We are now sitting in public and the proceedings are being broadcast. I remind Members to switch off any electronic devices. We will now hear oral evidence from Alex Greenwich, MP for Sydney in the Parliament of New South Wales, and from two witnesses joining via Zoom: Dr Chloe Furst, a dual-trained geriatrician and palliative care physician in South Australia and a board member of Voluntary Assisted Dying Australia and New Zealand, and Professor Meredith Blake from the University of Western Australia. Could the witnesses briefly introduce themselves for the record, starting with Alex Greenwich?

Alex Greenwich: My name is Alex Greenwich, Member for Sydney in the New South Wales Legislative Assembly, and I introduced our voluntary assisted dying laws.

Dr Furst: Hi, nice to see you all. I am a geriatrician and palliative care specialist in South Australia. I have been quite instrumental in the implementation of South Australia’s voluntary assisted dying laws. I am a practising practitioner with experience with over 150 patients.

Professor Blake: Nice to see you all. I am a professor of criminal law, and health law and policy, in the law school at the University of Western Australia. I have been writing, researching and presenting in the area of end-of-life choices for about 25 years.

Before calling the first Member, I remind all colleagues that questions should be limited to matters within scope of the Bill. We have to stick to the timings set out in the programme motion. The first session will finish at 12.30 pm, so can we stick to the points and keep them as short as possible, please? Members who wish to ask a question have indicated that, and I will call them in no particular order. I will start with Simon Opher.

Q265 I would like to direct this question to Dr Furst. There has been some concern in this country about the efficacy of end-of-life medications. Could you share some of your experience in Australia about how effective they are and any problems you have encountered?

Dr Furst: The medications are completely effective. I have not experienced any failures. One of the things I feel quite comfortable reassuring my patients and their families is that this medication absolutely works.

In terms of oral administration—the default option in South Australia unless the patient cannot consume the medication or has problems with absorption—it puts them to sleep within a couple of minutes. They are heavily sedated, as if undergoing an anaesthetic, and then death ensures—that is, the heart stops and respiration stops. For about 95% of patients, that happens within about half an hour. There is a small, small percentage of patients who will continue to be sedated but circulation will not cease for some hours after that. We warn patients and, more importantly, their families that this may be the case, and that is an enzymatic issue.

The medication it is highly effective. Personally, I have not had any experience where patients have had complications—vomiting, respiratory distress or any other concerns. Certainly in South Australia, those have not been issues that have been reported to us. I think there have been a couple of cases of vomiting elsewhere, but the medication has worked in all cases, as far as I am aware, around Australia as well, so this has not been an issue.

IV administration is also highly effective. By the time the medication has been administered completely, the patient is deceased.

This works—it is peaceful. Patients say to me, “I want to go to sleep and not wake up,” and that is absolutely what happens. It is a very peaceful death.

Q Just to confirm—you have not had any failures of treatment, as far as you are aware?

Dr Furst: There have been no failures of treatment in South Australia, as far as I am aware. I am not aware of any other particular ones around the country that have been heavily broadcast to us.

Q To follow up on that, there is no requirement that the doctor is present when the person self-administers the substance that leads to assisted dying. Am I correct? If that is the case, why does the law not make it necessary for the doctor to remain present until death, because at that point, the doctor would pick up any complications, would they not?

Dr Furst: Every legislation within Australia is slightly different. For South Australia and Victoria, you are correct—well, there is pretty much no obligation all around Australia for a doctor to be present for self-administration. The reason for that is to give individuals autonomy over their death, and over the time and place of their choosing. We in South Australia do touch base with what we call the individual’s contact person to understand if there have been any complications and to check in after the death. A large number of our patients, though, will seek out support from a voluntary assisted dying nurse navigator, who is often present in the house just as a support person. We do also have a lot of feedback from them as to any complications, but the doctor often, or a nurse, will come at a later time to declare life extinct.

The reasoning was that we did not think that there would be complications and we wanted to give people autonomy. We work on a permit system in a lot of jurisdictions in Australia, so people have a permit; they get given their substance and they can take their substance at a time of their choosing. They might have the substance in their house for weeks or months, potentially. Again, there is no obligation to follow through with taking that substance, which we also think is quite important. We know that in Australia, about 30% of patients who have a permit or who are approved for voluntary assisted dying actually decide that they do not want to consume the substance, but it is about giving them that choice and autonomy, and the strength to maybe pursue other lines of therapy.

Q We have had lots of witnesses testifying about gaps in palliative care and end-of-life care provision here in the UK. What is the current state of palliative care and end-of-life care provision in Western Australia, please?

