Finance (No. 2) Bill

Dave Doogan Excerpts

2nd reading
Tuesday 16th December 2025 Commons Chamber

[Dan Tomlinson]

Thank you, Madam Deputy Speaker. I look forward to contributions from Members on both sides of the House on the various measures in the Finance Bill. On the point that the hon. Member raises, this Government considered really carefully the reforms that were announced at the Budget last year, and have put forward changes to agricultural property relief and business property relief. There is an additional £1 million allowance—an allowance that was made transferable between spouses in this Budget—and also a 50% discount on the inheritance tax rate, so tax on that higher allowance will be at 20%, rather than 40%.

As well as making changes to lift children out of poverty, this Government have chosen to increase the national living wage from 1 April 2026 by 4.1% to £12.71 an hour, and to increase the national minimum wage for 18 to 20-year-olds to £10.85.

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

Will the Minister give way?

[Dan Tomlinson]

I happily give way—I look forward to it.

[Dave Doogan]

The Minister will know that for the vast majority of employees in Scotland, the increase in the national living wage is redundant, because it is less than the Scottish living wage. He talks about the things that the Government increased in the Budget; was it their intention to increase unemployment by 25% as a result of their jobs tax?

[Dan Tomlinson]

This Budget will lift thousands of children in Scotland out of poverty, because of decisions that we have made. This Government have made £10 billion more spending available to the Scottish Government, yet we still see public services failing up and down Scotland; the NHS is not working as well as it should north of the border.

--- Later in debate ---

[Sir Mel Stride]

My right hon. Friend is absolutely right. It shows a complete lack of understanding of business, and it reflects the lack of true business experience on the Government Front Bench. It also goes right to the core of the difference in principles and beliefs between the two principal parties in this Chamber. We on the Opposition Benches believe that if someone works hard, saves hard and has something left at the end of their life, they should be allowed—because they love those who they wish to look after in their absence—to pass on that inheritance without the taxman taking a huge, disproportionate amount of what they have accumulated. All the Labour party believes in is mounding up ever more debt in a statist world in which that debt is to be passed on to future generations to be paid back.

We believe in supporting the little platoon, as Burke put it—the families that together form a mighty army. We believe in personal responsibility and for that to be rewarded.

[Dave Doogan]

rose—

[Alison Taylor (Paisley and Renfrewshire North) (Lab)]

rose—

[Sir Mel Stride]

I will give way to the hon. Gentleman and then I will come to the hon. Lady.

[Dave Doogan]

Does the shadow Chancellor bristle like I do and like my constituents in Angus and Perthshire Glens who are engaged in farm businesses and agribusiness more generally when they hear Ministers make a false equivalence in talking about the generous rates of agricultural property relief compared with the wider economy and how long people will get to pay? They are making a false equivalence between someone inheriting their mother’s house after her death and transferring the family farm from one generation to the next. They are completely different propositions, are they not?

[Sir Mel Stride]

As I have to say so often following his interventions, the hon. Gentleman is absolutely right. There is a huge difference between the position of a dynamic, growing organism of a company and the other situation that he has described. Loading up these taxes on the death of the principal owner or one of the significant owners of a business means loading it up with uncertainty, and quite conceivably the business must be broken up as a consequence.

--- Later in debate ---

[Graham Stuart]

Yes, indeed—and they did. We have seen it. All the evidence is there, and it is happening now, regardless of the argument from Ministers as to what percentage of farms will be affected. We can see it in all the stats. Those stats are available—particularly, I would have hoped, to Treasury Ministers to find out what the real-world impact of this policy is. The real-world impact is that we have seen a drop in investment in the farming industry. That is a disaster.

It may be that the hon. Member for Penrith and Solway is standing alone, but let us look at the enthusiasm on the Labour Benches for the Second Reading of this major Finance Bill that is supposed to be doing such good for the country. There are more than 400 Labour Members, but they are not exactly here to cheer it on. I think they—and, I hope, the Minister—are realising just how counterproductive this is. The one thought I will try to implant above all is those numbers, which mean that it is absurd.

Madam Deputy Speaker, imagine generally being a business owner today, and not necessarily in farming. You hike your way up the mountain to get to success, wading through an eternal shower of tax rises and hacking your way through a jungle of red tape. Then, on your death bed, you are met not first by the grim reaper but by the Chancellor, armed with one final sting: a double tax bill for your children. This is the reality facing family businesses: if the Government cut business property relief next year, that will lead to a double tax bill.

