman will have been interested in our measures in the Budget for the British Business Bank, for instance, to increase access to finance, particularly for many of those businesses that are trying to scale up and increase. But I come back to this central point—I know what his position will be because he is a loyal member of the Opposition Benches and will follow what the Leader of the Opposition said on Budget day itself—which is that the Conservative party does not support our decision to require banks to pay a little more for a temporary period of time to fund household support across the country. We know that banks are coming from a strong position. It is a temporary increase. It is one that we believe is fair, targeted and proportionate. We are asking banks—requiring banks—to pay that extra amount, and they are therefore contributing towards the important support for households. What I think is sad about this debate is that the Opposition do not support that breathing space for households. I thought the right hon. Gentleman was loyal to his party leader, but if he would like to break ranks and intervene on me again to confirm that he supports our £100 household energy payment, that would be helpful.

[Graham Stuart]

The slavish loyalty of the Minister has already been remarked upon, along with the courage that goes with defending the indefensible quite as often as he has done—always with wit and good humour. Could he address this particular point? The truth is that banks are a popular target to hit with the public and with Labour Members, but if there is actually less money to go to the pubs, restaurants and small businesses in my constituency and elsewhere, can he not accept that that multiple should give people pause for thought before they go for the easy, popular target and take it out of the big, fat, rich banks, if it turns out the small business in trouble will actually lose the credit it desperately needs?

[James Murray]

I was listening carefully to the right hon. Gentleman, as I always do whenever he speaks in this Chamber, and I did not hear a response to the question I asked of him, which is whether he supports the household energy payment, which the Leader of the Opposition so clearly opposes. I invited him to intervene to clarify his position given there seems to be some confusion on the Opposition Benches around the household energy payment and whether they support it or not. I would have thought that given the Leader of the Opposition was so clear in not supporting the household energy payment, the hon. Gentleman—

[Graham Stuart]

Right hon. Gentleman.

[James Murray]

I would have thought that the right hon. Gentleman—excuse me—would have no difficulty in rowing in behind her, but he seems to be struggling with that somewhat, so I will make some progress.

I was speaking about the fiscal discipline that underwrites everything we are doing as a Government. Through the approach that we took in the Budget, we have maintained our fiscal rules while making no changes to rates of income tax or national insurance on income from employment or self-employment, or to the rate of national insurance that employers pay on wages or salaries for their staff.

[Nigel Huddleston (Droitwich and Evesham) (Con)]

The Minister is giving us lots of opportunity to intervene on him, and we are grateful for that. We keep hearing about the “difficult decisions” that Ministers are making to increase taxes. I do not think that is a difficult decision; it is a very easy decision to make—the laziest decision for a Government. I noticed that his list did not include the new tax on tourism. Will he please explain how Labour believes that we can help an industry by taxing it more?

[James Murray]

As the hon. Gentleman may know, the overnight visitor levy is a power that we are giving to strategic authorities across the country. It will be a decision for mayors or foundational strategic authorities to take about whether to introduce that levy, and if they do so, at what percentage to introduce it. Any proceeds will be reinvested in the local visitor economy and other infrastructure in the local area, and will support that area to get more visitors in future, thereby supporting economic growth—I hope that is something the hon. Gentleman would support.

Let me turn directly to the role of employers in our country, given the title of the motion. As I said in response to an earlier intervention, employers are working people and they are the backbone of our economy. As I also said, that is why the Budget gives businesses breathing space, with 70,000 retail, hospitality and leisure properties taken out of business rates altogether, and bills for others cut or frozen in real terms.

[Rebecca Smith (South West Devon) (Con)]

I thank the right hon. Member for giving way yet again. He is helpfully listing things from the Budget that are supposed to help businesses, but I wonder whether he has come across anyone in his constituency, or in his work at the Treasury who, like businesses I am aware of, have seen the standing charge for their business electricity double. We are talking four figures in the first place, so that is a significant increase. In one case a business invested in solar panels, which the Government would no doubt welcome, but ultimately the investment that it made will be completely wiped out by increased standing charges. Will the Minister address that specific point?

[James Murray]

I thank the hon. Lady for mentioning energy bills, because as MPs and Ministers we all recognise that energy costs are one of the primary concerns for households and businesses across the country. In the Budget two weeks ago, we offered breathing space for families and businesses, including with energy bills. Crucially, we also set out the work we will be doing in the years ahead to get those energy bills down for good, and ensure that we can invest in home-grown, renewable cleaner sources of energy, break the link between electricity and gas prices, and remove standing charges from gas bills and then electricity bills. All that is about reforming the way the energy market works, because while breathing space is what households and businesses need now, we know that longer-term reform is needed over time.

I was explaining the breathing space for businesses, and I mentioned the cuts to business rates announced in the Budget. I remind hon. Members that we are backing people who want to start and grow businesses by cutting red tape and unlocking billions of pounds of investment. We also introduced our new founders’ relief for founders of high-growth companies, and a new young entrepreneurs allowance to cover a year of living costs for young founders while they bring ideas alive. Employers and businesses drive growth, offer job opportunities and create wealth across our country.

[Helen Maguire (Epsom and Ewell) (LD)]

I am sure the Minister will agree that the Conservatives left the high street on life support, but unfortunately I feel that Labour has failed to resuscitate it. Epsom and Ewell has a coffee shop called Brew Forty Two. The staff work really hard, but rising costs mean it is difficult to employ young people, and the Saturday job is pretty much now extinct. Does the Minister agree that we need to reinstate lower national insurance contributions?

[James Murray]

I will come to that later in my remarks. Employers do not pay national insurance contributions for under-21s, because of the relief that already exists, or for apprentices under the age of 25. That goes some way towards supporting the objective that the hon. Lady mentions, which is to ensure that employers are supporting young people into work. I agree with her comments about the state in which the Conservatives left high streets across the country, having not done what was necessary to support them over 14 years.

Businesses across the country are the ones who drive economic growth, and every employer across the country knows the importance of fiscal discipline. It is crucial in enabling them to succeed, just as it is the crucial bedrock of economic stability for the country and the foundation that we need to support confidence and long-term growth.

[Sir John Hayes]

Will the Minister give way?

[James Murray]

I will give way one more time, then I will make a bit of progress.

[Sir John Hayes]

The Minister is being immensely generous in taking interventions. Employers in my constituency include many farmers and growers and related food firms and hauliers, yet much of the land in my constituency is threatened with immense solar developments, which will take that land out of production. That threatens the country’s food security, and we risk making energy security the enemy of food security. That is bound to undermine our economy in the long term, as we import more and more of what we need to feed the nation. Will he take a look at that, discuss it with colleagues across Government and see how we can reverse that trend? It puts our national economic resilience at risk.

[James Murray]

While I agree with the right hon. Gentleman drawing attention to the importance of food security as part of our national security, he and I take a different approach to energy security. The reforms that we are implementing as a Government, including through investment in home-grown, independent sources of energy to increase our energy security and make us more independent from fossil fuel prices around the world, are crucial to bringing bills down over time and ensuring greater energy independence and energy security. That is what the Government are doing, and that is how we see ourselves responding to one of the greatest pressures that many households and businesses face: the immediate and long-term costs of energy.

I was talking about employers recognising the importance of fiscal discipline in their own businesses, just as the Government recognise the importance of fiscal discipline for the country. We know that this Government inherited a crisis in our public services, our public finances and the cost of living. NHS waiting lists were at record levels, children worked in portacabins as school roofs crumbled, and rivers were filled with polluted waste. Billions of pounds of spending commitments had not been funded or even properly disclosed to the Office for Budget Responsibility. Faced with that reality, any responsible Government would have to act. We kept our manifesto commitment to working people not to increase their income tax, their national insurance or VAT, and we went further by freezing fuel duty and raising the national minimum wage.

[Patrick Spencer (Central Suffolk and North Ipswich) (Con)]

Will the Minister give way?

[James Murray]

I will make some progress, as I have taken a few interventions. Maybe I will address the hon. Gentleman’s point in a moment.

After taking office, we had to take decisions on tax, welfare and spending to fix the public finances and repair our broken public services. It was to restore stability in the public finances and to get our NHS and other essential services back on their feet that we increased national insurance contributions from employers. In making that change, we also more than doubled the employment allowance from £5,000 to £10,500 so that around 900,000 employers—around 40% of employers—have no employer national insurance liability at all.

As I mentioned earlier in response to the hon. Member for Epsom and Ewell (Helen Maguire), we maintained reliefs for those employing younger workers, with businesses able to claim employer national insurance contribution reliefs, including for those aged under 21 and apprentices under the age of 25. That means that employers pay no employer national insurance contributions for employees under the age of 21 or apprentices under the age of 25 on earnings up to £50,270, which saves up to £6,750 a year for each eligible employee.

We know that the decision to increase employer national insurance contributions had an impact on businesses, but we recognise that because of that choice and others, we have been able to put the NHS back on its feet, with waiting lists down by more than 250,000 since the Government came into power. As well as getting the NHS back on its feet, our fiscal rules and the discipline of meeting them mean that we are boosting investment in Britain’s future—the investment that families and businesses want and need. Across this Parliament, we will invest an additional £120 billion in Britain’s roads, rail, energy and other infrastructure, which is so important for driving growth, and last year we delivered the highest number of affordable homes in a decade.

[John Slinger (Rugby) (Lab)]

Does my right hon. Friend agree that this Government’s investment in our infrastructure and our NHS, which is significantly higher than the risible amount of investment delivered under the previous Government, is pro-business and pro-economic growth, and that that is why the Budget measures will help our country and help businesses across this land?

[James Murray]

My hon. Friend is absolutely right that businesses want to make sure that the population—their employees or future employees—are healthy, are able to get to work and are able to access the support they need to get a job. That is as important for businesses as it is for the people themselves, and of course businesses want to see the investment in infrastructure that our adherence to our fiscal rules enables. That investment in rail, road and energy is so important to businesses, as it is to families across the country.

In their motion, the Conservatives propose halving employer national insurance contributions for under-25s. Apart from a brief mention in the shadow Secretary of State’s speech, they appear to have forgotten that employers already pay no employer national insurance on any earnings up to £50,270 for every employee under 21, and for all apprentices under 25. However, the bigger problem—one that goes to the very heart of why the Conservatives failed in government and why it is clear that they have learned nothing—is that they are very good at announcing tax cuts, yet always entirely fail to credibly say how they would pay for them. If they want a reduction in employer national insurance, what is the cost? Where does the money come from? Is it from higher borrowing, higher taxes on someone else or cuts to the NHS and other public services that working people rely on?

Just look at the Conservatives’ announcements on tax more widely. They have promised billions of pounds-worth of unfunded and poorly targeted tax cuts for the very wealthiest—exactly the same irresponsibility that led to the disastrous Liz Truss mini-Budget that crashed the economy and sent mortgages skyrocketing. That is the difference between us as a responsible Government and them as a discredited Opposition.

[Dave Doogan]

There is a constant tension in that those who criticise Government fiscal policy must say where they would get the money from. On that basis, could the Minister advise the House what progress the Government have made over the past two years on closing the tax gap, and say what size it currently is?

[James Murray]

If the hon. Gentleman wants to have a conversation about the tax gap, I am very happy to pick that up. When we came into office in 2024, one of our first priorities was to close the tax gap before asking for any further tax contributions from any other sources. That was an essential part of our wider plan to restore public services and the public finances and to create the conditions for economic growth. That work continues, and I am very pleased to be playing a role in the Treasury, continuing that work to close the tax gap and modernise the service His Majesty’s Revenue and Customs provides, so that more people pay the right tax first time and can pay it automatically without mistakes or errors creeping into the system.

Because of the decisions we have taken as a Government—including closing the tax gap, as the hon. Member for Angus and Perthshire Glens (Dave Doogan) mentioned— we are providing certainty and stability. Meanwhile, the Conservative party cannot resist playing games with the public finances, irrespective of the fact that whenever it has done so in the past, it is working people who have suffered the most. Britain is a country of entrepreneurs, shopkeepers, manufacturers, publicans, start-ups, family firms and growing businesses, and I am proud of the people across our country who take on risk and put in every hour they can to start and grow businesses. Above all, they need—and they have—a Government who are prepared to do the hard work of building a stable economy in which businesses can prosper. Employers need stability in order to plan for the future, create good jobs, invest and innovate, and providing that foundation is our responsibility as a Government. That is why, in the face of global storms, fiscal discipline will always underwrite every promise this Government make. The opposite is true of the Conservative party.

Government is about making choices, not pretending that choices do not exist. We in this Government are choosing to back working people. We are choosing to back the employers who create jobs. We are choosing to back young people into work, and we will always choose, with fiscal discipline as our lodestar, to maintain the economic stability on which our success as a country depends. For all those reasons, I urge Members to reject the motion.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.