Dr Furst: I am in South Australia, but a recent survey by Palliative Care Australia surveyed over 900 palliative care specialists, and more than 80% of patients receiving voluntary assisted dying are actually getting combined palliative care and voluntary assisted dying. In our legislation in South Australia, there are key provisions for the monitoring of the funding to palliative care to ensure that no palliative care funding is diverted to voluntary assisted dying, but we feel very strongly that palliative care and voluntary assisted dying should go hand in hand. That is a feeling that is being seen around the country now. Palliative care physicians who are finishing off training now see voluntary assisted dying as part of their core business. It is no longer seen as something that should be provided by separate practitioners. It is really becoming quite integrated.

Professor Blake: I am coming in from Western Australia. We were the second jurisdiction in Australia to introduce voluntary assisted dying laws. Ours have been operative since July 2021, so we have had the opportunity to collect quite a lot of data. Year on year, the number of people utilising voluntary assisted dying in Western Australia is increasing. In the year 2023-24, there were 292 deaths by voluntary assisted dying, which represented 1.6% of WA deaths. I agree with Chloe and confirm her view around the palliative care side of things: 83.8% of those persons who accessed voluntary assisted dying were also accessing palliative care.

Q On that point about palliative care, I will direct my question to Dr Furst. What has been the response from palliative care professionals to the introduction of assisted dying in Australia? We have heard evidence from people working in the sector in the UK, but I am keen to hear about your experience in Australia. I understand that Palliative Care Australia’s national workforce survey explicitly looked at this, so I am keen to hear what its findings were.

Dr Furst: It has been a journey, certainly. Victoria started their voluntary assisted dying in 2019. I would be lying if I said that the palliative care community were completely on board with it at that point, but over the last five to six years there has been a real shift in mentality. We have seen that they can go hand in hand. Palliative care is about end-of-life choices. Voluntary assisted dying is about end-of-life choices. It is about putting the patient and the individual front and centre, and working with them. That is fundamental to palliative care. We have realised that voluntary assisted dying is a promotion of palliative care and it gives back choices.

Probably some of the older palliative care clinicians have not embraced voluntary assisted dying quite as much. That is probably very generalised, but certainly new consultants and new doctors that are coming through really see this as something that they want to do. I do not think that there is any animosity any more between the practitioners that choose to work in this space and those that do not. I get huge amounts of support from other palliative care physicians that do not necessarily act as practitioners. There is no real divide. It has been embraced, to be honest. In another five years, I think there will probably be very few palliative care practitioners who do not support this, unless they are true conscientious objectors for their own reasons—I guess, probably religious reasons. Palliative Care Australia and the peak medical bodies in Australia have generally shifted to see this as part of patient choice.

Alex Greenwich: The journey to voluntary assisted dying in New South Wales, and indeed across every Australian state, has benefited palliative care access and funding. In New South Wales, 85% of people who have accessed voluntary assisted dying are receiving palliative care. As part of the process, the co-ordinating and consulting practitioners also advise them on palliative care. The doctors are trained on the latest advances in palliative care. Baked into the principles of our legislation is access to palliative care for all citizens of New South Wales. Importantly, throughout our debate, whether Members supported or opposed the reform, our entire Parliament came together to ensure palliative care received an increase in funding and any access issues were addressed. The Australian experience with voluntary assisted dying is that it benefits and strengthens the palliative care system.

Professor Blake: Can I can I add to that? The Voluntary Assisted Dying Board in WA, as in all the other jurisdictions, produces a report. The very strong sentiment of the Voluntary Assisted Dying Board, and indeed within the Western Australia community, is that voluntary assisted dying is seen as part of the end-of-life journey. The board’s report states that the statistics and experience of Western Australians

“confirms…that voluntary assisted dying is an established and enduring end of life choice”.

For that reason, there has been quite a significant awareness that practitioners should be able to bring up voluntary assisted dying with the patient as part of that suite of end-of-life choices. That has been something that the evidence has suggested is very important, because if the practitioners are feeling that they cannot raise it in that context, that is having a detrimental effect on the patients who would like information on it. That has been our experience in Western Australia.

Q My question is to you, Mr Greenwich. I understand that in New South Wales—and please do correct me if I am wrong—similarly to the Bill we are proposing, you adopted legalised assisted dying for those who are terminally ill and will die within six months, but you also added an additional criterion, which was within 12 months for a neurodegenerative disease such as motor neurone disease. That element is not proposed in our Bill, but we have heard from other witnesses over previous days about that issue. What reflections might you have regarding that, and why did you add that element into the Bill beyond the six months that we are proposing here?