I asked the Exchequer Secretary to the Treasury, who opened the debate, to comment on how that double taxation works. He was unable to respond off the top of his head to my specific numbers, which is entirely understandable, but I hope that the Economic Secretary to the Treasury, armed and perhaps refreshed by the brilliant people in the Box behind her, will be able in summing up to address the specifics of the tax reality for a business faced by the double tax bill that thousands of sons and daughters will receive when their entrepreneurial mum or dad passes away.

From April, the 100% inheritance tax relief that family businesses rely on will be capped at just £1 million; anything above that will be taxed at 20%. Take a small company worth £11 million: the inheritance tax bill alone will be £2 million. But as far as I am aware, the sons and daughters of most entrepreneurs in Beverley and Holderness do not have £2 million tucked away down the back of the sofa. To pay that bill, which is a tax not on the business but on the people who inherit the business, as they are outside the business—I am not sure whether people have focused on this enough—they will be forced to extract that money from the business itself, usually in the form of dividends, and those dividends are taxed at rates approaching 40%. So a £2 million inheritance tax bill becomes a £3.3 million hit on the business, with £2 million to pay the Chancellor and another £1.3 million to pay—oh yes—the Chancellor, simply because the money was invested in jobs, equipment or the business overall rather than left idle.

[Dave Doogan]

Is the right hon. Gentleman as concerned as I am that this is a spreadsheet Budget concerned with little more than the number in the bottom right-hand corner? That is why everything is unravelling so catastrophically. On his BPR point, I have nothing against PLCs, but does he agree further that businesses that are owned by families and rooted in communities spend their investments locally, support local organisations and charities, employ locally and have their profits going back in locally, and that this is devastating jeopardy for those businesses?

[Graham Stuart]

As so often, the hon. Gentleman is absolutely right. Again, the talk is of hitting the fat cats and big businesses, but it is the huge corporates that will benefit. They will snap up the farmland and the small business. This is not fair taxation; it is irrational double taxation.

The consequences of this policy are real. If the hon. Member for Angus and Perthshire Glens (Dave Doogan)—I will call him my hon. Friend, if I may—is right about the Treasury being obsessed with the bottom right-hand corner, I hope that if no other argument weighs with the Minister, this might. A report by the CBI suggests that far from raising the welcome £1.4 billion forecast by the Treasury, the changes are likely to reduce tax revenues from family-owned businesses by £1.8 billion by 2030. That is yet another example of this innumerate Government having the exact opposite outcome from the one they wished, as investment falls, businesses restructure and growth is choked off. Instead of supporting the Government’s claim to be pro-business and pro-worker, this change could cost more than 200,000 jobs, on top of the 200,000 that the Chancellor has already cost the country. That is money sucked out of the economy and into Labour’s bottomless black hole. The impact will be felt directly in Beverley and Holderness, where it is expected to put 237 local jobs at risk, according to the CBI. Those are apprentices—

--- Later in debate ---

[John Grady]

I am going to make some progress if I may. Given the public finance situation that we face, I am afraid it is incumbent on Opposition Members to come up with some credible alternatives. But of course we know what their credible alternatives are; they are the sort of decisions made by the gravediggers Liz Truss and Kwasi Kwarteng—back to Shakespeare.

Control of public finances is one part of the equation. The other is growth, and the Government are promoting growth in the economy through things like the Planning and Infrastructure Bill, which was shamefully delayed in the other place.

I suppose we should talk about Reform’s proposals for growth. Private sector investment—like many Labour Members, I have worked in business—is supported by contract law, the rule of law, confidence in the independence of our courts, and the reliability of the Government. The European convention on human rights also has an important part to play, particularly article 1 of protocol 1: the right to peaceful enjoyment of possessions. Those Members who argue for the complete unilateral withdrawal from the ECHR may wish to consider the catastrophic effect on the economy of such a step. In the summer, Reform threatened investors with the cancellation of contracts for difference. That shows that a Reform Government would be happy to rip up contracts and to shred Britain’s reputation as a place of stability. I fail to see how that would promote economic growth. It would mean higher bills for consumers, and would make the country poorer.

