Taxes

Joy Morrissey Excerpts

Tuesday 15th July 2025 Commons Chamber

[John Grady]

I will make some progress if I may.

Our debt to GDP ratio is almost 100%, and we inherited that from the previous Government. Conservative Members object to tax rises while wanting tax cuts and increases in public spending and objecting to spending cuts. That is not realistic. We know from the disastrous Budget of Liz Truss and Kwasi Kwarteng that we must manage finances carefully. Some Opposition Members suggest that we should get rid of the Office for Budget Responsibility. The Conservatives shunned the OBR when Liz Truss and Kwasi Kwarteng put forward their Budget and we know what happened then. I find it quite surprising therefore that we still have Conservative Members who want to get rid of it.

The Conservative approach to the economy simply does not grapple with the serious state of the public finances; it inhabits a world of wishful thinking—a world of higher inflation, higher Government borrowing costs and higher interest rates.

[Joy Morrissey (Beaconsfield) (Con)]

Will the hon. Member give way?

[John Grady]

No, I will make some progress.

The huge inflation unleashed by the previous Government caused immense misery to my constituents. The interest rate rises made life a misery for hard-working families who had bought their homes in Glasgow East. That is why my right hon. Friend the Chancellor of the Exchequer is right to focus on appropriate management of the economy and not wishful thinking. The real question is this: what has the Conservative party come to. Will it ever return to seeing things as they are, rather than proposing policies that bear no relationship to reality? Its proposals, as I understand them, are a form of magical realism, which is why the electorate have cast them into 100 years of solitude.

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[Joe Powell]

I thank the right hon. Gentleman for that intervention, because it is important to talk about debt. I was disappointed that the shadow Chancellor failed to acknowledge that the inheritance in 2024 was total national debt of close to 100% of GDP, which was up from 60% in 2010. The annual debt payments that the Government are having to make—as others have said, they are close to £100 billion, thanks to the Government’s economic inheritance—are 8.3% of total public spending. Imagine what we could do if we spent that money on the NHS, our schools, or fixing the housing crisis.

This goes much deeper than debt. The truth is that we inherited a sick economy, affecting living standards, wages and public services, and there was no plan for growth. The Conservatives left Britain with rising debt and flatlining growth, yet they oppose the very measures that the Government have taken to fix their mess.

[Joy Morrissey]

Just to correct the record, on the economy, we had the highest and fastest growth in the G7 when we lost the election. We handed the Government that highest growth. I know it is hard for Back-Bench Labour MPs to grapple with that, but it is a fact none the less.

[Joe Powell]

I thank the hon. Member for that intervention. Of course, the Conservatives tanked the economy, and when there is such a dramatic decline in growth, increasing it from a very low level to a slightly higher one is relatively straightforward. The economic growth figures for the first quarter of this year, as we know, are the highest in the G7.

The Government are trying to fix the mess, including through measures worth over £20 billion a year—measures aimed at repairing our public finances by addressing the black hole and investing in public services that were wrecked by austerity, poor management and wishful thinking. The Conservatives have a nerve to pretend that they would do things differently now. My constituents tell me the same. Indeed, a local resident, George, has been vociferous about the lack of a credible economic plan from the Conservative party, and will not stop sharing his views on the airwaves. Yes, even the former Chancellor of the Exchequer thinks that the Conservatives have no answers to the fiscal challenges that the country faces. There is plenty that George Osborne and I disagree on, but he is absolutely right on that.

At every turn, the Conservative party is backing the blockers and preventing a plan for economic growth, whether it is the Leader of the Opposition blocking new energy infrastructure in her own backyard or the shadow Business Secretary, the hon. Member for Arundel and South Downs (Andrew Griffith), signing letters to delay vital transport infrastructure. It is no wonder that our economy has been held back for so long.

The other parties, too, have nothing to offer. Reform wants Liz Truss’s reckless economics all over again—the same failed experiment of unfunded tax cuts that crashed our economy and left our constituents paying the price. Meanwhile, the Liberal Democrats promise all the benefits of tough decisions with no way to pay for them. It is pure fantasy economics. I am glad that the Government have committed to not repeating those mistakes. It will fall on the Labour party to fix this mess, rebuild our economy and deliver the secure growth that Britain needs.

Nowhere is the cost of failure clearer than in the broken housing system. London boroughs now spend £4 million every single day on temporary accommodation —a massive waste of taxpayers’ money. The Conservatives also locked us into paying billions for over-inflated asylum hotel contracts. That is another egregious waste of taxpayer money that we inherited from them. That is the direct result of not planning for investment or for the long term; it is the price of short-termism and a failure to plan for the future.