16:49

[Daisy Cooper (St Albans) (LD)]

It has been a tough decade for businesses. It all started with Brexit, which unleashed uncertainty, red tape and form-filling, pushing up prices for all of us. Following that was the covid pandemic. Notwithstanding the furlough scheme, it unleashed on business a boom and bust cycle of lockdowns and opening back up, all because the then Conservative Government did not buy an off-the-shelf app that might have prevented that boom and bust cycle by tracking the impact.

[Stuart Andrew (Daventry) (Con)]

I recall that when I was sat on the Government Benches, the Liberal Democrats were calling for more stringent measures.

[Daisy Cooper]

The right hon. Gentleman will perhaps remember more correctly that during that time we called for a lockdown initially, but the public had already decided to go into lockdown. He will also remember that the then Prime Minister announced that pubs, high streets and a whole load of businesses should be closing down, without covering their insurance. The right hon. Gentleman will remember that.

Following covid, we had the mini-Budget, which I am sure the Conservatives will deny, too. The mini-Budget was incredibly painful and unleashed huge panic in the financial markets. It drove up the cost of living and the cost of commercial loans. On top of all that, we then had two anti-growth Budgets from the Labour Government that have pushed up costs on businesses. For many, it is too much to bear. Small businesses, the backbone of our high streets and our communities, have borne the brunt. It is the cumulative impact that small businesses have expressed concern about. They tell me that if it had been just one tax, they might just have been able to manage it, but they have had the national insurance contributions rise, the business rates changes and the Employment Rights Act 2025, which got the balance wrong between protections for workers and the burden on business. Businesses that have put in blood, sweat and tears and financial investment are now struggling and do not know whether they can survive.

[Dave Doogan]

The hon. Lady has given a comprehensive list of the impediments that this Government have put the way of business in just 24 months, but I hope she will not forget that we have the highest commercial energy prices anywhere in the developed world under this Labour Government. Those are similarly threatening to put businesses under.

[Daisy Cooper]

The hon. Gentleman is right to raise the fact that we have some of the highest energy costs for business. We have called on the Government to extend their scheme for energy-intensive businesses. We have made it clear that we want to see further action on decoupling the link between gas and electricity. I have had meetings with Ofgem about making sure that there is better regulation for small businesses, particularly when they are looking to brokers for their energy deals. There needs to be far more action, not just for energy-intensive businesses, but for the small businesses on our high streets.

As I was saying, the impact on businesses of all these higher taxes has exacerbated the youth unemployment problem. That is why we now see vacancies at a five-year low. It is wrong to blame young people for not applying for or getting jobs when there simply are not jobs for them to apply for. That is why we Liberal Democrats have talked about growing our economy and pulling the biggest single growth lever that we can by joining the single market, which would reduce costs for businesses.

[Dr Luke Evans]

Have the Liberal Democrats done any modelling of what the impact would be on those young people who are not employed if we rejoined the European Union and had free movement or if we had a youth mobility approach and there was an influx of young people into this country?

[Daisy Cooper]

If there are no jobs in the UK, there will not be people coming to the UK to take jobs that do not exist. If we could join the single market, it would reduce red tape, reduce form-filling, and make it cheaper for businesses in the UK to grow. They would create more jobs, and there would be more jobs for young people. I simply cannot believe that the Conservative party, despite all the evidence and all the studies, will still not accept that having a stronger relationship with Europe is the single biggest way in which we can grow our economy—and it is only if we grow our economy that we can cut taxes and cut bills. For as long as the Conservatives refuse to acknowledge the damage of their Brexit deal, they will remain an out-of-touch, anti-growth, anti-business party.

[Gareth Snell]

The hon. Lady has made the argument here eloquently, many times, about joining the single market and the customs union. However, on 1 April 2019, the House came within three votes of a Brexit deal that would have allowed the retention of membership of the customs union. I voted for it, and others who were Labour Members at the time voted for it. Six Liberal Democrats, including the current leader of the hon. Lady’s party, voted against it. They walked into the Lobby with the Conservatives—with those of the right—to veto a Brexit deal that included membership of the customs union. Why did they do that?

[Daisy Cooper]

I will not apologise for the fact that we fought tooth and nail—we were the only large party that fought tooth and nail—to stop the damage of the Brexit deal in any shape or form.

[Dave Doogan]

In the last Parliament, the SNP was a substantially bigger party than the Liberal Democrats, and we fought tooth and nail to maintain membership of the EU as well. I am sure the hon. Lady will acknowledge that.

[Daisy Cooper]

I do indeed acknowledge that. It was a slip of the tongue. Many parties were fighting tooth and nail to stop the damage of the Conservatives’ botched Brexit deal. I hope very much that at the EU summit, the Labour Government will move a great deal further than the timid approach they appear to be taking now.

[Paul Holmes (Hamble Valley) (Con)]

Will the hon. Lady give way?

[Daisy Cooper]

I will happily give way, all day long.

[Paul Holmes]

Will the hon. Lady acknowledge that economic growth in Europe is lower than the economic growth in this country? Perhaps she could also tell the House how much her party, under its policy proposal, would be willing to pay to join the single market. Would that not take money out of the economy that we could be using to increase growth domestically?

[Daisy Cooper]

The hon. Gentleman will, I hope, accept that growth in one country is not equivalent to growth in another country. When we tear down barriers between countries, we increase growth. Plenty of modelling has been done by the national economic social research unit in America, and by other bodies in this country. I am not sure, but I believe it is PwC that has talked about the amount of growth we would gain from the single market. We believe that joining the single market and the customs union would bring in about £29 billion and that the cost would probably be about £2 billion, so the growth that we would gain would massively exceed the cost of joining.

[Graham Stuart]

Does the hon. Lady agree that the Liberal Democrats are a singularly special party in this place, because they can believe passionately in something and then not vote for it?

[Daisy Cooper]

I am sure that if I had more time to speak in this debate, I could point to a number of examples of the Conservative party saying one thing and doing another. It is, of course, a party that is trying to claim, after the mini-Budget, that it is reclaiming the brand of fiscal responsibility, but even in the Conservatives’ recent spending plans there is, according to my calculation, a £33 billion hole between their funding pledges—or the things they want to fund—and the tax cuts that they want to make. It looks like Trussonomics 2.0.

[Danny Kruger (East Wiltshire) (Reform)]

May I bring the hon. Lady back to the point about the opportunity presented by opening up greater access to the European single market? She has cited various reports suggesting that that would be good. Is she aware of the winners of the Nobel prize for economics last year, who demonstrated that what has driven growth across the world, but particularly in the United Kingdom, has not been access to wider markets, but innovation and technology? That is about the growth that we receive from supporting businesses to develop new products and services. It is not access to global markets that does that; it is our own industry and services economy here in the UK. Will the hon. Lady please return to the original liberal principles that helped to develop the prosperity of this country in the 19th and 20th centuries, which are about low tax and low regulation?

[Daisy Cooper]

I have made it very clear in my speech that the single biggest lever for growth is a much better deal with Europe. I have never said that it is the only lever for growth. I absolutely believe that we need to invest in innovation, and I wish that the Government would go further in fixing the entire pipeline, from ideas and start-ups to scale-ups and commercialisation. We should be the best place in the world for a business to start up, to scale up and to stay, and I hope that the hon. Gentleman shares that vision.

I return to the motion. I was saying that the rise in national insurance contributions has exacerbated youth unemployment. We want growth with Europe; we want NICs cut; we want 100 hours of guaranteed work experience for young people before they reach the age of 18; and we want the cliff edges in universal credit tackled as well. We are pleased that the Labour Government have finally looked at putting a tax on the banks, but they will be aware that we have pointed out other ways in which they could have raised taxes on the banks—for example, through a windfall tax on unearned income, which would not deter any further investment. When it comes to our economy and supporting employers, the only long-term solution is to get growth back into our country and get Britain growing again. That is the only way that we can cut taxes and bills.

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. To ensure that everybody can contribute, there will be a speaking limit of seven minutes for Back Benchers.

17:00

[Dr Jeevun Sandher (Loughborough) (Lab)]

I want to start a bit differently today, if I may. My parents were employers; they were business people. They employed me in what was probably my first job. As the son of immigrants, I did not get a choice as to whether I took up that employment. I am not quite sure if I was paid the minimum wage, but working taught me something. It taught me what it meant to earn money; it taught me the pride in work; and it taught me what I got at the end of it. I will never forget working for a week, and then buying a turquoise iPod Mini. I loved that iPod, partly because I was really hip and cool, of course—

[Paul Holmes]

You still are!

[Dr Sandher]

Stop it! The hon. Member is too kind.

I had a sense of pride, because I knew that I had earned that iPod; it was the fruits of my labour. When I was growing up in the ’90s and ’00s, I saw business people doing well, partly because we were growing under a Labour Government, but also because the conditions of business worked. My parents knew that their workers had skills and were healthy, and they also knew that workers and families across the country were living good lives at that point in time. They could afford a decent life, and to spend money down the shops and on the goods that my parents were producing and selling. I saw them do well, and I saw business do well. Part of the reason why I became a member of the Labour party is that I want to see every single person do well and thrive. I saw businesses thrive, and I saw my parents’ business thrive.

I also joined the Labour party because we are the party of work—the clue is in the name. I want every single person in this country to have a good job, but we are quite far away from that, and we have been for quite a while. About 40% of people in full-time work cannot afford to raise a family, because there are not enough good jobs in this country. Post-industrial areas are still post-industrial, and they are the most deprived parts of this nation. They have not been doing well for an incredibly long time. We have to do more to create good jobs across our country.

[Patrick Spencer]

I could not agree more. We should do everything to create jobs. Surely the hon. Member is about to suggest that we cut taxes on businesses. That will create jobs.

[Dr Sandher]

I want to start there. I disagree with the Conservatives’ motion. It effectively says that if we cut national insurance contributions, good jobs will follow. The first thing to note is that, yes, we did raise national insurance contributions in our first Budget, and there are a million more people in work today. The second thing to note is that the Conservatives’ mistaken moral aims would lead to poorer material ends. They are googling; they are finding out the difference between the pay-as-you-earn measure of employment and the Office for National Statistics measure of employment.

There is something else on which I disagree with the Conservatives. I read the document entitled “The Right Way”, which they produced before their conference. It effectively said that if the Government just step away and create the right conditions, businesses will create the prosperity and good jobs that we need. We have seen that this has not worked. Post-industrial areas are still post-industrial. We saw the Government step away in the 1980s, and we saw those areas remain poor over time. In places like Middlesbrough, the employment rate is 20 percentage points lower than the national average. For non-graduate men, the employment rate is down by about 20 percentage points, too.

[Douglas Lumsden (Aberdeen South) (Con)]

The hon. Member is talking about deindustrialisation; it is happening right now in my constituency, because we are turning our back on the oil and gas industry. We are not approving Rosebank, when we should. It is an absolute disgrace that the Labour Government are killing off jobs right across north-east Scotland.

[Dr Sandher]

I think about 90% of jobs in the oil and gas industry have disappeared over the past 20 or 30 years, including 150,000 in Aberdeen. That is basically because the North sea is a declining basin; we cannot change geological facts. As the hon. Member will know, the Rosebank decision is a quasi-judicial one that will be made by the Secretary of State for Energy Security and Net Zero.

I come back to the fact that in the 1980s, the Conservatives said, “If you just cut taxes, good times will follow,” but they did not follow for huge numbers of people and huge areas of this country. We also see the legacy of the Conservative Governments from 2010 to 2024: in the past few years, there have been 250,000 more young people not in education, employment or training; areas have not recovered; and there has been the longest wage stagnation since Napoleon’s time.

We have seen the outcomes of the Conservatives’ philosophy. They had 14 years in government, and it was not a success. We did not see good jobs across this nation, because there was not the means or materials for them, or a foundation of prosperity. There were not the skills; the number of apprenticeship starts for young people was down by a third. The population was not healthy; we had the longest waiting lists on record. There was not enough transport infrastructure—ours was the worst in western Europe—and energy costs were the highest in the G7. That was the legacy of your Government, because the only thing Conservative Members have ever believed—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. I am not participating in this debate, but presiding over it, so “you” and “your” are not needed.

[Dr Sandher]

I apologise, Madam Deputy Speaker.

[Graham Stuart]

rose—

[Dr Sandher]

I will give way, because the right hon. Member has been very patient.

[Graham Stuart]

. The hon. Member is being most generous in giving way. He is a fair-minded man, so, on outcomes, I am slightly surprised that he picks this figure of 1 million more people in work; the numbers from His Majesty’s Revenue and Customs show that the payroll has reduced by 165,000 people since July 2024, and that the number of unemployed people has gone up by 225,000. In fairness, would he make sure that he does not just pick the one statistic that he thinks helps his argument?

[Dr Sandher]

I choose to use the labour force survey statistic because it includes both the self-employed and those who are low-paid and do not appear in the PAYE figures. I pick that figure because it is more comprehensive, and I believe it is more correct, as it includes everybody in work.

I want to briefly pick up the point about unemployment. The right hon. Member is right to say that both employment and unemployment have increased, but that in part is good news; it is because those who were economically inactive are now seeking work, so they are now in the category of “unemployed”, rather than “inactive”. We have more people in work, and more people looking for work.