I welcome the Chancellor’s reforms to gambling taxes. There is a clear distinction between going to the bingo and gambling on the horses—I will disclose that in the past I have enjoyed quite a few trips to the races—and online gambling and gaming, which, as we heard in the Treasury Committee, cause serious harm. It is essential that we start to tackle this issue. I realise that it is not a matter for the Treasury, but the marketing of online gambling and gaming needs to be reviewed, and I encourage the Treasury to act robustly against any evasion and black market activity.

I have heard some mention of choices today. This Budget and the Bill put in place steps to remove the two-child limit. My constituency of Glasgow East has some of the highest levels of child poverty in the United Kingdom. This is a disgrace and a scar on our society.

[Dave Doogan]

Will the hon. Gentleman give way?

[John Grady]

I will make some progress—I am mindful of Madam Deputy Speaker’s time limit.

Child poverty blights the lives of children in Glasgow East, and the levels of child poverty are a moral outrage. The Conservatives’ approach is to refer to my constituents as being on “Benefits Street”, which reveals the contempt that they have for my constituents, and Reform UK Members have been speaking about children in my seat with real racist malice. I say that it is a privilege to be a Member of Parliament for those children and I am proud that this Bill will help to lift hundreds of thousands of children out of poverty. I am proud of our Labour Government’s actions on child poverty and I fully support the Bill, which raises the funds to reduce child poverty.

--- Later in debate ---

[Dave Doogan]

I can only guess that Reform UK is polling quite high in Glasgow East. On his substantive point about child poverty, is the hon. Member relieved that his constituents in Glasgow East are benefiting from the fact that under the SNP, Scotland is the only part of the United Kingdom where child poverty rates are falling?

[John Grady]

Perhaps Reform UK is polling high in Perthshire as well. Leaving that to one side, let me tell the hon. Member what my constituents in Glasgow East are not relieved about: record NHS waiting lists, an SNP Government who block nuclear developments that would bring in hundreds of thousands of pounds a year through the creation of good employment, excellent jobs and growth in the economy, and an SNP Government who are anti-business and anti-growth, and who have just spent 18 years running Scotland into the ground. That is what concerns my constituents and that is why next year Anas Sarwar will be the next First Minister and create optimism for Scotland.

--- Later in debate ---

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

The SNP will not support a Second Reading. This Bill derives from a Budget that failed to deliver for Scotland and does nothing to move the dial for the households hammered by the cost of living crisis.

Scotland was relying on a step change from this Labour Government—on investment in public services, jobs and industry, and real action on energy bills—but none of that has come to pass. Instead, we have a dog’s dinner Budget that results in an increase in funding for Scotland that does not even cover half of the Scottish Government’s exposure to the national insurance increase across the public sector, and a resource block grant that increases only 0.5% per annum on average across the spending review period.

Thankfully, the clauses on income tax largely do not concern Scottish taxpayers, who benefit from the SNP’s judicious and progressive income tax rates in Scotland. Those in Scotland earning less than around £30,300 are expected to pay slightly less income tax than they would elsewhere in the UK, with the freezes to higher, advanced and top-rate thresholds estimated to affect only the highest 26% of earners. Someone earning more than £35,000 in Scotland will pay just 90p more in income tax per week than someone in the rest of the United Kingdom, while benefiting from Scotland’s unique social contract, whereby, under the SNP, we collectively fund prescription charges, bridge tolls, the Scottish child payment, tuition fees, under-22 bus travel, the baby box, personal care, publicly owned railways and publicly owned Scottish Water, which is the best-performing water company in the United Kingdom. Not bad value for 90p a week.

[John Grady]

The Scottish public finances have been aided by a record budget settlement from the UK Government, but there is a £5 billion black hole in them. Might it be the case that after 18 years of the SNP, some responsibility for such matters lies closer to home, perhaps in Edinburgh?

[Dave Doogan]

The hon. Gentleman was obviously not listening. The increase to the block grant is spread over the entire spending review period—five years—and it does not cover more than half of the cost faced by the Scottish Government as a result of the increase in employers national insurance imposed by the same Chancellor. I am glad that I got the opportunity to say that twice.

Energy bills have gone up by £340 under this Government, despite the fact that they were supposed to fall by £300. That is what people voted for—that is the prospectus that Labour gave them—and the Government are not taking it seriously. They are coming back with a £150 reduction to energy bills, which is coming out of general taxation. As sleight of hand goes, that is not very slick. The money comes out of people’s standing charge, but goes directly on their general taxation.

