Business and the Economy

Llinos Medi Excerpts

Wednesday 21st May 2025 Commons Chamber

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

It is a pleasure to be speaking up for Scottish constituents on such an important issue. I see that one of my Conservative colleagues, the hon. Member for Dumfries and Galloway (John Cooper), will be speaking up for his Scottish constituents. Nobody on the Government Benches has turned up to speak for their Scottish constituents on this issue.

I want to start with the good bits. Now that we have got that done, we will get into the meat of this. As has been said, we see an incredibly wrong-headed brake on investment and enterprise in the jobs tax—the increase to employers’ national insurance. I do not think that measure is a sleight of hand; it goes beyond that. To say that employers’ national insurance is not a tax on working people stretches disingenuousness to its absolute limits. The measure is also counterproductive. The £22 billion or £23 billion—whatever the Government’s target amount was to take in from employers—has already been attrited to well below £10 billion. If they actually did the right thing by hospices, it would go down even further. The measure is a massive burden for a modest gain for the Treasury, and that does not take into account the consequential costs of imposing such a burden on businesses and employers. The impact has already been felt in care homes in Scotland, with five closing ahead of this disaster for enterprise.

The Office for National Statistics has predicted that 25,000 jobs will be lost across the United Kingdom as a result. When the policy was introduced, I ordered a pint at one of my local pubs and jokingly asked the barman if the penny was already off the pint. He said, “Yes it is, and I have stuck on another 20 for your national insurance increase.” Although that is anecdotal, it speaks to the gulf in understanding between UK Treasury Ministers and the real economy that makes things tick. The Scottish Government estimate that, on average, the policy will cost £850 per job per year in Scotland. Except for the Scottish living wage and the slight difference in the income tax regime in Scotland, I see no reason why that figure would not be broadly the same across the whole of the United Kingdom economy. It is utterly unrealistic.

The genesis of the measure is the UK Government’s insistence that they had no idea that there was a £22 billion black hole in public finances—there probably was, although they probably made about a third of that with what they decided to do when they came into government. There is a brazen willingness by the Labour party to reinvent reality—it is bare-faced. Despite being engaged on that repeatedly in debate during the election campaign, the say that they did not know there was a multibillion pound black hole in the UK public finances. What were they debating if they did not think it was real? It is totally disingenuous.

Inflation jumped again in April to 3.5%, up from 2.6% in March. That was not caused by an economy firing on all cylinders or by a rejuvenated consumer sector, high on the output from a new Government, full of ideas and creativity. No, it is driven by electricity and gas prices and by water bills that consumers can do little or nothing about, but which they are still having to fight to pay on top of higher interest rates, as the Bank of England tries to get on top of inflation in a deeply dysfunctional economy.

The Government should seek to address the actual drivers of inflation and take on those energy prices. Let us not forget that not that long ago, at the election, we were promised a £300 reduction in energy bills. It was not “maybe”, “around” or anything of that nature; the message was that if people voted Labour, they would get a £300 reduction in their energy bills. In less than a year, however, energy bills have gone up by £281, so they are now almost £600 higher, emptying consumers’ bank accounts and driving inflation.

What is Labour’s response? Labour Members say, “That is because of our reliance on gas.” Well, we were reliant on gas before the election as well, so there are two possible reasons for that to have happened: Labour was playing fast and loose with the truth; or it did not understand how energy in GB works. I know which one I think it is, but either way it does not reflect well on this Labour party. In under a year, business confidence is falling, job losses and unemployment are rising, borrowing costs are soaring, prices are rising, growth is sluggish and there is rampant inflation. When speaking about growth at the beginning of the year, the Chancellor said that she was pleased but that she had got more to do. Well, God help business if she has got more to do. We have seen quite enough damage in the first nine months of this Labour Government.

I turn to agricultural property relief. In the garden of Scotland that is Angus and Perthshire Glens—I will take no dispute on that fact—we have some of the most productive agricultural land on these islands. As hon. Members would anticipate, with such productive agricultural land, we have extremely high-performing food producers who invest heavily in the latest technology and equipment, and ensure that there is a tremendous return on investment, so that they get the best yields possible so that they can drive down prices and deliver good-value food for tables across these islands and beyond.

What will happen now with agricultural property relief? What signal is being sent out to farms and farm businesses? Is it for those businesses to invest in their farms, so that they have to give it all away when somebody dies? Older farm owners in Angus and Perthshire Glens are now petrified of dying, and it will be the same everywhere else across the United Kingdom: what an ignominious, invidious position for any Government to put the people who produce our food into—it is incorrigible. I say to the Minister, with as much sincerity as I can muster, that quietly with his colleagues in the Treasury, at the spending review or some other opportunity—call it a review or whatever he likes—he should call off the dogs from our farming businesses up and down these islands. They deserve better.

Business property relief is not unrelated, and we have heard some of the testimony from other right hon. and hon. Members on the necrotic effect that has on investor confidence. There is good reason why large-scale family businesses are really good for economies, especially local economies. They employ local people, they headquarter locally, and they try, as much as possible, to establish and stand up their supply chains locally. They sell nationally and internationally. It is a virtuous conveyor of capital from outwith to within. It is excellent for the economy. It is far better than the same economic output from a public limited company, although of course PLCs have their role. But what large-scale businesses in Scotland and elsewhere are speaking to me about is that disincentive to invest.

[Llinos Medi (Ynys Môn) (PC)]

Family Business UK says that 55% of businesses have paused or even cancelled planned investments due to the Government’s plans to cap business property relief. Does the hon. Gentleman agree that the Government should delay the planned BPR changes and conduct a thorough consultation and an impact assessment?

[Dave Doogan]

I cannot help but agree with the hon. Lady. At the very least, that is what the Government should do, and other hon. Members have suggested that too. To be fair, it cannot be easy to form a new Government—it certainly does not look easy. Any new Government must come in, make decisions and quietly think, “Och, I wish we had not done that.” I am certain that APR was put under the nose of a Minister by a civil servant, in the full expectation that the Minister would have the wit to say, “We are not going there—we are absolutely not doing that.” And blooming heck, they have gone and done it. I am sure that when the civil servants walked away they were saying, “Oh God, we never expected that.” And so it is with business property relief, because of the consequences. The cost-benefit relationship between what they are doing to enterprise and business and what they will accrue to the Treasury is out of all kilter. The damage is way in excess of the potential accrual, and that is before behavioural changes are brought into effect.

I recently spoke to a large-scale potato farmer near Kirriemuir, in my constituency, who has massive cold storage, a vital element of potato production, so that farmers can keep the potatoes in tip-top condition and ensure that the supermarkets are supplied as and when, just in time. I sometimes think that the Government think that farmers are trotting around in their tractors, chewing on a bit of straw, but these are really switched-on businesses that are doing the utmost to keep food prices down. We have some of the lowest food prices in Europe, and that does not happen by not investing seriously massive sums in capital and equipment. At a stroke, the Government have catastrophically disincentivised the very behaviour that helps keep food prices down and is anti-inflationary. Look what is going to happen with that.