Family Businesses

The Speaker has not selected the amendment. I call the shadow Chancellor.

I beg to move,

That this House regrets the Government’s decision to introduce a cap on Business Property Relief, meaning that some family businesses passed down upon death will face Inheritance Tax for the first time in 50 years; further regrets the Government’s other economic policies that will damage family businesses, namely raising employers’ National Insurance contributions, reductions to business rates relief, making employers potentially liable for third-party harassment, the powers in the Product Regulation and Metrology Bill [Lords] that would allow the Government to ban pubs from selling pints, and the provisions in the Employment Rights Bill for guaranteed hours which will make flexible working harder to achieve; and therefore calls on the Government to support family businesses which provide employment for almost 14 million people, and contribute more than £200 billion in taxes each year, by lifting the cap on Business Property Relief, not implementing the increases to employers’ National Insurance contributions and business rates, and powers to change units of measurement, and to stop the progress of the damaging Employment Rights Bill.

At the last general election, the Labour party—now the Government—told us that it aspired to become the natural party of business, which is an absurd suggestion given what has happened over the past seven short months. It is as absurd perhaps as the Business Secretary claiming to be a qualified lawyer, as absurd perhaps as the Attorney General claiming to be a patriotic lawyer, or as absurd perhaps as the Prime Minister claiming to be anything other than a lawyer. The economy has tanked. Inflation recently spiked at 3%, and it is to go still higher; it was 2% on the day of the general election, a legacy that we bequeathed to the Labour party. Borrowing is up—substantially up—on the forecasts that the Office for Budget Responsibility produced at the last Budget, and growth has been killed stone dead. The Bank of England tells us that the economy will grow at half the rate it had originally suggested.

It is no wonder that all the business confidence surveys show confidence crashing through the floor as a result of what this Government are doing. Businesses are laying off jobs, businesses are putting up prices, businesses are reducing investment, and businesses are sometimes having to put themselves up for sale or, even worse, are going under.

On that specific point, a local businessman wrote to me:

“I have spent over 50 years building my engineering business from the ground up, only to now face the possibility that my life’s work could be dismantled due to an unfair tax burden.”

Why on earth would anybody want to start a business in the current climate, which has been created by the Government?

My right hon. Friend is absolutely right, and we see that in the surveys to which I referred; business confidence is at virtually an all-time low.

Before this whirlwind of disaster visited us, we had a calmer time during the general election. It was a Labour party on best behaviour with business, a Labour party with a manifesto that sought to reassure business—indeed, it explicitly ruled out the possibility of an increase in national insurance—and a Labour party on the prawn cocktail circuit, countenancing canapés and calm, with the breathy seduction of the former shadow Chancellor and the now Business Secretary hopping about in the background dispensing free legal advice to whoever cared to listen. With Labour, everything seemed possible; business would be safe in its tender hands—but it was not. Trust was destroyed, and the wrong decisions were taken. Why? Because those on the Government Front Bench have not a jot of real-world business experience. In fact, fewer than half of those around the Cabinet table have any experience in the private sector whatsoever. Far from being the natural party of business, this is the most anti-business Government in modern political history.

Surveys by the British Chambers of Commerce show that tax is now the No. 1 concern of businesses. According to the Federation of Small Businesses, in the last quarter of last year, business confidence hit the lowest level ever recorded in its surveys, save for the pandemic. It is almost as if the only way that small businesses are created today is through the shrinkage of larger ones.

Firms are being crushed by the wrong policies. Take the national insurance measure, which, despite having not yet commenced—it comes in in April—is already driving down employment and driving up prices and inflation. It is a ticking tax time bomb waiting to go off in early April. It will affect the lowest paid the hardest, with those in part-time work bearing the brunt of this measure, and it will impact those in labour-intensive sectors. UKHospitality found that three quarters of a million more jobs will be subject to national insurance as a direct effect of this Government’s plans. According to Young’s, the brewer, the policy will add an extra 20p to the price of a pint.

I am pleased that the right hon. Gentleman has expressed concern for people on lower wages, and I hope he will therefore welcome the decision announced at the Dispatch Box by this Labour Government to increase the living wage by 6.7% from April.

As the party that increased the personal allowance, doubling it between 2010 and the present day, taking millions of people out of tax altogether, and that brought in the national living wage, we have done a great deal to support the lowest paid in our society in particular.