Our argument is that, for businesses to create prosperity, they need not just lower taxes—I take the Opposition’s point on that—but the sales and the foundations to create prosperity. They need a healthy workforce. That is why we are investing in the NHS and waiting lists are falling. They need good skills, which is why the number of apprenticeship starts in this country is such a focus for this Government. They also need lower energy costs, which means providing home-grown, cheaper, cleaner energy. Those things help employers produce more in this country, and help businesses hire more people.

[Dr Luke Evans]

I am very grateful to my Leicestershire colleague for giving way. Could he point to where in the Budget Loughborough cafés or restaurants will get specific support with their energy? The British industrial competitiveness scheme is only for manufacturing, and all the tax levies that are coming off bills—the carbon taxes, the green levies—will not do so until 2028. I am not aware of any support specifically for cafés in Loughborough or restaurants on his high street. Am I wrong?

[Dr Sandher]

As the hon. Member will know, we are also freezing rates, but on a personal note, I do everything I can to support every pub in my constituency, because that is the service we Labour Members believe in.

We know that our approach, our philosophy and our moral aim leads to material prosperity because we have seen it before. We saw Attlee create collective prosperity after collective sacrifice, and Blair and Brown renew a nation after 18 years of Conservative Government. We see how our aims lead to better outcomes. Labour Members believe that our country thrives when everybody thrives. Businesses do well when everybody does well—when the young person who leaves school knows that they can get a good job in a local business; when that business can hire them, because it knows that they have the skills that it needs; and, more importantly, when the business knows that consumers can buy its goods, because we are making life affordable for all. That is how we Labour Members are creating jobs and helping business people like my mum and dad.

17:10

[Priti Patel (Witham) (Con)]

It is a pleasure to speak in this debate, and to listen to a range of views, but I genuinely think that Government Members should begin with an apology to employers, for a number of reasons. First of all, the Chief Secretary to the Treasury insulted them all a few weekends ago, basically saying that employers are not working people. It was a flat insult to the millions upon millions of people in family-run businesses, probably just like the parents of the hon. Member for Loughborough (Dr Sandher), who just gave a lecture on his views about employment and employability.

Fundamentally, small and medium-sized enterprises—hard-working family-run businesses—have always been the backbone of Britain and the British economy. I have a lot of time for the Minister. He is a great survivor, and he deserves some kind of accolade for his long-standing defence of his Government’s tax-grabbing, job-destroying policies, and even for his references to fiscal discipline—we can talk about that—but the Government need to wake up to the adverse impact of their economic policies for employment. We see devastating impacts on small businesses across the country and their ability to function. They are working hard and putting in long hours just to keep the lights on and manage their cash flow. The Government need to demonstrate some humility and acknowledge that right now.

[Patrick Spencer]

I thank my right hon. Friend for her assessment of the performance of the Government Front Benchers—I tried to intervene on the Minister. I have serious concerns; the Minister said, at the Dispatch Box, “We kept our manifesto commitment not to tax working people.” He then said that they introduced a NICs increase for employers, but in the same breath, he said, “Employers are working people.” Do you not agree with me that the Minister clearly does not understand what a business is, and that, in increasing NICs, he has increased taxes on working people and broken a manifesto promise?

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. Once again, “you” and “your” are not to be used when referencing colleagues.

[Priti Patel]

My hon. Friend is absolutely right. I do not want to insult anybody, but it is important for Members to speak on these issues if they have credible experience of them—if they have set up a business and come from a business background. I am afraid that government has become a blunt instrument now. Things are far too binary. The Government are not even thinking through the overall impact of their decisions on local businesses, and then they come to the Dispatch Box defending broken pledges. This House should spend much more time talking about our pride in the nation’s businesses. They are the wealth creators and employers who give people a hand up in life. They give people economic security.

I will speak for my great county of Essex, because I do not think it gets enough airtime in this Chamber. We are a county of entrepreneurs. Despite the damage that this job-destroying, business-bashing, tax-grabbing Labour Government are doing to our economy, we are fighting hard to survive. We have a range of amazing businesses, and I will list them, because I think the House might have experienced some of the fine produce from Essex. Wilkin and Sons in Tiptree makes the jam that is in the Tea Room. Linden Lady chocolates, made in Copford, are sold in the House of Commons shop. There is a range of Essex farmers and food manufacturers, whom we all depend on. A colleague spoke about food security; that matters. Maldon Salt, a very famous brand, comes from my constituency as well.

On the Opposition Front Bench, my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) touched on pubs, salons and all those other employers that provide the gateway to jobs for young people. Those are the types of business that we must support—we absolutely need to give them a hand up right now. We need reductions in national insurance, and we must recognise that in a significant way. Businesses think that Labour Ministers have no idea about the fact that they are working 70 or 80 hours a week just to keep their businesses afloat. That work is to generate tax revenues that this wasteful and bloated socialist Government are, quite frankly, destroying in an unjustifiable way.

There must be a recognition, because businesses in my constituency feel let down by Labour and seriously want to fight back against the increase in national insurance, the red tape from the infamous Employment Rights Act 2026 and the taxes on family farms. Businesses are constantly facing a rising tax burden. Even the reliefs in the recent Budget, which Ministers want to gloat about, will not compensate for the overall pain that businesses are facing.

The Minister spoke about fiscal discipline, but fiscal discipline alongside high levels of borrowing and debt will not give the financial and economic stability that local businesses need in our country. Debt is not going down, and borrowing is going up. We know who pays for all that: businesses pay for it all. Ministers come and go—we all know that—and they can make whatever defence they wish, but the reality is that it is hard-pressed taxpayers who are constantly filling Government coffers right now for higher debt and borrowing. Businesses need some latitude and leeway—they really do. I implore and urge this Government to reconsider many of the policies that they are putting in place.

There is a silver lining; it is called the Finance Bill. When that sees the light of day on the Floor of this House, it will give Members the opportunity to challenge the Government to give headroom and breathing space to businesses by lowering taxes, being more responsible on national insurance contributions and freeing up businesses to employ more people. Importantly, it will give Members the opportunity to challenge the Government to give the British people the freedom to succeed and live their lives, completely unshackled from the burdensome taxes that this Government are constantly putting on them.

17:17

[Alice Macdonald (Norwich North) (Lab/Co-op)]

Like the right hon. Member for Witham (Priti Patel), I start by recognising the many amazing employers and businesses across my constituency, from large household names such as Aviva, to local SMEs, including MSI Defence Systems, and local retail and hospitality businesses that are the backbones of our high streets, such as Café 193. I recognise the pressures on employers and businesses, including in the face of external shocks. I will focus on relaying some of the messages that I have heard from businesses and employers in my constituency.

I welcome the targeted measures in last month’s Budget, as the Minister set out, including the business rates relief. That will mean that more than half of all retail, hospitality and leisure businesses in the east of England will pay no rates at all, and another 900 businesses in Norwich and 400 in Broadland will benefit from frozen rates.

I recently attended a roundtable hosted by the New Anglia Advanced Manufacturing and Engineering partnership. Many of those innovative businesses are creating products and jobs in Britain—including for my constituents in Norfolk—but they face challenges. One of the biggest challenges they raised, which will not surprise the Minister, was rising high industrial energy costs, which are affecting trade and regional growth. I welcome the action that the Government are taking with BICS, but I urge the Minister to set out what more we can do to support manufacturing businesses such as those at the roundtable.

Today, we have had good news in the press that £12 billion of investment has been secured to build the Vanguard East and West wind farms off the coast of Norfolk. Those schemes alone will create more than 2,400 jobs, and I want as many of them as possible to be for people from Norfolk. We have to ensure that employers can also benefit from the supply chains. Norfolk has many strengths; renewable energy is just one of them. We have a £20 billion economy and strengths in energy, agrifood, advanced manufacturing, financial services and world-class research, such as at the Norwich research park. When the new Prime Minister came into office, the Norfolk and Suffolk business boards wrote to him together to set out how Norfolk and Suffolk can help to power, feed, connect and innovate the UK’s future. That is the ambition that I have heard from businesses.

I have also heard businesses’ requests that the Government work with them in three key ways that will benefit employers in Norfolk and Suffolk. First, as we have touched on already in this debate, is the importance of backing nationally significant infrastructure projects such as the Bacton energy hub and the desperately needed upgrade at Ely and Haughley junctions. Despite our differences across the House, I know that MPs across East Anglia really support those investments because of the impact they will have on businesses in the area. Secondly, through innovation we could be the leading testbed for new technologies, building on world-class assets such as the Norwich research park. Thirdly, by aligning skills, innovation and industrial policy, we will help businesses to invest, create jobs and develop the workforces they need.

Another clear message I have heard—we have touched on the need for stability—is about devolution and the opportunity it presents for employers and businesses. I welcome Norfolk and Suffolk being on track for devolution. This week, the Reform-led Norfolk and Suffolk county councils have finally reached an agreement on the terms of a devolution deal, which the Government are backing with about £37 million of investment each year. That cannot come soon enough; we need that deal and the associated funding in place as quickly as possible so that we can invest in infrastructure, skills and economic growth. It is really important that employers and businesses’ voices are heard and that they are instrumental in seeing how that investment is spent.

I will not pretend that I have not heard messages from businesses about some of the costs around labour. The Minister has set out why those decisions have been made, and I will continue to listen to the concerns that businesses raise with me and relay them back to Ministers.

Finally, I want to focus on young people, who have so much to offer employers. Far too many young people are not in education, employment or training—something we will be focusing on even more in the next few weeks. I welcome the action the Government have taken, including the jobs guarantee and the jobs grant to back employers who give a chance to young people who have been out of work for six months. I am working with the local DWP office, employers and other local organisations on an initiative called Opportunity Norwich to support young people into work.

No one is pretending that this is an easy situation and that there have not been difficult choices to make. The Budget and the measures the Government have set out are a welcome step forward. As a Norwich MP, I am proud of our city and our county of Norfolk. We are a place of innovation, hard work and creativity, and I am proud of our employers who have consistently shown themselves to be genuine community partners and to bring so much benefit to our local area. I will continue to advocate for the support they need to invest in our region, grow our economy and deliver opportunities to my constituents. I am sure that the Minister will respond in detail to many of the points raised, but I want to urge him to work with us in Norfolk and Suffolk to ensure that as we move forward on our journey with devolution, our employers and, indeed, employees thrive.

17:23

[Stuart Andrew (Daventry) (Con)]

It is a pleasure to contribute to this debate and to follow the hon. Member for Norwich North (Alice Macdonald). I heard a collective thud when the Minister was speaking earlier, which must have been the jaws of businesses in my constituency hitting the floor, because there was a real lack of understanding of the real pressures that businesses are facing.

One thing I love about being a Member of Parliament is spending time going around the constituency, and I always make a point of visiting businesses—be they small, medium or large—to hear directly from them their concerns, and there are many of them. I also hold a regular business club, and it is becoming increasingly difficult in those meetings to give businesses any meaningful answers of reassurance because of the real problems they are facing. I am always struck by just how hard these people are working to keep their businesses going. They are part of not just our local economy, but our community. They create the vibrancy of our villages and our towns and are places where people can meet and congregate. These things are really important. We heard a moment ago about tech and innovation; even in the smallest barn on a farm, some really amazing tech companies are being created, and that is something we should be celebrating.

Employers want their businesses to be successful, and having a great team of employees is a keen part of that. Employers invest not only financially but emotionally in their business. I hear time and again that the costs of running a business are making that increasingly difficult. The spokesperson for the Liberal Democrats, the hon. Member for St Albans (Daisy Cooper), was right to say that a multitude of tax rises are creating that difficulty—not least the Government’s increase in employer national insurance contributions.

The Government will point to the increase in employer allowance, and I appreciate that it helps some businesses, but it does not change the fundamental fact that many employers are facing higher costs just to employ the same people and local businesses are having to make really difficult decisions. Time and again I hear it. I was depressed to hear at one event about a business whose owner had started it three years ago on his own and that was about to employ three people, but the national insurance contribution rise meant that that simply was not affordable any more.

It is not just businesses that are affected. Time and again, when I was a shadow Digital, Culture, Media and Sport Minister, I tried to raise the impact on the charities sector, where I spent 16 years working before entering Parliament. I know the pressures that they face. I particularly worked in hospices, which can only provide care if they can afford to employ the people to look after their residents—children, in the case of the hospice I worked in. The Government will cite their £100 million of capital funding for hospices, but they cannot fund nurses with bricks and mortar. The reality is that these workers should not be facing these tax rises, because they are picking up a massive part of public sector work in caring for some of the most vulnerable people in our constituencies.

We have many wonderful charities in my constituency that provide important services to people who need them. They are employers too, and they still have staff to pay. When I speak to the people who use these charity services, it is not the charity that they talk about but the staff. That is why we must think about those charities as well.