In the interests of time, I will not dwell on agricultural property relief; I have said a fair bit during interventions, and I know that my hon. Friend the Member for Aberdeenshire North and Moray East (Seamus Logan) will contribute on that issue.

[Graham Stuart]

I am grateful to the hon. Gentleman for giving way while he is on the subject of energy. Of course, what should have been in the Bill was an end to the additional tax levy, because there are no sky-high profits any more, there are no excess taxes that need to be paid, and 1,000 people a month are losing their job in the oil and gas industry.

[Dave Doogan]

The right hon. Gentleman anticipates my next paragraph. The energy profits levy should be coming to an end, but it has been extended by this Labour Government until 2030. That has caused 100 job losses from Harbour Energy, and it is causing 1,000 job losses every month, according to Offshore Energies UK. We are in this situation because the Prime Minister lacks the mettle to get rid of the Secretary of State for Energy Security and Net Zero. That is one job getting protected in Whitehall, but it is costing 1,000 jobs a month in Scotland. That is the Labour way, and it always will be.

On electric vehicles, this thruppence a mile probably does not sound that much to those who live in Chelsea or Kensington, but it will cost an awful lot more to those who live in Angus and Perthshire Glens. I get the politics of it: half of the entire Labour membership lives within Greater London, and the other half lives in other English cities, and in Glasgow and Cardiff. They probably think it is a tremendous wheeze to make people in my constituency subsidise the tax on the Labour membership’s electric vehicles, but people are smarter than that. People who live in the countryside can add up, and they know that this Government’s attack on their electric vehicle taxes does not add up. They are being swindled by a Labour Government.

[Richard Foord]

The hon. Gentleman’s characterisation is slightly unfair to those 80 or 90 Labour MPs who represent rural areas, and it is worth paying tribute to the speeches by the hon. Members for Scarborough and Whitby (Alison Hume), and for Penrith and Solway (Markus Campbell-Savours). They have spoken out against this mean, callous agricultural property relief measure, and they have done a brave thing by doing so. Does the hon. Gentleman not agree?

[Dave Doogan]

I absolutely do agree. I am in full accord with those Members’ bravery on the APR, but I am not sure how that links directly to 3p a mile for electric vehicles. The point is made, though.

The preamble to the Budget was hugely challenging and had a direct consequence on the markets. It caused people to freeze employment and investment in their businesses, and it caused pensioners to cash in their pensions. I am pleased that the SNP was the first to call on the Financial Conduct Authority to investigate the Chancellor’s behaviour, and I hope that the FCA’s position changes. Despite all that, Scotland’s economy remains one of the best performing parts of the United Kingdom. Since 2007, per-person growth under the SNP has been 10.2%. That compares to 6.8% in the UK. We lead the whole of the UK, with the exception of London, for foreign direct investment, and a NatWest report recently confirmed that Scotland had one of the highest start-up rates in the UK in the first two quarters of this year.

Employment across the UK is 75%, but as I mentioned in my intervention on the Minister, unemployment in the UK has risen from 4.1% to 5.1% since this Labour Government grasped power last year. Thankfully for the people of Scotland, unemployment is 25% lower in Scotland, at 3.8%. I am sure that fact will not be lost on the good people of Glasgow East. Next month, the Scottish Government will deliver their Budget and continue to build on our success, but the SNP will not be voting for this Bill’s Second Reading. We will not be party to the injudicious and unjust damage that will be inflicted on businesses and households by the grabbing hand of Labour through this Bill. The people will have their verdict on this risible Chancellor and her bilging outflow of fiscal calamity in May 2026, specifically in Scotland and Wales, and in English councils. I, for one, look forward to the Government getting their just desserts.

--- Later in debate ---

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

I rise to focus briefly on a small number of issues in the Bill and one associated with it—I will explain. I want to focus on how these issues will impact Scotland generally and my constituents in particular. Although the Exchequer Secretary to the Treasury is no longer in his place, I note his comment that persistence pays off, which I think he made in reference to the intervention of the right hon. Member for Beverley and Holderness (Graham Stuart). I therefore hope that the Minister is listening to me in relation to this matter.