Let us look at housing—one part of our plan. We have ambitious planning reforms to deliver the greatest impact on growth at no fiscal cost. We have the biggest investment in social and genuinely affordable homes in a generation. We have leasehold reform, protection for renters and a new decent homes standard, which are all opposed by the Conservative party.

This Government are making tough choices to raise revenue. The Conservatives talk about businesses; I meet businesses all the time, and I understand the pressures that they are under. They tell me that it is vital that NHS waiting lists fall, so that their employees can access the treatment that they need; that we have modern infrastructure in Britain, including transport and energy; that their staff can afford housing options; and that we agree an EU youth mobility scheme to support our hospitality industry.

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[Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)]

The motion is simply asking the Government to commit to what they put in their manifesto. It seems that we are hearing every sort of speech other than speeches that address that point.

Let us first take the national insurance rise. It is extraordinary to ask us to believe that businesses in Labour Members’ constituencies are delighted that their taxes have gone up because that will help public services. I am sure that they are all keen to see their taxes go up again to satisfy the new 30% pay rise that resident doctors want. We were told that that would not happen, and that that was why the Government had to put up taxes the last time. A bit of reality has to come to this conversation, given that local businesses are either cutting people’s hours, on a recruitment freeze, making redundancies or going into liquidation.

Let us think about companies that go into liquidation. After 30 years of trading, a company in my constituency went into liquidation last month, simply because it could no longer cope with the NI rise. That was the straw that broke the camel’s back. Twelve people were made redundant immediately, meaning there would be no more taxes—no more income tax or purchasing tax—from that business, and on top of that, benefits would have to be paid.

We are on a downward spiral of tax and spend in this country. Indeed, it is quite incredible to listen to the speeches from Labour Members. It is as if nobody has left the country, no money has been withdrawn from the City, and no person has taken their assets elsewhere. Those are literally the headlines on the economy, day after day, in the Financial Times and other newspapers, yet we get a lot of harking back to the past, rather than recognition that Labour has been in power for more than a year.

[Joy Morrissey]

My right hon. Friend makes an excellent point about growth and wealth creators being taxed out of this country. They are simply taking their money and leaving, as the Labour party continues to tax them.

[Sir Alec Shelbrooke]

My hon. Friend sums things up perfectly. What terrifies me is that the Government do not seem to be taking any notice of that. When they talk about bringing in more taxes, such as a wealth tax, Labour Members all cheer. When my right hon. Friend the shadow Chancellor—I think it was him—said that Labour Members do not care, and would like to see more people who have wealth go, someone on the Government Benches shouted “Good!” It is absolutely incredible to say that the people who generate the wealth in this country are the enemy.

Let us just think about my constituency of Wetherby and Easingwold, which does exactly what it says on the tin: Wetherby and Easingwold are the two main market towns in the constituency. Market towns are part of the big ecosystem of the economy that is linked around farming, and the farming tax has created a huge problem in the farming community. People are scared to invest in capital equipment. That is the first thing. “How are we going to pay these bills? Is it even worth passing the farms on? So let’s pause our investment.”

That ecosystem in my constituency is not just about the farmers and what gets sold at the farmers’ market. It is about the businesses that service farm equipment. It is about the businesses that supply mechanical support. It is about the businesses that are involved in every aspect of the supply chain around farming in my constituency, and the worry and concern that is being felt throughout the communities means that they do not spend any money. That means that the Government are now losing out on VAT and on other taxes. So, what is their answer? Let us bring in a wealth tax; let us tax more—it is quite frankly frightening. In terms of taxation, I am terrified of where this country is heading.

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[Joy Morrissey]

The Labour party has decided to tax hard-working families on their choice of education. It means that people can no longer send their child to a SEND special school. It means they no longer have the choice to use their money, because the Labour party wanted to take a little more tax from them. Does my right hon. Friend agree that it is not a fair process and it is actually excluding people who want to protect their children for the future?

[Sir Alec Shelbrooke]

My hon. Friend makes a very powerful point. I am just wrapping up, but I will tell you this, Mr Deputy Speaker: I am a comprehensive schoolboy, and I am not going to take any lessons off the private schoolboy on the Front Bench who tells me that it is unfair that we are not taxing people who are trying to do the best for their children—talk about pull up the ladder, I’m all right, Jack.