[Mr Lee Dillon (Newbury) (LD)]

In my constituency of Newbury, a volunteer centre survey found that charities needed to raise an additional £300,000 a year just to stand still. Does the right hon. Member agree that charities’ time should be focused on serving our constituents rather than worrying about fundraising off the back of Labour’s tax rises?

[Stuart Andrew]

The hon. Gentleman is right. I was the head of fundraising at the hospice, so I know that it takes some time to plan a fundraising strategy. If a charity suddenly finds overnight that it has to find all that extra money, it will be almost impossible, and often they will end up having to eat into reserves, which is not a good thing.

[Gareth Snell]

I want to go back to the point that I raised to the shadow Secretary of State. The right hon. Gentleman was here when the health and social care levy came around. At no point did the Conservatives attempt to exempt charities and hospices from that tax rise. Why was it appropriate to keep them in scope when he was proposing it but completely inappropriate now?

[Stuart Andrew]

I point the hon. Gentleman to his party’s own manifesto. Labour promised that it would not do it. That is the reality of it, and that is the challenge that we are putting to this Government.

I really am worried about the opportunities for so many young people. We all remember how important getting our first job was. Mine was being a waiter at a hotel in Anglesey. It taught me about independence, it built my confidence, and it gave me real experience of working, sometimes with very challenging customers. It was really important to build that confidence. But it is becoming increasingly difficult for young people.

I know that employers in my constituency want to give young people those opportunities, but there is a cost involved in taking on and training someone. I spoke to one of the pub owners in my constituency who said that he always used to employ 14-year-olds to wash dishes, and when they got a bit older they would work as a waiter or waitress in the restaurant, and when they were a bit older still they would work behind the bar. As a result, he had trained staff, when they came back from university at Christmas or summer. He simply cannot afford to do that any more because of all the additional costs. Instead, he is employing older people. That is a real problem that we have got to address.

Many people who have just finished university or further education will be trying to get their first job, often without much experience. We should be doing all we can to encourage employers to give them that chance. That is why I support the Opposition’s proposal to halve employer national insurance contributions for under-25s, which would help businesses to plan ahead when taking on younger employers, making it more affordable to employ those who are just starting out. If we do not address this problem, there is a real danger that young people will find themselves permanently stuck in unemployment.

I will make another point to conclude. Some Members talk about employers as though they are somehow separate from working people, but when I visit businesses across my Daventry constituency, I meet people who are working extremely long hours and have often had to put their savings into getting the business up and running in the first place and to keep it afloat. They are serving customers, they are dealing with suppliers and they are doing the accounts. Sometimes they are worrying about whether they will have enough money left to pay themselves, let alone their workforce. They say to me that they wake up in the middle of the night worrying about where the money will come from. I do not think anyone could seriously suggest that those people are not working hard. They are making great personal sacrifices. We should be proud of everything they do and give them encouragement whenever we can. We should welcome the fact that they are providing employment for other people.

I want to see businesses in my constituency and across the country doing well, our local charities continuing their important work, and young people having the opportunity to get into employment, but we must recognise that increasing the cost of employing people has consequences, particularly for smaller businesses. Halving employers’ national insurance for under-25s would be a practical way of helping businesses give more young people a chance in life and the start that I enjoyed. For those reasons, I will happily vote for the motion.

17:32

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

I want to speak in the debate because Cornwall probably has more self-employed and small businesses than many other places. Small businesspeople hold businesses together and employ people. They take on the responsibility, risk and privilege of creating jobs for other people. I considered myself as much of a working person when I was an equity partner in a law firm that employed 50 people as I did when I was a teaching assistant.

Small businesses do an incredibly important job. I want to talk about a few of them in my constituency. Richard Wakeham at Treveague campsite in Gorran employs six people. We also have Mariners and Harbour Lights, our brilliant fish and chip shops; Bread & Butter in Truro; Fudge & More in St Mawes; and Windjammer, with Oliver running a number of establishments brilliantly. Of course, we have our farmers—I went to see one in Restronguet at the weekend—and then we have publicans like Mark Holden, who runs a number of pubs and has built his hospitality business over 16 years. For many years, Mark has worked hard with young people, setting up apprenticeships and giving training to dozens of Cornish young people. He is working closely with the Government and the Minister for Skills to set up skills training in hospitality down in Cornwall.

The motion concentrates on under-25s, so that is what I will focus on. Our young people have struggled, with rising numbers of NEETs, but that has been over a long time, not just the last two years, as the Milburn review made clear. Alan Milburn said that this has been a growing issue, and among the reasons for that are: how SEND provision in schools dropped off under the previous Government; covid, which was a really big issue for young people and hit their confidence; and mental health support, with child and adolescent mental health services having been decimated in the last 15 years.

As has been pointed out a number of times, employers pay no national insurance contributions on earnings of up to £50,270 for under-21s, nor for apprentices under 25. That makes a saving of up to £6,790 per employee per year, which was worth £2.5 billion in the last year.

Some of the Opposition Members have talked about the minimum wage rises. When the Labour Government first brought in the minimum wage, the figure was similar for everybody over 18, and businesses did not shut down and the economy did not stop, as the Opposition said would happen. When they got into power, they split the minimum wage into three or four different age brackets. That caused an awful lot of problems and inequity, because a 20-year-old’s rent is not cheaper than a 26-year-old’s. In trying to converge those wage differences, we are trying to reintroduce that fairness and the idea of the minimum wage in the first place.

This Government have introduced other measures to help small and medium-sized employers take on young people: £2,000 for SMEs that hire apprentices between 16 and 21; free training for under-25 apprentices; the youth jobs grant, with £3,000 for every young person hired; and the jobs guarantee, which is coming in, for fully subsidised jobs for six months, with the Government covering 100% of the employment costs. There are a thousand people in that first pilot.

There is a lot of work to be done. Under-25s have struggled for many reasons over a number of years, not just because of the job market. What we have to do, and what the Milburn review will make very clear in the next few weeks that we should do, is support those young people to overcome their barriers and help employers to employ them again.

16:19

[Patrick Spencer (Central Suffolk and North Ipswich) (Con)]

I rise in support of the Opposition motion. I rise to criticise this Government’s attitude towards employers, their disregard for the reality of life running a business, their nonsensical approach to tackling poverty and social mobility, and their maddening approach to the economy.

The reality is that a job is the foundational unit in an economy. It is the immortal gene that is fundamental to economic evolution, growth and prosperity. I say that because a job is, first and foremost, an income. An income keeps a roof over someone’s head, food on the table and the lights on. An income is spent and then passes through the economic supply chain, creating more value and, yes, more jobs. A job is not just an income, however; it is a source of pride, purpose and identity. It offers structure, routine and the opportunity for a sense of self-achievement. It is a source of social inclusion, friendship and support. It is also a stepping stone. The job someone has today connects them to the job opportunity that might come up tomorrow, next week or next month. Without a job today, the probability of being in work in future diminishes greatly.

As a result of those three realities, work is indeed the best route out of poverty and into prosperity, not just for the individual but for the population as a whole. Look what happens when work is degraded. All the evidence shows that long-term unemployment is synonymous with depression, anxiety, social isolation and a shortened life expectancy. The Health Foundation found that people out of work and on benefits are five times more likely to report poor health than those in work. And yet, Members on the Labour Benches are obsessed with talking down the importance of a job. They talk of bad jobs and unfulfilling work. The reality is that the phenomenal growth in employment we experienced between 2010 and the onset of covid coincided with a massive improvement in living standards and a fall in material deprivation.

If Members do not believe me, they should read the report from the Institute for Fiscal Studies. The share of children living in material deprivation fell by a quarter in the six years leading up to the pandemic. By 2017-18, severe material deprivation among working-age families was roughly one fifth lower than it was in 2010. Pensioner material deprivation fell continuously from 2010 onward. Why? Because rising employment and earned income, offset the cuts to welfare. That is what we delivered in government: a high-employment, low-welfare economy, which is in stark contrast to the high-unemployment and high-welfare economy that this Government aspire to.

The Government talk about hope. The Conservatives in government gave people hope of a life off welfare and in work. Four million new jobs were created between 2010 and 2024—4 million people who otherwise would have been left languishing on benefits, 4 million people who could go home on a Friday proud of their contribution to the economy, their family and themselves. The Labour Government cannot help themselves but steam in and ruin the jobs market for so many.

Nowhere is that more the case than in their deluded decision to increase national insurance contributions for employers. Can you imagine the contorted logic of saying, “I am from the Labour party, the party of work, and we want jobs for all, so we have decided to tax the people who create the jobs in the hope that taking money out of their pockets will inevitably mean they will have more money to put into yours.” It does not make any sense.

This Government do not make any sense. They are for Europe, then they are against it, then they are for it again. They want to invest in defence, then they do not, then they do and now they do not. They embarked on the famous prawn sandwich offensive in advance of the last election, only to turn around and backtrack on all that pro-business sentiment. They promised they would not tax working people, then they did.

In the process, we saw a Treasury Minister go on TV and refuse to recognise entrepreneurs, business owners and decent people who have taken a risk to start a business as working people. Well, say that to Jason and Kate of Trulock & Harris in my constituency. Tell Roger, the postmaster in Framingham, who had to put up with Storm Babet but kept on going, that he is not a working person. How about Will, who runs the Greyhound in Pettistree, one of my favourite pubs? People travel from across the country to go and visit him. Tell him he is not a working person.

Tell that to Debbie, the landlady at the Kesgrave Bell, who has served that community for a generation and is loved by her customers. Is she not a working woman? Tell my friend Charlotte, who works day and night on her business selling paper and card products and has done for six years, that she is not a working woman. How about Darren from DK9 in Blakenham? Our children are in the same class at school. He invested in rescue teams that helped find little Noah Woods in Brantham earlier this year. Is he not a working man as well? Or perhaps the team at Realise Futures in North Ipswich who have set up a community interest company supporting disadvantaged people into work—are they not working people either?

These are the people we on this side of the House stand up for: the workers, grafters, innovators and disruptors who work themselves to the bone because they want to make payroll for their staff and do not want to let their customers down. This Government could help them. It is not too late. Cut their taxes, reverse the NICs increase introduced by the right hon. Member for Leeds West and Pudsey (Rachel Reeves) and help people get a job.

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. I call Danny Kruger, after whose speech the time limit will drop to six minutes.

17:42

[Danny Kruger (East Wiltshire) (Reform)]

I want to acknowledge the contributions made by Labour Members, because I think they have clearly articulated their philosophy of growth. In a sense, it is coherent and respectable, because what they believe is that the economic growth is driven by state action. It is true, and they often make this point, that we need the rule of law, infrastructure and proper investment in people, in places and in the sectors that need help. Those are legitimate arguments, but the fact is that our economy is built on businesses. It is built by businesses—particularly small businesses—being free to operate themselves. The prosperity of this country historically was created by free men and women trading with each other with minimal Government regulation. Yes, this took place in a safe and rule-bound world, but with rules that were light and predictable and without excessive taxation.

I think of Marlborough, in the heart of my constituency. This wonderful ancient town was given its charter 800 years ago, and it was a successful trading community on the road between London and Bristol. It was built on the textile trade, with amazing wool manufacture and processing. That is what made it rich. I was honoured to join the procession of the town council to the war memorial on Sunday—we love a procession in Marlborough—and to walk behind the robed councillors and mace bearers proclaiming the ancient wealth of the town.

The economy of Marlborough now largely involves retail, hospitality and tourism. As the procession walked into St Mary’s church, we passed Franklyn’s Bistro, a restaurant I know well—I was in only a month or two ago—and I saw that, to my great regret, it has now closed altogether. This happens in hospitality. Restaurants open and close, but there is something happening in Marlborough and across my constituency and across the country, which is that hospitality is absolutely on its knees.

Worst of all, Marlborough received the terrible news this week that the Polly Tea Rooms had closed down. It was an institution in the town, open for 114 years and surviving two world wars and all the economic ups and downs of the last century and more. This large shop front on the high street had been selling tea and cakes and lunch and dinner for all those decades.

I was very proud to be able to support the Polly during covid, and I was very proud that the owner said, “You have saved the Polly,” because I helped him with managing his application for a covid loan, but I am afraid to say that it is all over.

I want to quote the notice that the owner, David Clarke, put out:

“I have decided to close the Polly Tearooms with immediate effect.

I was hoping that the budget…would offer some help to businesses like ours, but the result was the same as every budget this Government has brought in, quite the opposite…Fuel costs and business rates have also been increasing all of the time, but with the cost of living crisis as it is, we simply can’t increase our prices to our customers and expect them to still come in as often as they did in the past.

The Chancellor John Healey spoke in his budget…of ‘hope’ for the future. He said the word so many times, I lost count. He sounded like Mr Micawber from David Copperfield, hoping something will turn up.

But that is all this government has—hope. No plan for growth, no idea what to do, just hoping something will turn up, rather than creating the environment and conditions to make the economy grow. They are spending far too much money on the wrong things, and then taxing the very people who would be able to create growth to the level that they have nothing left to achieve any of it. The measure for the government investing in anything should be how will this improve our economy. They should apply this test to every penny they spend—literally every penny. But this of course is not what…Labour…do.