The point is about the culmination of all the changes the Labour Government have brought in. This Government have indeed raised national insurance, and may need to do so again in future. However, the key point is what the ramifications of all these changes will be—the living wage change, the cuts to business rate relief, the red tape being introduced with the Employment Rights Bill and the national insurance contributions going up. That toxic concoction will kill off growth. That is the problem. Does my right hon. Friend agree?

My hon. Friend is absolutely right. It is not as if the Government were not warned about these issues. In its reports, the OBR made it extremely clear that while the headline figure to be raised through the national insurance contribution changes is £25 billion, the net figure will be far less because of the behavioural impacts that necessarily follow when jobs are taxed—one does not need to have spent a decade at the Bank of England to know that. National insurance increases lead to fewer jobs, lower wages and higher prices.

Of course, this Government are piling on the regulation with their Employment Rights Bill. We know that this will increase the risk of employing people at a time when the employment market itself is softening and putting an end to flexible working practices, which not only benefit many businesses but suit many people, particularly younger people and those who are more elderly. Given that, it is astonishing that the Chancellor has launched a tax raid on family businesses.

I thank the shadow Chancellor for giving way. Will he spell out the specific rights in the Employment Rights Bill that he and his party believe should not be afforded to working people in this country?

The hon. Gentleman asks a very fair question. The Bill will create a situation where employers are fearful of taking on new hires because of the consequences that may follow, where trade unions are advantaged in the way the Bill suggests—the trade union paymasters who may, perhaps, support the hon. Gentleman, but who certainly support many of his colleagues—and where the minimum service standards legislation that we brought in will, as I understand it, be overturned. None of those things will be good for jobs, for people searching for employment, for businesses or for the UK economy.

Declare an interest!

I will happily declare an interest, Madam Deputy Speaker, as a proud member of many trade unions. My declaration is up to date and free for all to see.

I very much enjoyed the shadow Chancellor’s answer to my question, but perhaps I could pose it again, taking a lesson from the leader of his party, and say that he might want to answer it this time. What are the specific rights in the Employment Rights Bill that he and his party oppose? The motion says that the Employment Rights Bill should be stopped. Which rights in the Bill does he oppose working people having?

To paraphrase the leader of the hon. Gentleman’s party, I have already answered his questions. I do note his serial offence of being a member of several trade unions at the moment—it is good of him to disclose that.

The changes to business property relief will see the break-up of many family firms. Of course, the Government will say that it will have an impact only on the wealthiest estates because of the £1 million threshold, but how many of those companies will have the cash available to settle those liabilities? The value of many businesses, of course, lies in their assets. Liquidating those assets to pay those kinds of liabilities, given that the assets are often instrumental to the effective working of the firm, is an absurdity. We also know that the changes will damage businesses’ ability to borrow against assets when there is a sword of Damocles hanging over their head by way of a potential future inheritance tax liability.

Research by CBI Economics for Family Business UK suggests that this policy may not even raise any money. The firms that will be impacted have said that on average, they will invest 17% less in their business as a consequence of this measure; in fact, 15% of those businesses have said they would sell their business altogether.

Of course, the rules will be complex. There will be plenty of red tape and legal advice to be taken from solicitors—real ones. Some people will pay through dividends on which they have already been taxed, so they will be taxed twice. Tax on tax, as we know, is the Labour party way. William Lees-Jones of JW Lees, the long-established family brewery and pub operator in the north-west, has said that the family business tax would

“inevitably reduce future investment in the company.”

Importantly, he goes on to say:

“It would also place our business at a considerable disadvantage to our competitors who tend to be listed or owned by private equity, sometimes overseas.”

What Labour seems not to understand is that every business starts with an idea, a hope or a dream, and the individual then puts their whole heart and soul, and every working hour they have, into building their business, often as a whole family endeavour over many generations. It is that, not just the economics and the jobs, that Labour is destroying.

My hon. Friend is absolutely right. That is where the dearth of experience of entrepreneurship on the Government Front Bench really shows. We see this not just with BPR, but with agricultural property relief. Family farms will be broken up, with years and generations of people struggling and working hard, whatever the weather, to grow businesses and provide the food that we need torn asunder with a stroke of the Treasury’s pen.

In an interview, the Prime Minister said that the reason for doing this to farmers was to be able to give them the NHS that they might need. Only a week later, the £10 million fund that was there to support the mental health of farmers had been taken away. It must stick in the throat of farmers when they are told that they are not a priority, that food security is not a priority, and that they will now not have the health service in place, despite having to pay the tax that is about to come into force.