Taxes

Sarah Olney Excerpts

Tuesday 15th July 2025 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

Let me be clear: the legacy left behind by the last Conservative Government is one to be ashamed of. Their incompetence in governing left schools and hospitals crumbling, social care cripplingly underfunded, and record levels of sewage in our lakes and rivers. Their record is a dispiriting picture of low growth, high interest rates and record levels of inequality.

We know that this Government inherited a mess, and we know that the cause of that mess was years of reckless economic mismanagement, but that cannot be allowed to serve as cover for measures that damage business or cause suffering for the vulnerable in our society. The decisions taken by this Government at the autumn Budget have not worked. The national insurance jobs tax will damage small businesses, lower people’s living standards and undermine the Government’s own ambitions for growth. People endured years of Conservative mismanagement, which is why this new Government should be doing far more to grow our economy, create new jobs and improve living standards.

The Liberal Democrats acknowledge that the Government had tough decisions to make. However, instead of raising national insurance, cutting disability benefits and cutting departmental budgets even further, they should be taking bold and ambitious steps to grow our economy, which is the best way to raise tax revenue and boost living standards. That is why we have been calling on the Government to ignore the scaremongering from those on the Conservative Benches, and urgently negotiate a new, bespoke UK-EU customs union.

On taxation, as set out in amendment (b), tabled by my hon. Friend the Member for St Albans (Daisy Cooper), we all know that the Government are desperately looking for ways to raise revenue. I encourage Treasury Ministers to take a look at the measures set out in last year’s Liberal Democrat manifesto, which would ensure that revenue is raised in a fair way, taking into account the huge amount of economic inequality that, sadly, we see across the United Kingdom.

This huge inequality in our country threatens to rip our social fabric apart, which is why the Liberal Democrats have proposed a better way: raising revenue fairly, doing so practically and tackling inequality; increasing taxes on some of the biggest and wealthiest corporations, including the big banks, by reversing the Conservatives’ tax cuts for banks; ensuring that the wealthiest people in the world who are doing business here are taxed effectively, by raising the digital services tax from 2% to 10%; fairly reforming capital gains tax in a way that cuts tax, or keeps it the same for the vast majority, while ensuring that the wealthiest 0.1% cannot avoid paying their fair share; and doubling remote gaming duty to ensure that gambling companies pay their fair share. Those steps could happen immediately, so I hope Ministers, who are keen to fill a fiscal hole, might follow our advice.

The previous Government did so much damage to our high street businesses, but the Labour Government’s national insurance jobs tax has only made things even harder for them and their workers. High street businesses are the beating heart of our economy at the centre of our local communities, and they create the jobs that our communities rely on. The changes to employer national insurance contributions announced in the autumn Budget are an unfair jobs tax which will have highly damaging impacts across many sectors: on social care providers; on GPs; and on the hospitality sector, which has been hit by an extra £3.4 billion in annual costs through the cumulative impact of the changes announced in the autumn Budget. The Liberal Democrats voted against the changes to employers NICs at every opportunity. I once again urge the Government to scrap those measures.

As the motion looks to examine the causes of the economic challenges faced by people and businesses across the country, a perhaps surprising omission is the ongoing disastrous damage caused by the Conservatives’ pitiful Brexit deal. The appalling agreement negotiated by the last Conservative Government has been a complete disaster for our country, particularly for high street businesses, who are held back by reams of red tape and new barriers to trade, costing our economy billions in lost exports. The dismal picture of the financial impact of their terrible Brexit trade deal is becoming increasingly clear. A recent survey of 10,000 UK businesses found that 33% of currently trading enterprises experienced

“extra costs directly related to changes in export regulations due to the end of the EU transition period”.

Small businesses have been particularly badly affected, with 20,000 small firms stopping all exports to the EU. And a recent study has found that goods exports have fallen by 6.4% since the trade deal came into force in 2021.

The Liberal Democrats welcome the steps this Government are taking to rebuild our relationship with the EU, but I urge them to recognise that this should only be a first step towards negotiating a bespoke UK-EU customs union. Independent analysis has shown that a closer trading relationship with the EU could boost GDP by 2.2%. That would bring in roughly £25 billion of extra tax revenue every year, which would be crucial for fixing the public services which the Conservative party left broken.

More broadly, as we look at measures which would ease the pressure felt by so many businesses and boost the economy as a whole, we continue to call on the Government to introduce vital reform to the business rates system. In 2019, the previous Conservative Government promised a fundamental review of the business rates system, but they failed to deliver it. Meanwhile, the current Government pledged to replace the system in their manifesto, but still no action has been taken. The current system penalises manufacturers when they invest to become more productive, leaves pubs and restaurants with disproportionately high tax bills, and puts local businesses at a disadvantage to online retail giants. The Liberal Democrats have called for a complete overhaul of the unfair business rates system and its replacement with a commercial landowner levy that would shift the burden of taxation from tenants to landowners. Our proposals for fair reform would cut tax bills, breathe new life into local economies and spur growth. Equally important, it would provide long-term certainty for businesses, which is what everybody across the UK wants.

On the Liberal Democrat Benches, we know the extent of the challenges the Government faced when they came into office. We acknowledge that they inherited a dire economic landscape—challenges now exacerbated by an unreliable actor in the White House and an aggressive Russia—but that cannot be an excuse for the mistakes the Government are making. They must take bold action to boost our economy. As such, we support the calls in today’s motion to scrap the national insurance jobs tax and reverse the changes to agricultural property relief. People across the country are still struggling with the cost of living crisis, just as small businesses remain burdened with sky high energy prices, now compounded with an unfair jobs tax and an unfair business rate system.

The Liberal Democrats will continue to urge Ministers to go further and act with more urgency, investing in skills by reforming the apprenticeship levy, properly funding social care and boosting growth through negotiating a bespoke UK-EU customs union to give our economy the boost it so desperately needs.