So, along with literally hundreds of other businesses, I have no option but to give up trying to make it work.”

I could not put it better myself. I am the son of a restaurateur, so I know how people pour their hearts into these businesses. I am so sorry for the Polly, Franklyn’s Bistro and the other hospitality businesses in my constituency that are closing.

What should the Government do about it? My right hon. Friend the Member for Newark (Robert Jenrick) has set out a series of measures on behalf of my party: we would raise the VAT threshold from £90,000 to £150,000 to support those small businesses to grow, take on more work and take on more staff; we would end tax on overtime; and we would reverse the employer national insurance rise back to 13.8%. On hospitality, we would cut VAT to 10%, we would cut beer duty by 10%, we would progressively over time abolish business rates for pubs, and of course we would repeal the job-destroying Employment Rights Act 2025.

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

I am really sad to hear about the Polly Tea Rooms in the hon. Gentleman’s constituency, but has he spoken to the IFS about cutting VAT? The IFS has said that cutting VAT would not generate the income that people promise, and I think the Treasury says the same. For businesses like the Polly Tea Rooms, I do understand the issue of the national insurance rise in the Budget of two years ago, but the other issue is the cost of living crisis, which is driven by something we have not spoken about in this debate at all: Trump’s war on Iran. Does he recognise those wider impacts on the economy as well?

[Danny Kruger]

I do not accept for a second that cutting VAT on hospitality would not be of great benefit to those businesses. I am astonished to hear that the IFS might have said such a thing. VAT is one of the major costs that businesses have to carry, so clearly a cut in what is essentially a sales tax for retail businesses would be helpful.

I will speak briefly about the challenge of the cost of living and energy costs in particular, because the issue for retail businesses like the Polly is not just about the costs that they have to carry; it is about the demand for their business being reduced because of the cost of living that customers are carrying, as Mr Clarke said in the statement I read out. What the Government should do is not simply give people more money to spend, but ensure a stable economy and a stable society, and then leave people with more of their own money that they can spend on our high streets.

That is why my party proposes raising the personal allowance for individual taxpayers to £15,000. That would be a tax cut of £500 per person for over 40 million people in this country. On the point made by the hon. Member for Edinburgh South West (Dr Arthur), I say that we would take £250 off household energy bills, which is the right response to the accelerating energy costs that have been caused not just by global instability but by Labour’s obsession with net zero.

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. There is now a five-minute speaking limit for Back Benchers.

17:49

[Paul Holmes (Hamble Valley) (Con)]

British businessmen and women are integral to the growth and sustainability of our nation’s finances. A nation’s economic strength is measured not simply by the size of its Government, the amount it spends or the number of regulations it imposes, but by the confidence, enterprise and ingenuity of its people. It is built by those who take risks, start businesses, employ others, run shops, run pubs, manufacture goods and provide services. It is built from the ground up.

Yet at precisely the moment when we should be strengthening the foundations of our economy, this Government are placing an ever greater pressure on the very businesses that sustain it. I fear that this Government simply do not understand the reality of running a business in Britain today. Indeed, we have seen that in the last couple of weeks. Take the comments by the Chief Secretary to the Treasury that employers are not working people. I do not think a political soundbite has resonated with so many across the country for a long time. I cannot overstate the hurt and insult that that comment caused to the men and women of this country who have had an idea, who get up early, who have gone out and built something, and who have given their employees a start in life, such as a young apprentice they have taken on, even if it means that they have to reduce their own pay to keep open or keep operating. They are the first ones out to work in the morning and the last ones home in the evening. Those comments hurt people, and although the Minister has apologised, I believe that she perfectly summed up the dire situation that this Government have caused for businesses up and down the country.

At the autumn Budget in 2024, the then Chancellor announced an increase in employer national insurance contributions of 1.2 percentage points alongside a reduction in the threshold at which employers begin to pay national insurance from £9,100 to £5,000. That happened despite Labour having promised that it would not do it. Ultimately, businesses have three options: absorb the additional cost, pass it on to their customers through higher prices or reduce their costs elsewhere. Both the Centre for Policy Studies and the Office for Budget Responsibility warned that those measures would lead to higher consumer prices and lower nominal wages. They have affected 1.2 million employers, and 940,000 people have lost out financially. They leave the average employer facing a net increase that will see their liabilities rise by approximately £26,000. Those are not abstract figures; they represent real businesses, real jobs and real decisions about whether to invest, expand or even remain open.

I want briefly to bring the debate closer to home by highlighting the experience of some local businesses in my constituency. Cherrywood Kitchen in Netley, run by Jason Hardcastle, is a small hospitality café that provides local employment and contributes to the community. He has seen a clear impact on the operating costs of his café since 2024, with national insurance contributions rising by over £2,000, VAT liabilities increasing by £4,000 and a weekly wage cost now exceeding £12,500. His cafe is busy. He has seen turnover increase every year that he has operated, but the actions of this Government have meant that he now takes on fewer people and does not take any profit home at the end of the week.

Another local business owner, Matthew Boyle, operates a number of excellent hospitality venues in my constituency, employing local young people—people who the Government claim they want to support. He spent 23 years building his hospitality business, which now employs 175 people, but this Budget and this Government’s actions will add £230,000 of additional annual costs to his business.

[Stuart Andrew]

My hon. Friend makes an important point. Is he struck, as I am when I meet these business people, by how physically broken they sometimes look because they simply do not know how they are going to survive? Their life’s work and their dreams have been torn to shreds by this Government.

[Paul Holmes]

My right hon. Friend makes an excellent point, and I go through the same thing as him. One of the most frustrating things on a Friday, when I go to see businesses in my area, is that I have no hope to give them because this Government have given them no hope. The Government need to listen to business people like Matthew who create the jobs and the wealth in the country that they love spending so much.

Ministers must recognise that businesses are not simply a source of revenue for the Treasury; they are the wealth creators of our economy. That is why I am delighted that the Leader of the Opposition has set out our party’s policies on how we would help to meet the challenge that the Government have caused including, as my right hon. Friend the Member for Daventry (Stuart Andrew) said, by halving national insurance contributions for people aged 21 to 24, saving £1,500 for employers, and abolishing business rates for hospitality. I also believe that we need to consider a VAT cut for hospitality businesses.

If we want thriving high streets, more jobs, better wages and a stronger economy, we must start by making Britain a better place to do business. Employers are working people because they create prosperity—not the Government, and certainly not this Government who are actively making the situation worse. It is not the Government who create prosperity; it is the people and businesses of this country, and they deserve better than what they are getting under this dire Labour Government.

17:55

[Mr Peter Bedford (Mid Leicestershire) (Con)]

Before I came to this House, I spent 17 years in the private sector as a chartered accountant, working with businesses in the food and drink, construction and utility sectors. I sat with owners as they went through their accounts, line by line, working out whether they could afford to take on one more person. When this House talks about business owners, I think of people who put their savings and even their own homes on the line so that others can earn a wage. There are a great many of them. At the start of 2025, there were 5.7 million private sector businesses in the country. Small and medium-sized firms provide almost 17 million jobs—almost three in five private sector jobs—and family firms sit at the heart of that, employing almost 14 million people in the country.

The value of a successful business goes far beyond numbers. In my constituency of Mid Leicestershire, there is David North in Rothley, a family deli that has served the village for more than 50 years; Barrie Stephen in Anstey, a salon that started in one village and has trained stylists who went on to open businesses of their own; and S. J. Langton in The Square in Glenfield. Businesses like those give a teenager their first job and offer the apprenticeship that lets a young person build a career without leaving home. They are the shops that keep our villages alive, but how have this Government treated them?

In the Government’s first Budget they raised employer national insurance contributions to 15% and cut the threshold to just £5,000. The accountancy firm UHY Hacker Young found that national insurance bills for employers rose by almost £28 billion in a single year. That is more than the Government’s own forecast. When we tax something more, we get less of it. Today, small firms planning to cut jobs outnumber those that are planning to hire by more than three to one. Then came the Employment Rights Act 2025, with new costs and new risks for every firm and every new hire. Then there were the business rates, and the results were entirely predictable. The Federation of Small Businesses confidence index fell to minus 71 at the end of last year. The business confidence monitor of the Institute of Chartered Accountants in England and Wales has now been negative for seven consecutive quarters.

The headwinds are getting stronger. Inflation rose to 3.5% in September, with motor fuel up by almost 30% on the year. The OBR has cut growth forecasts for next year to just 1%, and last week the Bank of England raised interest rates for the first time in over three years. Small firms looked to last month’s Budget to help, but the verdict of the Federation of Small Businesses was blunt. Those firms got

“nothing to ease sky-high energy bills, and nothing to make hiring someone more affordable.”

Employer national insurance remains at 15%—the jobs tax remains.

The Conservatives take a different view: Governments do not create growth, businesses do. Our job is to back businesses and then get out of their way. That is why we will scrap the family business tax and the family farm tax. We will introduce a permanent 100% business rates relief for retail, hospitality and leisure, cutting bills for a quarter of a million pubs, shops and high-street businesses. We will halve employer national insurance on jobs for those aged between 20 and 24, because the cost of giving a young person their first break has soared under this Government.

[Ben Maguire (North Cornwall) (LD)]

Will the hon. Member give way?

[Mr Bedford]

I will not. We would repeal Labour’s Employment Rights Act 2025, replace IR35, review Making Tax Digital, scrap the packaging tax and simplify tax for small businesses and the self-employed.

I started working in my early teens, because if I wanted something, I had to earn it. This is the bargain that every business owner makes: they take the risk and do the work, and all they ask is that the Government do not stand in their way. Back them, and they will build this country. Tax them into retreat, and they will stop. The Government must decide which side they are on.

17:59

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

“Yes”—it is a small word, but it is absolutely crucial to creating a successful economy. Yes to that first investment; yes to opening that business; yes to giving that young person a job; yes to taking that risk; yes to expanding; yes to investing—all those things are so crucial to getting a successful company and a successful economy. However, the Government cannot build an economy by making it harder for businesses to say yes. The economy responds not to a Prime Minister saying, “We must have growth,” and his intentions, but to the incentives that Ministers put in place—or, in this case, the disincentives.

We have heard it mentioned before—in relation to the jobs guarantee, for example—that the Government are trying to incentivise people into work, while at the same time disincentivising businesses from taking on people. That is like pressing the accelerator while putting on the handbrake. The Government have given so many businesses a reason to say no. The NICs increase, the business rates increase, the minimum wage increase and the red tape in the Employment Rights Act are a toxic concoction for our businesses, and are having a devastating effect.

Let me take the examples of the café in Burbage, the restaurant in Barwell and Earl Shilton or even the gym in Hinckley. They have had the jobs tax. They have had the minimum wage go up. They have had employment red tape added. They have had business support changed and taken away. They have had business rates go up. They have had their energy bills go up—there was no support in the Budget for that. Is it any wonder that the ONS has said that from October 2026, some 16% fewer hospitality businesses have been created? Across the entire economy, business creation is down by 3.5%.

Let us turn to the wider argument about the environment. As my constituency neighbour, my hon. Friend the Member for Mid Leicestershire (Mr Bedford), has said, business confidence has been down for seven consecutive negative quarters. Businesses are losing the confidence to say yes. Why? Because of the employment costs. In a report by the Institute of Chartered Accountants in England and Wales, 53% of businesses cite labour costs and 41% cite taxation. That figure is double what it used to be.

Young people have been mentioned a lot. There are 981,000 people aged between 16 and 24 who are not in education, work or training. That is 30,000 more than last year. It is almost 1 million people, for the first time since 2013. That compares unfavourably with the likes of EU countries; for the first time ever, we are above the EU average.

Why does all this matter? The contribution from my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) from the Opposition Front Bench got me thinking. We can count the trees that have fallen, but we cannot see the forest that has never been planted. What do I mean by that? We can see the 12,000 job losses in Poundland. We know that Morrisons has had to lay off 5,000 people. Jaguar Land Rover has had to lay off 4,000 people. Claire’s on the high street has had to lay off 2,500 people. Whitbread, which runs Premier Inn, has had to lay off 3,800 people. We can also count the young people who are going abroad. We know that 250,000 people went, of whom two thirds were under the age of 35. But what about the businesses that never opened? What about the investment that was never made, the job that was never offered, or the apprenticeship that was never started?

The cost of this Labour Government’s “no” economy is so great. This is about the opportunity that has never been taken, and the future that we could have had. That is not recorded in any figures. No matter how hard this Government tell businesses to hire, they cannot force people to be hired, or force young people to stay. We cannot build a “yes” economy by giving businesses thousands of reasons to say no. That is why I support the motion.

18:04

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

It is a pleasure to take part in this debate, Madam Deputy Speaker.

