Taxes

Caroline Dinenage Excerpts

Wednesday 12th November 2025 Commons Chamber

[Dame Caroline Dinenage (Gosport) (Con)]

I apologise—I may be a little hard of hearing. Could I ask the hon. Member once more for a quick yes-or-no answer? Would he vote to get rid of the two-child benefit cap?

[Sam Rushworth]

That is not a vote before the House right now, but I have been pretty clear in my answer. I never agreed with the cap when the Conservatives introduced it. They did terrible things that put too many children in my community into poverty. The Government are addressing child poverty in multiple ways, including through the welfare system. However, children are not poor just because we do not have good enough benefits. In Bishop Auckland, people do not want better benefits; they want better jobs, a stronger local economy, better infrastructure, better education and a better health service. All that will require public spending. If I may say so—[Interruption.] Do you want to make an intervention?

--- Later in debate ---

[Dame Caroline Dinenage (Gosport) (Con)]

It is a pleasure to follow the hon. Member for Harlow (Chris Vince). I thank him for cantering us through his mother’s career at HMRC—on behalf of the whole House, I thank her for her service, and I ask him to pass on our very best wishes.

Madam Deputy Speaker, as a near neighbour to my constituency, I am sure that you will know that the history of Gosport has always been umbilically linked to the fortunes of our armed forces. The town was effectively nationalised by the Royal Navy two or three centuries ago. As the size and structure of our defence base changed, with that, over many decades, went many of the jobs and livelihoods that depended on it. Job density on the Gosport peninsula is almost 50% lower than in the wider south-east region, which is an issue that I have spent 15 years as an MP trying to help drive solutions for. There is nothing more important to an area like mine than maintaining the conditions that give businesses the confidence to invest, employ and grow, but the overwhelming foundation stone for growth, and for the innovation and investment that will solve the productivity puzzle that the UK is facing, is that businesses need to be able to make long-term decisions and plan for the future.

Employers in my constituency, both large ones like StandardAero, QinetiQ and STS Defence and the numerous small and growing businesses, need to be able to rely on stable borrowing costs and to know that the cost of materials will not rise unsustainably in order to have the confidence to take on new staff and start apprenticeship programmes. Investors like those who took the plunge and moved to the Solent enterprise zone at Daedalus airfield, creating hundreds of local jobs in the process, need to know that if they put their capital at risk by investing, the Government will not reach in on a whim to take a large slice of any reward. The fact is that employer tax rises put all of that at risk. That is what we have seen since last year’s Budget and why local people are nervous about this year’s Budget too.

Tax fulfils two purposes: one, which the Chancellor knows well, is to raise revenue for the Government, but I am not convinced that she has given much thought to the other, which is influencing changes in behaviour. The pessimism and growth downgrades in our economy over the past year have provided hard and fast evidence that changes to the tax regime are at least as powerful at achieving the second goal as the first. Some £40 billion of tax rises very effectively mowed down those green shoots of post-pandemic recovery, but worse than that, they incentivised businesses in my Gosport constituency to make decisions that run in direct contrast to what our area needs. There are fewer employment opportunities and fewer chances for young people to build good-quality careers.

I have heard worrying stories about the impact that the employer national insurance rises announced in last year’s Budget of unintended consequences have had in my constituency. The common thread is that the national insurance change hit the businesses for which labour is the highest cost hardest, putting services that my constituents rely on every day at risk. A fifth of everyone who works in Gosport works in caring, leisure and other service occupations. Those are by far the biggest employment sectors, and account for almost three times the average for England, so my constituents felt the Chancellor’s national insurance rises the hardest.

[Dr Luke Evans]

My hon. Friend is making an excellent speech about what happened a year ago. Another problem is that all the kite flying in the Treasury at the moment means that people are now making decisions to withdraw their pensions schemes, not employ people and not invest. Is my hon. Friend seeing that in her constituency, as I am in mine? All that kite flying has real-world consequences, even before we get to the Budget in three weeks’ time.

[Dame Caroline Dinenage]

My hon. Friend is 100% right to point out that people are making knee-jerk decisions because of fear about what the Chancellor will do, and they are delaying business decisions that they might otherwise have made that would have brought growth to my constituency.

My constituency lies on the south coast. The stunning Solent coastline may mean that Lee-on-the-Solent, Stubbington and the wider Gosport area is a wonderful place to retire. As I often repeat, we have the largest proportion by percentage of veterans of any place in the United Kingdom, but that requires adequate health and care provision. However, care providers, whose main cost is personnel, are struggling.

