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Finance Bill (No. 2) - New Clause 7 - Review of effects of sections 50 and 51 on housing market
11 December 2024
Lead MP
Judith Cummins
Bradford South
Lab
Debate Type
Bill Debate
Tags
TaxationHousing
Other Contributors: 58
At a Glance
Judith Cummins raised concerns about finance bill (no. 2) - new clause 7 - review of effects of sections 50 and 51 on housing market in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Government Response
Defended the government's decision to end VAT exemption, highlighting expected revenue and measures in place to mitigate potential impacts.
Judith Cummins
Lab
Bradford South
Called for adherence to parliamentary procedure and did not make specific arguments about the bill or amendments.
Nusrat Ghani
Con
Sussex Weald
Proposed new clauses 8 and 9 which require statements to Parliament on the impact of charging VAT on private school fees, focusing on pupils with special educational needs, small rural schools, faith schools, and those in the music and dance scheme.
James Murray
Lab Co-op
Ealing North
Defended the government's decision to end VAT exemption for private school fees, stating that it would raise £1.5 billion in its first year and £460 million in 2024-25. He mentioned that around 37,000 fewer pupils will be in the private sector due to policy changes.
Simon Hoare
Con
North Dorset
Questioned the government's terminology of 'tax breaks' and argued that imposing VAT on education is unprecedented in a civilised democracy, implying it is not just about removing exemptions but imposing taxes.
Graham Stuart
Con
Beverley and Holderness
Asked if the impact on children being withdrawn from schools had been greater than expected, suggesting that previous underestimations of policy impacts should be considered.
Oliver Dowden
Con
Hertsmere
Questioned why changes were imposed from January rather than at natural transition points, suggesting it is not fair on parents affected and could be considered cruel.
Ben Spencer
Con
Runnymede and Weybridge
Raised concerns about a lack of spare places in independent schools for certain years, potentially disrupting children's exam training due to policy changes.
Calder Valley
Asked why there is no tax exemption on tampons but one for private schools, suggesting this reflects priorities of Conservative members.
Luke Evans
Con
Hinckley and Bosworth
Asked for clarity regarding VAT implications on school fees that combine various elements like meals, which could create accounting problems.
Solihull West and Shirley
Asked about the impact of policy on pupils receiving continuity of education allowance and its implications for armed forces and diplomatic service recruitment.
Luke Evans
Con
Hinckley and Bosworth
Independent schools will have to convert their community facilities into revenue-making machines or face significant cuts, negatively impacting local communities and school partnerships.
Oliver Dowden
Con
Hertsmere
Independent schools in Hertsmere partner with state schools, providing opportunities for 1,400 pupils weekly. The new tax will harm these partnerships and reduce educational opportunities.
Baggy Shanker
Lab Co-op
Derby South
Asked about the tax on aspiration, emphasised that Labour seeks to encourage aspiration for all children in every school setting.
Calder Valley
Referred to significant cuts to state schools since 2010 and questioned the consistency of Conservative criticism on education funding.
Ashley Fox
Con
Bridgwater
Warned about the severe impact on children with special educational needs due to unaffordable fees, potentially overwhelming state provision.
Charlie Dewhirst
Con
Bridlington and The Wolds
Highlighted East Riding of Yorkshire's low funding for special educational needs per pupil compared to other areas, suggesting additional strain on local authority support.
Rachel Gilmour
Lib Dem
Tiverton and Minehead
Expressed gratitude for rebuilding Tiverton high school but disassociated from some personalised attacks. Mentioned grandparents saving money to support children’s education at independent schools.
Euan Stainbank
Lab
Falkirk
Supports the amendment, emphasising the urgent need to fund state education. Argues that private school spending per pupil is nearly 90% higher than in the state sector and notes a significant rise in real terms since 2003. Mentions opposition from Falkirk council towards reducing learning hours affecting pupils' educational journey.
Scott Arthur
Lab
Edinburgh South West
Intervened to comment on the absence of SNP MPs, expressing surprise at their lack of presence given their record on education in Scotland. Criticises the opposition's stance as disappointing.
Munira Wilson
Lib Dem
Twickenham
Ms Wilson supported new clause 9, arguing against the imposition of VAT on school fees. She pointed out that the tax is counterproductive and unfair to families who choose independent schools for their children's special needs due to inadequate state provision. She highlighted statistics indicating the over-subscription of special education schools and delays in issuing EHCPs, underscoring her concern for the well-being of SEND pupils.