I started my business at the end of my first year at university. By my third year, it was paying me more than I thought any employer sensibly would—that is, if anyone would be foolish enough to take me on in the first place—so I carried on building that business, with no business experience and no knowledge of how to do anything. I had to learn everything from scratch. Lloyds became my business bankers, and although they were supportive, the sight of the black horse on an envelope was enough to make my palms sweat from sheer stress. All it takes is for the bank to withdraw its support, and your whole business—all your hours, hopes and dreams—are gone.

The Minister is unusual in having some feeling for and understanding of private business. One of the problems is that Government Front Benchers in particular, and the parliamentary Labour party overall, do not. If you do not understand the dynamics of a business—the pressure and the reality of trying to build a business—you will not understand why people were outraged by the Chief Secretary to the Treasury’s remark about employers not being working people. That outrage is not fake; it is real and visceral. Their sense of disappointment in their Government is so strong. Many of them will have voted for this Government, based on their promise that growth would be the No. 1 thing, and that tax would not be put up. It sounded great in the manifesto. Those people feel betrayed by the lack of understanding and empathy for the fact that they are risking everything, including the home that they share with a spouse, who has to sign up as well. They have put all that on the line to create a business. That is the only way to create wealth. The state facilitates—through the rule of law, decent health services, education and the rest of it—but it does not deliver wealth. That can only come from the private sector, and that failure of understanding and personal experience has led to this desperate situation.

The previous Chancellor, the right hon. Member for Leeds West and Pudsey (Rachel Reeves), made a manifesto pledge that must have been made because some public relations person told Labour, the weekend before the election, that if it did not make that pledge, it might not win, and not to be complacent: “Let’s promise not to put tax up on working people.” The Government then broke that pledge by coming up with the clever wheeze of putting tax up on employers, with no understanding of what that would do.

The arithmetic is really depressing. The £26 billion hit to the economy meant that there was not £26 billion to spend on the NHS. It turned out that the increase did not even raise the £16 billion that, according to the OBR, it should have, once the cut in corporation profits and so on was accounted for. The Government then had to compensate the public sector, which brought the figure down to £11 billion or £10 billion. Then they said, “Oh, no, hospices and GPs are not technically part of this,” so they had to find more money. Single-digit billions is all that the Government got for putting a £26 billion or £27 billion brake on the economy. It is utterly insane.

It is noticeable that smaller and smaller numbers of Labour MPs want to come to the Chamber to defend that decision. I congratulate those who have, on their party loyalty if nothing else, but when I talk to Labour colleagues outside this Chamber—if I have a chat with them in the bar, for example—I struggle to find any Labour MP who says, “That was a really good idea. That was the best way of raising money.” They will defend the need to raise money to stick into the health service, repair the “dreadful 14 years” and so on. They buy into that still, but they do not think that putting tax up on employers was a clever way of raising money, because it did not raise very much, it was an enormous brake on the economy, and it has been devastating. It has been most devastating for young people.

[Alistair Strathern (Hitchin) (Lab)]

indicated dissent.

[Graham Stuart]

If the hon. Gentleman wants to intervene on me, I would be delighted to let him come in.

Yesterday, the deputy governor of the Bank of England said that one of the reasons why youth unemployment has gone up faster than unemployment generally—remember, because of that gigantic brake on the economy, overall unemployment has gone up by 250,000 under this Government—was the cost of employing young people, including because of the minimum wage, the jobs tax and so on.

[Dr Luke Evans]

Would my right hon. Friend care to comment on the state of the graduate market, too?

[Graham Stuart]

The situation is affecting all young people, is it not? I have used this quote in the Chamber before, but it is worth repeating, even for the tiny number of Labour MPs who were prepared to come here, to vaguely try to support the Government. Ronald Reagan said about the left:

“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.”

Labour taxed it with a jobs tax; then it regulated it with the Employment Rights Act 2025 until it stopped moving. Then young people were not getting employed anymore. Labour said, “Yippee!” Labour MPs were literally going around the TV studios saying, “Look at us—there is a jobs guarantee.” They have taxed it; they have regulated it until no one is getting employed; and now they will say, “We will subsidise it.” They have absolutely no conception of how private enterprise works, or how the economy works. They are letting the country down, and they increasingly know it, albeit that they do not say so in the Chamber quite yet.

18:10

[Nigel Huddleston (Droitwich and Evesham) (Con)]

Two weeks ago, when I spoke in the Budget debate, I criticised the Government for deliberately increasing the cost of running a business and of hiring people, in the full knowledge that it would cause more unemployment. I said that it is constituents, including mine, who are paying the price for Labour’s economic failure with their jobs. What I did not realise at the time was quite how prescient those comments were. On Monday, one of the largest employers in my constituency, Kanes Foods, went into administration, with the loss of 662 jobs. That is 662 people who last week were paying national insurance and income tax, but who this week are on benefits. My thoughts are with every one of those employees and their families.

Many people may not know or have heard of Kanes Foods, but most of us will have consumed its packaged salads or stir fries, which were on sale in major supermarkets and especially in Asda. Let me be clear that the business had some difficulties, and the administrators have particularly highlighted challenges with a recent waste water treatment issue. Let us be in no doubt, however, that Government policies did not help. When margins are as tight as they are in food production and distribution, even a tiny increase in labour costs can turn a profitable business into a loss-making one.

When the Government whacked up the national living wage by way more than inflation, they added to businesses’ costs. When the Government increased employer national insurance, it added somewhere in the region of £700 or £800 to the cost of employing each and every worker. When a business has hundreds of employees, as Kanes did, that is hundreds of thousands of pounds of additional costs. When the Minister comes to the Dispatch Box in a few minutes’ time, I would like to see him at least acknowledge that the Government have played a part in large numbers of my constituents now being unemployed, and perhaps bring himself to say sorry.

I hold the Government at least in part responsible for the situation, but on a more positive note, I thank the local community for supporting those impacted by the closure of Kanes Foods. In particular, I thank Primafruit, which has already gone out of its way to offer jobs to some of those who lost their jobs, and other businesses are coming forward. I also thank Jobcentre Plus in Evesham, which I spoke to yesterday, which is providing support for impacted constituents and information on how they can claim for pay, holiday pay and redundancy pay. The administrators are also working on that.

I am also concerned about the knock-on impact on the supply chain—on suppliers to Kanes, and on those who are owed money by Kanes. I appeal to them to talk to the administrators. I am hopeful, as are the administrators, that somebody will come forward and buy some of Kanes’ business, or its site. We may be able to get something back and resurrect the business—once a vibrant local family business, right in the heart of the vale of Evesham—in some way, shape or form.

A broader issue, and a key theme in today’s debate, is that this Government simply do not respect people who run their own businesses. They do not consider them to be workers, and the Government overall do not seem to have respect for the private sector. They do not seem to get business. They do not understand basic things like cash flow. They do not have a grasp of even the most basic economic principles, but that is not a surprise; they are socialists. As the saying goes, if a socialist understood economics, they would not be a socialist.

Before entering Parliament, I spent 23 years in the private sector, and that amounts to more private sector experience than the Prime Minister, the Chancellor, the Business Secretary, the Home Secretary, the Foreign Secretary and the Housing Secretary have combined. In fact, it amounts to more private sector experience than is in 90% of the Cabinet, which is startling, but it probably goes some way to explaining why this Government are well on track to continue Labour’s unenviable record: every single Labour Government since the second world war has left office with unemployment higher than when they started. Let us contrast that with the Conservatives’ record in government, between 2010 and 2024, of helping to produce an environment in which 4 million jobs—800 jobs a day, on average—were created.

There is an alternative. There is a pro-business, Conservative alternative, articulated by the shadow Business Minister in her opening speech, and that is why I will wholeheartedly support the motion.

18:14

[Esther McVey (Tatton) (Con)]

Nothing highlights the fiscal failure of this Government more starkly than the plight of Poundland. The chain’s 600 stores and 12,000 workers sit on the verge of collapse, not because customers have walked away—they have not; sales grew by 6.7% in September—but because of the Government’s unaffordable tax rises, which make it impossible to run a business that works on slim profit margins. Those that work on slim profit margins keep prices down for customers. How ironic it is that a Government who preach about helping the least well-off and helping with the cost of living are forcing those firms out of business.

Business owners in my constituency are mystified by the damage that the Government have inflicted on businesses up and down the country. What I am asked by them most often is, “Do this Government not understand the harm that they are doing, or is it that they just do not care?” They have concluded that it is both. The Chief Secretary to the Treasury, the right hon. Member for Wycombe (Emma Reynolds), made sure of that when she said that employers were not working people—which, by the way, was a kick in the teeth for every employer in the country who is often at work before everyone else, and leaves work after everyone else. When the former Chancellor, the right hon. Member for Leeds West and Pudsey (Rachel Reeves), announced that she would raise business and employer-related taxes by over £50 billion by the end of the decade, she wanted money for Labour’s pet projects—benefits and net zero—and she did not care that they squeezed the life out of businesses. Labour did not care where that money came from. I asked the right hon. Lady on several occasions whether she expected the number of jobs to go up or down when she taxed them. She did not say. She did not know. She was shocked.

Labour does not seem to understand that you cannot tax your way to growth and you cannot spend your way out of debt. The consequences have been job losses and, combined with day one workers’ rights, fewer opportunities. The tax rate policy hit on family businesses was hard as well.

[Ben Maguire]

I have sat here for nearly an hour and a half, and I have not heard anything from Conservative Members about how they will address the elephant in the room: how to generate economic growth and rebuild trade relationships with our closest partners in the EU and elsewhere. Instead, we just hear criticism of the national insurance jobs tax. I completely agree with the right hon. Lady about that, but we are not hearing anything—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. This is a debate about employers, not about our relationship with the EU.

[Esther McVey]

When it comes to getting costs down for employers, I would start with energy. I welcome the Government’s—eventually—approving the drilling in Jackdaw, and they need to admit to doing the same in Rosebank and going further. They should look at what our neighbours in Norway have managed to do by drilling in their country.

Let me return to the subject of family businesses. The Government showed a complete lack of knowledge of family businesses and how they are run when they capped what would have been 100% tax relief for business properties and taxed the assets as they did so. They did not understand that the life of a business can be a couple of years—it may not last—or it can go on for generations. It does not end when the founder of the business dies; it goes on. The Government did not seem to have a clue about that; they showed complete disregard.

The other thing my constituents talk about is why the Government hate wealth creators. Why do they hate the wealthy? It must be—has to be—the politics of envy and jealousy. Frankie Dyer of Barbakan Delicatessen—one company in my constituency, but it could have be any of the 365 hospitality businesses there—sent an open letter to the Prime Minister before the Budget. She wanted help, particularly with national insurance contributions, which have had the worst impacts on her business, now costing her an extra £1,000 per employee. If someone has 50 or more employees, they will have no profit left at all, and they certainly cannot invest to grow their business.

Frankie said that her business is second-generation, and it is 62 years old. It is now facing severe financial pressures. Despite the business having an annual turnover exceeding £2.3 million and winning more than 10 awards for its products, soaring operational costs—energy bills, tax obligations and national insurance—mean that the business is now struggling to stay afloat and to pay its bills each week. She is calling on the Government to reduce national insurance contributions. She wants to employ more young people, as does the whole of the hospitality sector. People in the industry want VAT, which those on the Labour Benches led them to believe would be reduced, to be reduced to 13%, and they want the charge on employment—the tax on jobs—to be reduced. The Government should reduce national insurance contributions.

18:21

[Rebecca Smith (South West Devon) (Con)]

The Government are quick to lecture Conservative Members about how to care for the most vulnerable, but at the very moment that Ministers say they want more people getting into work—as we have heard time and again this afternoon—they have increased the cost of employment. We all know that work is the best form of welfare, and Labour’s job tax is shooting the Government in the foot.

Time and again, local businesses tell me that they can no longer afford to take on apprenticeships. The double whammy of higher employer national insurance contributions and the increase to the minimum wage has simply become too much to bear.

[Gareth Snell]

The Conservatives have made the argument that they would like to see a reduction in national insurance. Will the hon. Lady spell out, in pounds and pence, by how much the Tory party would like to see the minimum wage cut to achieve the outcomes that she is suggesting?

[Rebecca Smith]

I thank the hon. Member for his question, but many questions of that nature have not been answered this afternoon. That is not what I am here to talk about. I am here to talk about the fact that businesses are currently dealing with this situation. What happens in the future is irrelevant; we are talking about what is happening while this Government are in power.

We know that by next year the annual cost of employing a full-time worker on the minimum wage will have increased by more than £4,000 since 2024—a whopping 31% increase in just three years.

[Gareth Snell]

rose—

[Jayne Kirkham]

rose—

[Rebecca Smith]

I will continue.

It is little wonder that job opportunities have shrivelled up under Labour, as has been pointed out by Members on the Government Benches. Vacancies fell by 21,000 between July and September this year, and as we have heard, small firms are being hit the hardest. To get our economy moving again, the Conservatives would halve employer national insurance contributions for under-25s. We would help young people get a foot on the ladder by backing the businesses that are prepared to give them that first opportunity.