Overall, the economy is being destroyed under this Government. We will have a political kickabout this afternoon, but I am terrified of where we are going. The 1970s is back good and proper—public sector strikes, ridiculous pay demands constantly bringing the Government down, 240% debt to GDP ratio predicted on this path, more and more taxes to come, and more and more wealthy people leaving. We saw what happened by 1977 when we went off to the IMF. The situation was so bad that the IMF said no! We are on that path, and it terrifies me.

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[Phil Brickell]

I will make some progress given the time limits that will be put in place on other Members.

That finally put us on a strong footing to move on from the irresponsible and reckless chaos of Liz Truss’s mini-Budget and the litany of unfunded spending commitments left behind by the previous Administration, who had no intention of implementing them.

I must remind the House of what Labour inherited from the last Government when the Chancellor walked through the doors of No. 11 just over a year ago: a national debt at nearly 100% of GDP—the highest since the 1960s; living standards falling for the first time since the 1950s; anaemic growth that left us second to last in the G7; and the UK as the only G7 country where the employment rate had still not recovered to pre-covid levels by the first quarter of 2024. That was the Conservative legacy—a legacy of economic mismanagement and a tax system weighed down by loopholes, complexity and underenforcement, so I will take no lectures on fiscal responsibility from the architects of that wreckage.

We on the Labour Benches will not indulge the fantasy that the path to prosperity lies in slashing public services, making unfunded promises and claiming that we can borrow endlessly without consequences. Our constituents deserve better. This Government, led by the Prime Minister and the Chancellor, are getting on with what Labour always provides: a Government of service.

First, let me address the abolition of the outdated non-dom regime. For too long, our tax code allowed the very wealthiest to live in this country and enjoy our services, infrastructure and rule of law but contribute only a token amount to the national purse. That ended, quite rightly, with this Government. The new residency-based regime is a matter of principle: “If you live here, you pay here.”

Secondly, we have increased the rate of capital gains tax on share sales—not to punish wealth but to deliver fairness. Many of my constituents contact me to say that they see no reason why wealth—assets, and stocks and shares—should be taxed less than work. There is more to be done on that, but I welcome the measures that the Government have taken so far.

[Joy Morrissey]

What the Labour party is saying very clearly—it is useful to have it clarified—is that those who scrimp and save, who decide to give money or homes to their children, who save their farm for their children, do not matter. They will be the ones who are punished under Labour—not those who scrounge on benefits, but those who have saved their money and made choices. Labour is saying that those are the people it will punish. I thank the hon. Gentleman for clarifying that.

[Phil Brickell]

The hon. Member would do well to listen to what I have to say, and I will come to wealth taxation shortly, but I would appreciate it if she did not take that very condescending tone with me—I spent more than a decade working in the financial services industry myself.

These measures have been taken because it is simply the right thing to do. When a nurse in Bolton hospital is paying a higher effective tax rate than someone making millions on property or shares, the system is not just broken; it is unfair.

Thirdly, the Government have cracked down on tax-dodging, with more funding for HMRC to go after tax evaders and bring down the stubbornly high tax gap. That gap—the difference between what the Government are owed and what they actually collect—currently stands at almost £50 billion. That figure—50,000 times £1 million—is almost the size of the entire defence budget in 2023-24. Unlike the dearth of policy proposals from the Conservative party, I constructively implore the Government to continue tackling the enablers of dodgy tax schemes. Firms that promote aggressive tax avoidance schemes will now be held to account with fines of up to £1 million. I welcome that measure in particular.

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[Joy Morrissey (Beaconsfield) (Con)]

On 3 December 2024, the Chancellor made a commitment. She told a conference of business leaders that she would not need to raise taxes. It was a foolish claim from a Chancellor out of her depth. She then taxed the engines of growth in her Budget—the businesses and entrepreneurs who create jobs. She sent high-earning taxpayers fleeing from our country in record numbers. She taxed jobs with her betrayal after saying she would not raise national insurance contributions, and that rise has brought charities, small businesses and entrepreneurs to their knees. She has destroyed the family farm with her family farm tax. She has taxed hard-working families with the VAT attack on independent schools.

Having broken her promises and made false claims to businesses, the Chancellor is now coming for pensioners. She is coming for the people who have worked and saved, paid their tax and contributed to this country. She is the only Chancellor who claims to be an economist but does not understand the Laffer curve. It is time for the Prime Minister to realise what he has and to act. He has a weak, out-of-her-depth Chancellor who is sending our country down a one-way street to a 1970s-level economic failure.