It is just over 100 days until April, when farmers across Scotland will face changes to agricultural property relief described by NFU Scotland as

“one of the most significant threats to Scottish family farms in a generation”.

They did not know that the changes were coming—no one did—because they were not in Labour’s manifesto. What was in the manifesto, on page 59, was a pledge to recognise that

“food security is national security. That is why we will champion British farming whilst protecting the environment.”

The sudden application of the new rules on inheritance was deeply unfair. No farmer expected it.

In Scotland, 98% of the total land area across the country is classified as rural, covering about 17% of the Scottish population. Land use in my constituency is classed as 76% agricultural, 18% forest or semi-natural and 3% built-up areas. There are 51,200 farm holdings in Scotland, and I accept that not all of them will be impacted by this policy, but studies by experts such as the Centre for the Analysis of Taxation have offered an alternative approach—one that is less harsh and that would generate similar levels of revenue, but it has been ignored by the Government. As I say, although not all farms will be affected by the change to APR, all farms could be, and maybe have been, impacted by having to take new and costly legal advice in the light of these unexpected changes.

The spousal transfer allowance change is welcome, but its addition points to a recognition at the Treasury. It is a shallow attempt to placate farmers in the light of the ensuing backlash and an admission that the 2024 Budget provisions were too harsh. The anti-forestalling clause mentioned by the right hon. Member for Orkney and Shetland (Mr Carmichael)—clause 62 of the Bill—and the associated schedule 12 are deeply cynical, as they penalise anyone who transfers their farm but dies within seven years, creating a potentially massive bill. Good for the Treasury; potentially disastrous for national food security. As the hon. Member for Scarborough and Whitby (Alison Hume) pointed out, if no transfer is made and the farmer dies before April 2026, the estate passes tax-free. That is the problem with the anti-forestalling clause.

I appreciate that Labour MPs are probably preoccupied with a different aspect of succession planning at the moment, but perhaps they could focus their minds on this issue. As has been said, Labour is paradoxically biting the hand that feeds it, but every family across these isles is feeling this effect.

[Dave Doogan]

My hon. Friend is making a powerful speech. Does he agree with me—and, I think I am right in saying, with the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick)—that agriculture in Wales and Scotland forms a very much larger part of our economies than it does in England, and it is therefore particularly objectionable that the Government did not consult the devolved Governments on this legislation? Does my hon. Friend further agree that farmers do not own wealth; they own value?

[Seamus Logan]

I agree with my hon. Friend completely. I implore the Treasury to reconsider and hear what the hon. Member for Penrith and Solway (Markus Campbell-Savours) said, but if it does not, my party will bring forward a suitable amendment on Report.

Labour MPs have talked a big talk about how much money is going to Scotland, but I would like to ask them how much they are taking away from Scotland, whether it is through the APR, the energy profits levy, the excise duty on Scotch whisky or the national insurance hike. Once again, it feels like Scotland’s wealth and success are being used against it by an uncaring Westminster Government.

I want to turn to one other issue: NHS drug costs. They are not in the Finance Bill, but my point is that they should have been. I appreciate that you are giving me a bit of leeway, Madam Deputy Speaker. The new UK-US trade deal in medicines raises huge questions about where the money is coming from to pay for these increases in drugs costs. If the additional costs are to come from within existing NHS budgets—that is, through efficiency savings—I must ask the Government whether they have read the University of York’s impact assessment concerning excess deaths and negative impacts on cancer patients, gastroenterology and respiratory care in particular. If the additional costs are to come from the Treasury, where is this mentioned in the Budget, in this Finance Bill or in the accompanying Red Book? It is certainly not in the Bill, but it should have been. The OBR will be listening and watching, and will get to this in due course.

What does all this mean for Scotland in Barnett consequentials? Why has there been so little opportunity for parliamentary scrutiny of this smoke-and-mirrors deal? Transparency is needed on costs. The Health Secretary says £1 billion to £1.5 billion. The OBR says £3 billion, and £6 billion has been suggested by other commentators. Which is it? The Government hail it as a great deal for the UK, but the truth is that no matter where this money comes from—the Treasury or existing NHS funds—patients will ultimately pay the price for filling this pharma black hole. It looks like the UK Government are over a barrel on this, with drug companies threatening to pull out of investment in the UK, bullying from an increasingly erratic White House and creeping privatisation of the NHS. The Government need to provide some answers. I simply say to all Labour Members who have bragged this evening about what a wonderful Bill this is and what a wonderful Budget this has been: why are the polls showing that this Government are the least popular in history?