Madam Deputy Speaker, you might be pleased to hear that there are more than 3,700 small and medium-sized enterprises in South West Devon, much like in Cornwall, which has been mentioned already. The south-west is home to many SMEs. Each one represents somebody who took a risk, invested their savings, employed local people and worked many long hours to build something of their own. In fact, that was my own experience. My dad regularly went out to work before I had even had breakfast, then came home and fell asleep—I never got a story or anything like that. He was out working six days a week, running his small business. When he was asleep, he was worrying about how the business was going to survive.

For many sole traders and small business owners, there is no guaranteed safety net if their business fails. If they have no public sector pension waiting for them at retirement, they are in an even more precarious position. I was therefore genuinely astounded when a Labour Minister had the audacity to claim that employers are not working people. The employers I know work incredibly hard. They are, as we have heard many times today, the ones opening up before dawn and locking up long after everyone else has gone home. They are the ones managing staff, cash flow and contracts. They bear the ultimate responsibility when things go wrong. When a business goes under, the employees may be able to move on to another job—although given the examples this afternoon, that is perhaps less of a possibility—but for many business owners, it is not that simple. They are losing something they have devoted years of hard work to building.

The Labour Government seem to forget that 99% of businesses in the UK are small and medium-sized enterprises, meaning that they have fewer than 250 employees. Saddled with ever higher costs, these businesses are now faced with difficult choices to raise prices, cut trading hours or make redundancies. Indeed, one local café owner told me that they have been forced to cut back deliberately on younger staff to protect the jobs of their employees who have mortgages and rent to pay. Added to that, they breed poultry, and they have had to increase the mid-year price of chickens, which will go on and lay eggs for people, for the first time in 18 years, which is driven by rising prices of animal feed, gas and fuel.

One local electrician from Plympton has told me how he regularly sees about 10 other businesses at the wholesaler each morning. There was a time when the majority of them had an apprentice, but now it is just him, and he has one only because it is his son, so it is in his interest to keep the business going. Ministers seem to have forgotten that employers pay the apprentice when they are at college as well as when they are at work, and the costs are just too high.

I have 670 construction businesses in my constituency, and one of them used to participate in an innovative scheme to support recovering addicts back into work. It partnered with well-loved Shekinah, a Plymouth homelessness charity, which provides employment support for people undergoing treatment for drug or alcohol misuse. These people would work for the company on a flexible basis, starting at a few days per week and building up gradually. After a few months, the workers would go on to gain full-time employment with other businesses. However, the company’s founders, Aaron and Sarah, say that it is impossible to continue offering this scheme due to the increased labour costs. As Aaron has said:

“We are so sad about this, as it is something that we feel is vital. Everyone needs a second chance and the chance for work and purpose in life.”

I believe that that is a sad indictment of Labour’s damaging policies.

The couple have also made the difficult decision to stop taking on apprentices. The business simply cannot afford it, despite being regularly approached by local colleges. Aaron told me that the total employment cost per day for a 21-year-old with no experience is now over £100, but for twice the cost he could recruit and employ an experienced tradesperson, who would be three or four times more productive from day one and require no supervision.

Despite the changes at the top table, this is the same old Labour, with more taxes and higher costs. If the Government are serious about helping people off welfare, they should stop making it harder to hire them. Labour’s answer is to punish employers. Ours is to create more opportunities and more apprenticeships, and get more people into work.

18:27

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

When Labour campaigners knocked on doors at the last general election, they made a promise—a promise that they would not raise taxes on working people and that they would not increase national insurance—and people put their trust in them. Today, however, the shutters are coming down on our high streets, young people cannot get a foot on the ladder and the business owners, who were told that they had nothing to fear from this Labour Government, are now paying the price for that broken promise. Let no one pretend that this is a debate about abstract tax rates; it is about jobs, the future of our high streets and whether the commitments that this Labour Government made to the electorate carry any weight at all.

Labour let the mask slip when the Chief Secretary to the Treasury said that employers are not working people. What an absolute load of rubbish. Of course, employers are working people—the café owner who starts work before dawn, the farmer who employs staff from the local community, or the pub landlord who has gone without their own salary to keep their staff in work. Each of them are working people, and each of them have been asked to pay more by this Labour Government, who promised that they would not.

On broken promises and the rising cost of employment, Labour’s manifesto stated that it would not increase national insurance, yet in its first Budget the Government increased employer national insurance from 13.8% to 15% and cut the threshold at which it is paid from £9,100 to £5,000. The thresholds actively hurt part-time and lower-paid roles, which are precisely the jobs on which many young people depend. Ministers claim that this is not a tax on businesses, but it absolutely is a tax on businesses and working people. That has been seen throughout this debate. Then there is the increase to the minimum wage, which again stifled business growth. And that is before we look at the challenge of the Employment Rights Act 2025. Under this Labour Government we have seen higher taxes, higher costs and more red tape. Far from being the party of business, Labour is showing itself to be actively discouraging growth and killing the businesses up and down the country that are the very backbone of our economy.

Let me turn to my own constituency. We have held many roundtables with many local businesses, and I thank Sarah Brookfield-Almond and Ryan Troy from the Ilkley and Keighley business improvement districts for helping me to organise them. The businesses who came along were retailers, hospitality businesses and independent traders. Employers of every size were present—people who have spent years building up their businesses and who give work to local people across my constituency. Their message was consistent and stark: they described the relentless pressure of the increase in employer national insurance contributions, the minimum wage increase with no support to meet their needs, the business rates that bear down on them and the uncertainty of the Employment Rights Act hitting their businesses hard. These businesses are not asking for special treatment; they are asking for a Government who understand and want to support them.

One fantastic local business which has grown and expanded is Three Little Birds Bakery, owned and run by Bec Severs. She has a shop in Keighley, and recently opened one in Ilkley. Bec has been very clear about her views on the Labour Government’s most recent Budget. Taking to Facebook, she said:

“This budget does nothing to help”.

On the latest minimum wage rises, she says there is “absolutely no support” for how she will now have to pay that money to her employees. That has been heard loud and clear by the Turkey Inn, which has now reduced its working hours from seven days a week to four days a week on the back of this Government. Then we look at that hospice sector, which is being hit very hard, such as Sue Ryder Manorlands hospice in my constituency, by the rise in employer national insurance.

Those people are not think-tanks. They are not economic advisers to this Government. They are hard-working people in my constituency who are being impacted heavily by the choices of this Labour Government. This Labour Government are not on the side of hard-working people and my constituents are feeling the brunt of it.

18:32

[Sarah Bool (South Northamptonshire) (Con)]

Fewer sentences have caused such shock and reaction than when the Chief Secretary to the Treasury said that employers were not working people. I feel so saddened for all those small business owners across my constituency who have worked so unbelievably hard and sacrificed so much to give so many other people the opportunity of work. I think about Magda, who runs the Omorfi Nails and Beauty salon in Towcester. She does not only employ staff; while also bringing up her family, she is studying medical practice so that she can help people with diabetes—a matter close to my heart—through podiatry. It is an insult to say that she is not hard working and a working person. No matter how many examples we give, the Government simply will not listen. I wish they would engage. The voices from all the stories told here today are those of actual people from our constituencies who are living and breathing this. I implore the Government to take this issue seriously.

At the very beginning of the debate, the Minister talked of breathing space. I think the only “Breathing Space” people recognise is the song by the Pet Shop Boys, but I think their version might be slightly more popular than the Chancellor’s. We ask businesses every single day to take risks. The contract must be that if we ask them to take a risk, we give them the confidence to be able to operate their businesses, not the shifting sands constantly coming from this Government and their Budgets. Actions ultimately speak far louder than words, because hope does not pay the bills, hope does not put food on the table and hope does not heat our homes.

As we have identified, the people suffering most are our young people. We have heard many examples of people who are struggling to get opportunities and jobs. One of the pubs in my constituency—I have just run a pub of the year competition—said that it put up an advert for just a couple of hours of work at the weekend for those under 18. It received 200 applications for just one job. There are so many young people who are absolutely desperate to get into the working environment, but they cannot because those businesses cannot give them the opportunity. That is a travesty that has happened on this Government’s watch.

Nearly 1 million young people are NEETs, with 60% of those being economically inactive—not just not in work but not even looking for it. There is a much deeper issue of youth detachment from the market, which hurts young people’s confidence, health and ability to earn an income, and it hurts the taxpayer, because it is incredibly hard for us to give young people opportunities if those jobs do not exist. That is why I welcome the Conservative proposal to halve national insurance contributions for the under-25s to get them into work.

I will flag—as I did in justice questions this week—that the Employment Rights Act has introduced many powers that the Government laud, but with them we are going to start to see an increasing amount of red tape. With that red tape comes an issue with employment tribunals. When people are going through a dispute with an employer, one of the most difficult times of their lives, they are going to discover that there is a huge backlog for tribunals. There are already over 70,000 open single cases. In reducing the time from two years down to six months to bring a tribunal claim, the Act is going to increase the workload and the backlog in the courts by a third. That is madness.

We are slowing down the economy with everything we do. The Employment Rights Act is exactly as the Conservatives describe: it is an unemployment rights Act. It is burdening our businesses and slowing down opportunities, but the Government and the Labour Benches just sit and stare. That is the problem: they are sitting and staring while hard-working people out there are trying to make a living. The Government need to start listening.

My poor farmers were looking to the Budget for a little bit of help and assistance—88% of my constituency is agricultural land—but they are not getting any. Another big issue that we have to focus on are the massive issues in the pig industry. I will save that discussion for another day, but the industry is desperate for some support from the Government. I implore the Government one more time: please, do listen to the Opposition Benches. The Government may not want to on political grounds, but we are literally just voicing the concerns of our constituents. Please listen.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

18:36

[Peter Fortune (Bromley and Biggin Hill) (Con)]

It is a pleasure to close this debate, and I thank every Member who has spoken across the House. That includes the hon. Members for Loughborough (Dr Sandher), for Truro and Falmouth (Jayne Kirkham), for East Wiltshire (Danny Kruger), and for Norwich North (Alice Macdonald)—Norwich is a fine city.

On the Opposition Benches, I thank my right hon. Friend the Member for Witham (Priti Patel), who took us on an excellent canter through the businesses in her constituency. I thank my right hon. Friend the Member for Daventry (Stuart Andrew), and my hon. Friends the Members for Central Suffolk and North Ipswich (Patrick Spencer) and for Mid Leicestershire (Mr Bedford). My hon. Friend the Member for Hinckley and Bosworth (Dr Evans) talked about the importance of the word “yes”, and I will hold him to that in future. I thank my hon. Friends the Members for Hamble Valley (Paul Holmes), for South West Devon (Rebecca Smith), for Keighley and Ilkley (Robbie Moore), and for South Northamptonshire (Sarah Bool), and my right hon. Friend the Member for Tatton (Esther McVey).

My right hon. Friend the Member for Beverley and Holderness (Graham Stuart) gave an excellent speech about his business sense; he also talked about his sweaty palms, which explains some of his bowling when we are playing cricket. The most important contribution was from my hon. Friend the Member for Droitwich and Evesham (Nigel Huddleston), who talked about the reality of businesses failing, and the 662 jobs that have been lost due to the squeezed margins at Kanes Foods—we wish them all well.

If this debate comes down to anything, it is two simple truths: if we tax growth, we get less growth; if we tax jobs, we get fewer jobs. That is not ideology; it is the exact logic that Government will use when they tax things such as tobacco. The difference is that the Conservatives would very much like to see more jobs.

Let me be clear what I am talking about: employers are the café owner who opens at 6 am; the scaffolder out in the rain; the builder, the hairdresser, the gym owner and the hotelier; and the pub landlord, who on any given night is also the cleaner, the accountant and, when needed, the bouncer. They take the risk, they put their own house on the line, and then they do something remarkable: they give other people a job. They are the backbone of our high streets and our economy and we value them.

In Bromley and Biggin Hill, I see them every week, in places such as The Oak pub in Bickley, Tip Top key cutters in Hayes, or the Spitfire Café in Biggin Hill. They are not asking for special favours; they are asking not to be charged more for doing the very thing that the Government say they want them to do, which is to give someone a job.

That brings me to the remarks of the Chief Secretary to the Treasury on the first of this month, when she told GB news:

“I don’t think employers are working people. They are companies.”

I do not say this to be unkind. Every one of us has said something careless over the weekend that we have then spent Monday morning trying to explain—I certainly have. By the next day, it had fallen to the Science Minister to tell LBC that employers are working people. I have always believed in following the science, and I hope the Treasury will, too.

I have met a great many companies in Bromley and Biggin Hill since then, and some were greatly distressed and hurt by that statement. These are hard-working people who felt undervalued, disregarded or that their work was being disrespected; some were angry; and most of them have a first name. They open early, close when the last customer leaves, and do the VAT return at the kitchen table on a Sunday night. If that is not working, I would love to know what is.