The Nuffield Trust has calculated that the national insurance rise costs England’s 18,000 independent adult social care providers £940 million, which has severe consequences for the elderly and vulnerable people who need the service. One local provider, who operates a 44-bed care home offering residential care for the frail elderly and those living with dementia, suggested that they had no choice but to pass those national insurance rises directly on to their customers. As a result, one constituent told me that he was seeing an increase of nearly 8% in his brother’s care home fees.

At the other end of the spectrum, Hopscotch nursery, which looks after 1,900 children across our local region and provides fantastic care and support, told me that the jobs tax added £1 million to its overheads—that is a 10% increase, which means a 10% fee increase is being passed on to many of my constituents. Working parents need childcare, so working parents have to pay. What is the impact? Reduced household spending and a slower economy or, even worse, a parent dropping out of work to look after the children. Perhaps that is why we have seen growth flatline, borrowing costs rise and, this week, unemployment reach its highest level since lockdown.

On 26 November, will the Chancellor demonstrate that she has learned the lesson that tax rises that hit employers’ bottom lines have serious implications for our businesses, communities and economy? I would be shocked if she has not, but we are still hearing reports that hiring costs are going to increase yet again. None of the hospitality and retail businesses in my constituency will welcome that. After all, the sector has already seen 80,000 job losses.

I am particularly concerned for young people. A recent Telegraph article said that young people were giving up on Gosport because of the lack of employment opportunities. For many, a job in hospitality or retail is the first step on the route into work. Businesses in the sectors that take on so many young people across my constituency, from adult social care and childcare to hair and beauty, are telling me that they are not taking on more staff as a result of the Chancellor’s changes to national insurance contributions. In fact, the National Hair and Beauty Federation told me that, at the current rate of decline, there would be no new apprenticeships in that sector at all within the next few years. It is not a coincidence that this year my constituency saw the number of young people between 18 and 24 years old claiming unemployment-related benefits rise by 31%. So when the Government conduct their new independent review into why this is happening, they might want to start by looking in their own backyard.

When the Chancellor is considering the vast array of tax measures at her disposal to fill the £30 billion black hole, will she consider the impact on the employment of young people of any proposals to further penalise retail and hospitality businesses? She might even consider taking a Conservative growth policy, and announce that business rates will be scrapped for high street businesses such as pubs.

It is not only businesses that support growth. Across Gosport, Lee-on-the-Solent, Stubbington and Hill Head, many people dedicate their own time to volunteering, towards supporting sports clubs, charities, health forums and community organisations. Those groups are the backbones of our communities, but like any organisation they cost money to run. The Culture, Media, and Sport Committee, which I chair, has heard how increasing costs have impacted the ability of charities and voluntary organisations to deliver the services that local people rely on and love.

We often forget that charities face employment costs too. Despite 83% of charities recording an increase in demand for their services over the past 12 months, last year’s tax hike added a combined £1.4 billion to the wage bills of more than 44,000 charities. A huge amount of pessimism is growing in the sector. A third of charities are reducing their workforce as a result of the tax rises, and a similar number think that the sector is in an unhealthy space.

The increase might be easier to shoulder were it not for the parallel drop-off in funding streams. Tax rises mean less money for charitable giving, especially if the Chancellor is going to go after pensioners with her increase in income tax. I cannot stress enough how much tax rises have hurt and will continue to hurt the charitable sector, and the unintended consequences are huge. We have less charitable giving and fewer hours volunteered, as people work longer and salary sacrifice schemes are raided, while increased costs threaten jobs at national charities such as Oxfam, Scope and the National Trust, which face the loss of £50 million through restrictions on their ability to claim gift aid.

Sports clubs do a fantastic job of alleviating pressure on charities and the NHS, but they can also reduce the burden on the Chancellor to pay out-of-work benefits. On current estimates, spending on working-age disability and incapacity benefits is expected to increase by £25 billion to more than £70 billion by the end of this Parliament, and an estimated 148.9 million working days were lost due to sickness or injury in 2024. Physical activity can play such a vital role in the prevention of so many conditions, and so many of our sports clubs lean in, but the tax rises in last year’s Budget mean that the sector is in a precarious position and unable to meet its potential. The facilities that teams use to practise, play and socialise need staff as well as revenue streams. Tax undermines the work being done by our sports clubs to increase the take-up of physical exercise, reduce the burden on the NHS and keep our communities together.

We do not yet know what the Chancellor plans to announce at the Budget in a couple of weeks’ time. Last year we saw £40 billion-worth of tax rises. It was the highest tax-raising Budget in a generation, and I know that many people in my constituency were shocked. That was not what the Government promised when they were in opposition or at the general election. We now fear that the Chancellor will go big on tax rises, despite categorically saying last year that she had wiped the slate clean and would not be coming back for more. My concern for my constituents is that they have seen no tangible benefit from last year’s Budget, just pain, and they will undoubtedly shoulder the burden whenever new measures are announced.