--- Later in debate ---

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

The shadow Financial Secretary, the hon. Member for Grantham and Bourne (Gareth Davies), took the time to mention Father Christmas and Tinder. I thought he might also have taken a moment to welcome the fourth major trade deal secured by this Government and signed today with South Korea, which is set to boost our economy by £400 million, but that was obviously too much to ask.

It is an honour to close this Second Reading debate on the Finance (No. 2) Bill. I thank the Exchequer Secretary to the Treasury for opening the debate, and all right hon. and hon. Members who made contributions. I look forward to hearing further contributions during the rest of the Bill’s passage.

Before I turn to the points made during today’s debate, let me be clear about the purpose of the Bill. I will frame it in the context of choices, because so many hon. Members who have contributed to the debate have done the same. Put simply, the Bill delivers the fair, responsible and necessary choices required to strengthen our economy and cut borrowing, to return our public services to health, to back British entrepreneurs and to make people better off. Those are the choices that this Government are making.

[Dave Doogan]

On that point, will the Minister give way?

[Lucy Rigby]

Not yet.

We have heard absolutely nothing from the Opposition that acknowledges that they made the wrong choices. Indeed, what we heard just now from the shadow Financial Secretary and earlier from the shadow Chancellor was a masterclass in selective amnesia. People would be forgiven for thinking that Members on the shadow Treasury Bench were not living in this country during their period of Government, let alone running it. They have conveniently forgotten that their choices gave us appallingly low productivity, threadbare public services, ballooning welfare spending and real wage stagnation. Those were their choices, and it is little wonder that they do not to want to remember them, let alone be judged on them.

--- Later in debate ---

[Lucy Rigby]

I am afraid to tell the right hon. Gentleman that employment is rising in every single year of the forecast.

My hon. Friend the Member for Glasgow East (John Grady) raised the importance of getting debt and borrowing down. I could not agree more. There is nothing progressive whatsoever about spending over £100 billion a year on servicing our debt. That is more than five times our annual policing budget. It is money that could be spent on schools, hospitals and the urgent public service renewal that this country so desperately needs. That is exactly why, under this autumn Budget, borrowing falls in every year of the forecast, and we are bringing the national debt under control. The Chancellor is putting in place the fastest rate of fiscal consolidation in the G7, and she is doubling the headroom to £21.7 billion.

[Dave Doogan]

I am grateful to the Minister for giving way. Will she concede that approximately three quarters of the last three hours of debate on this Bill has been devoted to the egregious family farm tax, including two noble and articulate contributions from Labour Beck Benchers, which took some bravery? Will she take that message back to the Chancellor, and get her to finally scrap the family farm tax?

[Lucy Rigby]

It is not a concession to acknowledge that that was the topic of much of the debate. We are more than aware of the strength of feeling on inheritance tax and the cost pressures that farmers are under, and I appreciate the compassion with which hon. Members have made their arguments. I remind them that that is why the Government came forward with the changes announced at the Budget just a few weeks ago. Following those changes to both APR and BPR, surviving spouses can pass on double the tax-free allowance, making the system more fair and simple for farmers.

A core part of strengthening our economy is about backing British businesses to reach their full potential. That means backing British innovation and aspiration and giving entrepreneurs what they need to start up, scale up, list and grow here in the UK. That is why this Bill significantly expands the enterprise management incentive scheme limits to maintain the world-leading nature of this relief.

Finance (No. 2) Bill

Dave Doogan Excerpts

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

[Lucy Rigby]

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

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

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

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

[Lucy Rigby]

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

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

--- Later in debate ---

[Dave Doogan]

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

[Laurence Turner]

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

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

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

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

--- Later in debate ---

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

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

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

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

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

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

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

[Dave Doogan]

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

[John Lamont]

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

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

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

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

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

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

--- Later in debate ---

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

[Dave Doogan]

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

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

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

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

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

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

--- Later in debate ---

[Dave Doogan]

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

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

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

[John Lamont]

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

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

and that the majority

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

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

[Dave Doogan]

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

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

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

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

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

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

[Dr Luke Evans]

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

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

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