This matters because of a promise. Before the election, Labour said in its manifesto that it would not increase taxes on working people, and that is why it would not increase national insurance. Businesses up and down the country were told again and again that Labour was on their side. Then came the first Budget, when the rate of employer national insurance went up from 13.8% to 15% and the threshold at which employers started paying fell from £9,100 to £5,000, bringing in around £25 billion a year with a tax on every job in the country, paid before a single new person is taken on. The only way for Labour to square its promise with that tax was to decide after the election that the people paying it no longer count as working people. With respect, that is not a definition; it is an escape hatch.

We warned that this would happen, as did the OBR, which said at the time that the rise would mean higher prices and lower wages, that around 940,000 employers would lose out, and that the average employer losing out would face a bill around £26,000 higher. The number of people on payrolls has fallen for most of the past two years. Youth unemployment is at its highest in more than a decade. Earlier this year, the number of young people neither earning nor learning passed 1 million for the first time in more than 12 years. That should trouble every one of us. When a Government put up the cost of hiring, the first person not hired is the one without experience. That is no judgment on them; it is just the arithmetic.

Here is the part I find hardest to square: this tax was sold as a tax on businesses, not on working people. However, the OBR’s own assumption is that over time, around three quarters of the cost—76%—is passed on to employees through lower real wages. This means that the tax that was not on working people turns out to be paid mostly by working people—it is just done behind a curtain of accountancy and in a way that never appears clearly on the front of the payslip. Instead, it appears in the pay rise that did not happen, the extra shift that was not offered and the job that was never advertised. Those are the hardest losses to see and the easiest for Government to overlook.

It is not only the high street. Think about who else is an employer: the GP practice, which is a private partnership and pays employer national insurance like anyone else; the care home; the nursery; the community pharmacy; and the local hospice, which is a charity, raising money one fun run at a time. I recently visited Demelza hospice, a remarkable charity that helps life-limited children and their families. The compassion staff bring to their roles was matched only by the frustration of rising employment costs, putting specialist staff at risk.

When this tax was announced, many hospices were surprised to find that they were caught by it. They had heard that the NHS would be protected, and assumed that that meant them. It did not. Every pound a hospice spends on national insurance is a pound raised at a cake sale that never reaches a patient.

Then there are the businesses I speak for in my own brief as shadow Minister: our fantastic hard-working manufacturers—firms that compete with the whole world on thin margins and that often have to train skilled people from scratch. Raising the cost of employing someone means raising the cost of training them, too. That is the last thing a country that wants to make things again should be doing.

Bill Perera, who employs more than 700 people in Bromley through his McDonald’s franchises, said that

“while individual measures may be manageable in isolation, their combined effect is placing a strain on investment, recruitment and long-term growth.”

National insurance, the wage bill, energy costs and new employment rules—each one on its own looks manageable, but together they decide whether a business takes on one more person.

The new Prime Minister and new Chancellor promised breathing space. It is a lovely phrase—I will give them that. But for the employer staring at a higher national insurance bill, a higher wage bill and a higher energy bill, it feels less like breathing space and more like they are holding their breath. A new Prime Minister was a chance for a new start; instead, we have simply put a new cover on an old book.

I want to be fair to the Government, because I know what Labour Members will say, and it deserves an answer. They will say that they inherited difficult public finances. Every new Government say that. I will not pretend that the choices were easy, but choosing how to fix things is the whole job of Government. They chose to put a tax on jobs after promising not to. At the very moment that the economy needed more people in work, that was the Labour party’s choice. They will say that they protected payslips—that employee national insurance, income tax and VAT were left alone. But as I have said, the OBR experts say that the workers carry the cost anyway. The Government can protect the front of the payslip and still shrink what is written on it.

Labour Members will say that we raised national insurance ourselves in 2022. We did. We listened and reversed that within months, because it was the wrong call at the wrong time. There is no shame in changing your mind when the evidence changes. I say gently to the Government that it is one of the few things in politics that it is never too late to do.

[Paul Holmes]

Does the shadow Minister agree that the key difference between our increase and the Government’s increase is that in their manifesto to win the general election in 2024, they said that they categorically would not raise national insurance?

[Peter Fortune]

I thank my hon. Friend for his intervention. Saying one thing and doing another is something that we are getting very used to from this Government.

What would we do? We would halve employer national insurance for workers aged 21 to 24, taking the main rate down to 7.5%. We are not inventing a new idea here. Under-21s and apprentices under 25 already pay no national insurance on most earnings. That was a Conservative reform and this Government have kept it, so I take it that they agree that it works. All we are asking is why that help should stop on someone’s 21st birthday, just as so many are leaving university or college and looking for a proper start. Nor is it only a Conservative idea. The cross-party Work and Pensions Committee recommended in July that the Government extend the relief to all under-25s. When a Committee with both Labour and Conservative Members agrees on something, it is usually worth a second look.

Most of us in this House remember our first job and the person who took a chance on us. Mine was at the South London Press in Streatham—though, to be fair, I think they regarded that as a mistake pretty sharpish. For a lot of young people, that first chance comes as a job in a café, shop, pub or hotel. Those are exactly the businesses that this tax hits hardest and that our plans would help most. On business rates, we would give retail, hospitality and leisure businesses full relief—up to £110,000 each—so that our high streets have genuine room to grow and hire. We look at the whole bill that businesses face—not one line of it—because that is how the person running a business has to look at it too.

Napoleon supposedly called us a nation of shopkeepers. I am sure he meant it as an insult, but as we know things did not go terribly well for poor old Boney after that, and I consider it a compliment—a strength, part of our industrious culture and something we can be proud of. The motion asks the House to agree with something that most of our constituents would think goes without saying: that the person who opens the shop, runs the pub or builds the extension and who pays the wages of the people working alongside them is a working person. If Members agree with that, they can say so tonight in the Lobby.

18:48

[The Parliamentary Under-Secretary of State for Business, Innovation, Science and Trade (Blair McDougall)]

It is a pleasure to respond to the debate with you in the Chair, Madam Deputy Speaker. I join other Members in paying tribute to the work that entrepreneurs do in our country—to the sacrifice, long hours and sleepless nights that have been referenced.

The right hon. Member for Beverley and Holderness (Graham Stuart) singled me out as being someone who has empathy with and an understanding of business. I do not know if that will result in him having to surrender his party card, or perhaps in me doing so, but I will take it in the spirit that it was intended. We absolutely understand the feeling of jeopardy that he talks about.

My hon. Friend the Member for Loughborough (Dr Sandher) spoke powerfully about the feeling of responsibility that employers have, including his parents, towards their workers. For all the disagreement that there will be in this debate about how we do it, our job is to make that just a little bit easier, because it can be an all-encompassing and, at times, lonely enterprise running a business.

I will endeavour to respond to as many points raised by right hon. and hon. Members around the Chamber as possible. Several made me hungry and reminded me that I skipped lunch earlier on today. The right hon. Member for Witham (Priti Patel) and my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham) referred to fantastic food businesses in their constituencies, and even the reference to the prawn sandwich offensive from the hon. Member for Central Suffolk and North Ipswich (Patrick Spencer) brought on that feeling.

I do, however, want to echo the remarks made by my right hon. Friend the Financial Secretary to the Treasury in his opening speech. The big macroeconomic picture for the UK is this: we were the joint fastest growing economy in the G7 in the first half of this year, the IMF has upgraded our growth for this year, and the IMF’s chief economist has called the UK the “stand out” economy for deficit reduction, with the lowest forecast deficit in the G7 by 2029.

[Esther McVey]

Will the Minister inform us how many businesses have gone to the wall since Labour came into government?

[Blair McDougall]

It has been a dreadful decade for businesses, and for small businesses in particular. As I said at the beginning, our job is to make it easier to invest and to ensure that we are cutting red tape and increasing access to finance. I will talk about that in a moment.

In the Budget, we took action to give the businesses that the right hon. Member for Tatton (Esther McVey) is concerned about and employers some breathing space. We continue to work on the long-term changes that are necessary to create good jobs and growth in every part of our country. As a result of that work, employment is up this year—it is higher than previously forecast in March—and, in fact, the UK has the third highest employment rate in the G7. Meanwhile, business investment—so often embarrassing under the previous Government—relative to the size of the economy remains at its highest level for a decade.

Of course, as Members have said, there are global headwinds from the conflict in the middle east. [Hon. Members: “Ah!”] Conservative Members say “Ah”, and they do not like to be reminded of that, because they were calling for us to take part in that conflict. People and employers are seeing the impact of that conflict in their bills. We know that there is more to do, but this is a country that is turning a corner.

With that, I turn to the points raised throughout the debate, starting with national insurance, which was raised by several hon. Members. The facts are these. Employer national insurance contributions are forecast to raise about £150 billion in 2026-27. That is a significant contribution to the funding of our public services. Why is that needed? Because we cannot have a strong NHS or strong public services without investing in them, investing in our country and rebuilding the crumbling infrastructure we inherited after 14 years of austerity.

[Stuart Andrew]

The national insurance rises are really affecting hospices: in some cases, 40% of their beds are closing. Where will those people go? They will go to the national health service. How does that help our public services?

[Blair McDougall]

We recognise that and, as was mentioned, we are providing additional resources throughout the NHS and hospices to help with that.

On relief for employers, hon. Members will know that the employment allowance was estimated to be worth £7.4 billion in 2025-26. That provides eligible employers with up to £10,500 a year towards their national insurance contribution bills.

That is obviously not the only help that we gave to businesses in the Budget. As my hon. Friend the Member for Norwich North (Alice Macdonald) noted, we have lifted tens of thousands of businesses out of business rates. Several hon. Members raised concerns about youth unemployment.

[Graham Stuart]

Will the Minister acknowledge, because he not only has the ear of business but is a very honest Member of this House, that, notwithstanding the talk about support for business and the 70,000 businesses that have been mentioned, overall the Budget raised the tax on business by another £2.2 billion, on top of the £66 billion that came in the two previous ones?

[Blair McDougall]

We asked business, and banks in particular, to pay a little more so that we could give people help with their energy bills. We have heard in the debate, once again, that the Conservative party opposes that and so opposes that additional support that people are getting with their energy bills this winter.

As has been said, no employer is paying national insurance contributions on under-21s up to a salary of £50,000 and similarly for apprentices who are under 25, which is a saving of around £6,700 at most for employers. We have doubled the employment allowance and ensured that 40% of companies do not pay national insurance contributions.

[Lincoln Jopp (Spelthorne) (Con)]

Has unemployment gone up or down on this Government’s watch, and what has caused it?

[Blair McDougall]

Unemployment is still lower than in comparable economies—[Interruption.] The hon. Gentleman asked the question, so I will answer. Employment is up and inactivity is down in this country. It is precisely because we are concerned about youth unemployment that we are introducing measures such as the £2,000 hiring payment for smaller employers to take on young people and the £3,000 jobs grant for those at risk of sliding into youth unemployment. As several hon. Members have noted, that is in stark contrast with the increase of a quarter of a million in youth unemployment and inactivity in the last few years of the Conservative Government.

[Dr Luke Evans]

rose—

[Paul Holmes]

rose—

[Blair McDougall]

I will give way to the hon. Member for Hamble Valley (Paul Holmes) for one last intervention and then I will make some progress.

[Paul Holmes]

The Minister has outlined the £2,000 payment to businesses. Does he think that it is best for a Government to administer that payment or to reduce taxation on businesses so that they can choose to employ younger people without that Minister getting in the way?

[Blair McDougall]

It is precisely because we recognise, as many right hon. and hon. Members have mentioned, that retail and hospitality give so many young people their first job that we are lifting so many of those businesses out of business rates and lowering the tax burden on those individuals.

I will follow the Prime Minister’s lead and note that we agree on a lot despite the debate across the House. We agree, as many hon. Members have said, that small businesses in particular are the backbone of our economy, we agree that more must be done to support business to employ people, and we agree that young people should be supported.

[Dr Evans]

rose—

[Blair McDougall]

I will make some progress.

We agree that young people should be supported into work. However, we disagree fundamentally on how to go about that. The hon. Member for South West Devon (Rebecca Smith) spoke about the minimum wage, but told the House that she did not want to talk about what might happen in the future. I think I know why that is. It is because in a report from the Prosperity Institute, the shadow Business Minister in the other place committed to freezing the minimum wage for five years. That is a real-terms cut of 12% for the poorest workers that will not just take £8,900 out of the pockets of the poorest workers in the country, but take that money out of the tills of businesses in their communities.

The way to fix the issue we have with youth unemployment is to increase the number of apprenticeships, increase the flexibility of those apprenticeships, invest in the growth sectors that will create the well-paid jobs of the future, ensure that those young unemployed people are more attractive to potential employers and take all the other measures that we are taking to invest in business.

The Tory plan for those young people who have been rejected over and over again and who are close to being broken by the experience of being let down by the system is to punish them for that. We will not do that. The Conservatives offer only insecure hours, cuts to incomes and poverty pay. That did not work for 14 years, it did not work for employers and it will not work now.

Question put.

18:59

Division 121

Question accordingly negatived.

Ayes: 105

Noes: 293