Graham Stuart
Con
Beverley and Holderness
Mr Stuart interjected to remind Ms Wilson that Brexit was supported by the British people, not just the Conservative party. He suggested that her criticism of the government's decision on VAT imposition lacked respect for the democratic choice.
Scott Arthur
Lab
Edinburgh South West
Mr Arthur acknowledged the challenges described by Ms Wilson but argued that the policy aimed to raise income necessary to improve outcomes for all children. He suggested her position defended the existing system at the expense of potential improvements.
Christine Jardine
Lib Dem
Edinburgh West
Ms Jardine raised concerns about the policy's impact on Scotland, questioning how funds from VAT in the UK would be allocated to improve Scottish state education. She warned that parents might withdraw children from independent schools due to financial constraints, exacerbating pressure on already strained state resources.
Christine Jardine
Lib Dem
Edinburgh West
Intervened to argue against characterising parents who send their children to private schools as those who can afford it easily. She suggested that taxing these families could harm the children and place additional burdens on the state system, contrary to raising money to help others.
Ben Spencer
Con
Runnymede and Weybridge
Suggested it makes more sense to encourage people not to use the state for provision, thereby saving state funds that can be used elsewhere. This reflects a broader disagreement with Labour's approach to taxation and public spending.
Graham Stuart
Con
Beverley and Holderness
Questioned the impact of removing the VAT exemption for children with special educational needs in independent schools, citing Milton Friedman’s advice that taxing something leads to less of it. He also interjected about the relevance of debate to VAT on private schools.
Matt Rodda
Lab
Reading Central
Extended congratulations and asked for further elaboration on Dr Sandher's vision, particularly regarding affordable housing needs for young families in medium-sized towns and cities across the country.
Damian Hinds
Con
East Hampshire
Mr Hinds argues against the measures, citing concerns about significant educational disruptions, financial burdens on families, and impacts on faith communities. He emphasises the need for a post-legislative review of the music and dance scheme to assess its long-term impact.
Freddie Van Mierlo
Lib Dem
Henley and Thame
Mr Van Mierlo raises concerns about SEND provision for children returning to state schools, highlighting the additional burden this could place on them.
Edward Morello
Lib Dem
West Dorset
Mr Morello cites an example from his constituency where a primary school estimates that approximately 20% of their students would have additional SEND requirements if they were in the state system, indicating potential cost increases for local councils.
Jonathan Brash
Lab
Hartlepool
Mr Brash questions Mr Hinds about the current state of special educational needs provision and whether he regrets aspects of it, implying that some families feel they must pay for private education to meet their children's needs.
Shivani Raja
Con
Leicester East
Critiques Labour's proposal to impose VAT on independent school fees as a tax on education, stating it punishes ordinary families who have made sacrifices for their children's schooling. Argues that this measure undermines parental choice and disrupts educational stability without improving state education quality.
Edward Morello
Lib Dem
West Dorset
Opposes the imposition of VAT on independent school fees, arguing that it will harm families and worsen educational inequality. Emphasises the importance of funding state schools through equitable means without restricting parental choice or penalising working-class families.
Kieran Mullan
Con
Bexhill and Battle
Supports new clause 8 to ensure accountability for the VAT measure, criticises Labour's framing of the policy as punitive and divisive. Argues that imposing VAT is unjustified and fosters resentment without factual basis.
Ben Spencer
Con
Runnymede and Weybridge
He argues that the policy is harmful to independent education, causing significant disruption for children studying in independent schools due to the move to state schools. He cites data suggesting his constituency will be heavily impacted with 500-1,000 children needing to switch to state schools, affecting their academic progress and social life.
Sarah Olney
Lib Dem
Richmond Park
She supports new clause 9, arguing that it would protect children with special educational needs who do not have an EHCP from being forced into state schools due to increased fees. She warns about the potential strain on local authorities and state schools unable to manage the sudden influx of students with SEND.
Lewis Cocking
Con
Broxbourne
Mr. Cocking provided a detailed case study of Haileybury Turnford Academy in his constituency, illustrating how private schools can support state schools financially and academically. He argued that adding VAT would harm these partnerships, leading to reduced financial and resource support for state schools.
Torsten Bell
Lab
Swansea West
Mr. Bell interjected to argue that Mr. Cocking's example actually supports the Government’s policy, suggesting that higher fees paid by private school attendees could fund additional support for state schools.
James Murray
Lab Co-op
Ealing North
Mr. Murray responded to criticisms of the Bill, clarifying exemptions for higher education and English language teaching. He emphasised that the Government's policy aims to clarify and simplify taxation rules.
Damian Hinds
Con
East Hampshire
Mr. Hinds questioned whether private tutoring should be exempt from VAT, arguing it is similar to full-time education but taxed differently.
Sarah Olney
Lib Dem
Richmond Park
Ms. Olney interjected to point out that the Liberal Democrats had a fully costed programme in their 2024 election manifesto which did not include VAT on school fees.
Munira Wilson
Lib Dem
Twickenham
Ms. Wilson provided no direct contribution but signalled opposition through her intervention.
Luke Evans
Con
Hinckley and Bosworth
Mr. Evans questioned whether the Treasury had considered additional accounting burdens for schools under the new regulations.
Graham Stuart
Con
Beverley and Holderness
Mr. Stuart inquired about the tax implications of educational establishments providing modular elements that could be chosen independently by pupils.
Kieran Mullan
Con
Bexhill and Battle
Mr. Mullan interjected to argue against the Minister’s framing, stating there is no basis for saying children in the state sector have less due to VAT exemption for private schools.
Tulip Siddiq
Lab
Hampstead and Highgate
The amendments will raise £310 million per year by 2029-30, which will be used to support the Government’s first steps and other priorities. They aim to improve the comparative advantage for UK-resident home movers and first-time buyers while ensuring that no additional barriers are faced by those coming to the UK and buying their first or only home.
Luke Evans
Con
Hinckley and Bosworth
The change to stamp duty is likely to affect first-time buyers negatively because they are now being brought into paying stamp duty, making it harder for them to realise their aspiration of getting into the housing market.
Noah Law
Lab
St Austell and Newquay
The decision to raise stamp duty is vital for tackling the plague of second homes that we have seen in communities such as Cornwall, supporting home ownership by ensuring a greater advantage over second home buyers.
Kit Malthouse
Con
North West Hampshire
The Minister should declare her interest because she is herself a landlord. Casting aspersions on people who own additional properties is unfair and may negatively impact those who have no option but to rent due to inflated property values.
James Wild
Con
North West Norfolk
Mr. Wild argues that new clauses would require the Chancellor to publish assessments of the impact of increased stamp duty rates on the private rental sector and overall housing market within six months of the Bill passing into law. He cites expert warnings that the measures could increase rents, reduce supply of rental properties, and negatively affect labour mobility.
Noah Law
Lab
St Austell and Newquay
Mr. Law interjected to agree with Mr. Wild that reducing the prevalence of second homes is crucial for ensuring people can afford to live and work in their communities.
Luke Evans
Con
Hinckley and Bosworth
Mr. Evans interjected, pointing out that the measures could stifle first-time buyers due to higher tax payments when buying houses, thereby causing a conflict with the Government's aim of increasing property availability for purchase.
Kit Malthouse
Con
North West Hampshire
Mr. Malthouse interjected to highlight the potential for properties in London to be owned by foreign corporations domiciled in tax havens due to penal taxation, thereby avoiding stamp duty.
Calder Valley
Mr. Fenton-Glynn interjected, noting the increase in housing waiting lists since 2019 and challenging Mr. Wild to review the impact of previous government actions.
Gareth Snell
Lab Co-op
Stoke-on-Trent Central
Mr. Snell interjected, asking for data on properties with paddocks that could be claimed to have mixed-use tenure to avoid higher stamp duty rates.
Jayne Kirkham
Lab Co-op
Truro and Falmouth
The amendment will help address the issue of second homes in Cornwall, where a significant portion of houses are second homes. The speaker welcomes this measure to tackle disruptive properties.
Daisy Cooper
Lib Dem
St Albans
The Lib Dems argue that raising stamp duty is not the best way to address the root problem of second homes disrupting local communities. They propose giving local authorities more power to regulate short-term lets and impose higher council tax on overseas residents.
Tulip Siddiq
Lab
Hampstead and Highgate
The speaker supports the Government's measures, stating that they will support home ownership among first-time buyers. She also emphasises that the information on impacts is publicly available.
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