Alex Greenwich: Thank you very much for your question. At the outset, I will just stress that every jurisdiction should legislate the form of voluntary assisted dying that is appropriate to them. In New South Wales, that was six months for a terminal illness, or 12 months if that terminal illness was a neurodegenerative disorder. We had learned from the other schemes in Australia that that was going to be important because of the decline that occurs in neurodegenerative disorders like motor neurone disease, for example. It was because of that that we went down that path.

Professor Blake: I should add that in Queensland, there is no such distinction in life expectation between other diseases and neurodegenerative diseases. Queensland legislation is different: it sets a 12-month period of expected death, and the reason for that approach was in response to feedback from people living with neurodegenerative disease that they felt that they were being put in a different position to people suffering from, or experiencing, other terminal illnesses. The Queensland Parliament took a different approach to address that particular feedback.

Dr Furst: From South Australia’s perspective, we are similar to New South Wales; we have less than six months for all conditions bar neurodegenerative conditions, which is less than 12 months. As a clinician, personally, I think that 12 months for neurodegenerative conditions is really helpful, because—as you have heard—if you are looking at prognosis and trajectories, with things like cancer, a patient will be going along and then often have quite a steep and rapid decline. That six-month prognosis is quite noticeable, but for patients with conditions like motor neurone disease, their decline can be slow and very distressing to them. Also, when trying to balance the prognosis along with getting them through the process, 12 months is really helpful, so if there was any chance, I would be strongly advocating for that.

Q Thank you to the witnesses for joining us this morning. I would like to address my comments to Alex Greenwich, if I may, but also come back to Dr Furst and Professor Blake.

It is really valuable for us as a Committee to hear your reflections on the experience of the process of passing this legislation. How did you manage to keep that process patient-centred but also take into account the concerns around the broader societal issues, particularly when it comes to equality and human rights—those really important issues? What was that process like, and what are your reflections on it? Also, Dr Furst and Professor Blake, one thing that I feel really strongly about is having really good training around assisted dying, and end-of-life care and choice. Would you like to make any comments on what that looks like?

Alex Greenwich: Thank you very much for that question. I will take you through a little bit of the journey to voluntary assisted dying in New South Wales, what encouraged action, and then the safeguards that we put in place.

The New South Wales coroner had reported to us that there were a number of really horrible suicides of people with terminal illnesses who felt they had no option—that those were cruel and lonely suicides. That was backed up by paramedics and police who would arrive on site. Myself and my parliamentary colleagues decided, “We can do better, and we can regulate in this space.” Voluntary assisted dying in New South Wales is an important form of suicide prevention. What voluntary assisted dying does, in the model that we legislated, is ensure that a person who has a terminal illness and knows that it is going to be a cruel and painful end of their life is instead directed to a doctor—a doctor who will be able to take them through all of their palliative care options, provide and link them with social supports, and give them the choice to have a death that is better than their illness would otherwise provide.

It has been important to make sure that our legislation is limited to that cohort of people who are terminally ill and know they will have a cruel end of life. Our legislation is not about people with anorexia nervosa. It is not about people with a disability. It is not about people who are feeling a burden. It is about a very limited and narrow cohort of people who know that they are going to have a very cruel and painful end of their life, and want that control to know that they can have a death that is better than what their illness would otherwise provide.

We have ensured that decision-making capacity needs to be enduring. We have ensured that a person cannot be under any form of coercion. We ensured that we had a really strong period of implementation, from the time the Bill was passed to 18 months later, when it came into effect, to make sure that our health system and the various doctors required training.

In New South Wales, the experience of voluntary assisted dying is that it has been a form of suicide prevention, and that it has also been, as I explained earlier, very pro-palliative care. As I reflect on our parliamentary debate, it was also one of the first times that our Parliament had grappled with the concept of death. We were very honest about it, and we were very honest in having to admit that we are all going to die, that there are some people with some terminal illnesses who are going to die in a really cruel and painful way, and that we could provide them with an option of control, peace and respect. We believe, and our annual reports into our legislation indicate, that we have been able to provide that. I am happy to answer any further questions, but I will wrap up on that.

Professor Blake: Given that the Western Australia legislation has been in force rather longer than the other jurisdictions that have been talked about today, we have had the opportunity to reflect upon it—I am speaking here as a lawyer; I assume that is why I have been invited to talk—and that has revealed some of the very good things about the working of the legislation, but also some of the challenges that have emerged.

As Dr Furst has said, the legislation in all Australian jurisdictions varies slightly, but it follows a particular legislative model, and is highly prescriptive. It requires a number of requests and, in Western Australia, assessment by two different practitioners. In Western Australia, there is no judicial double-checking of that process. Although I note that that is contemplated within the UK law, that is not something that we have found to be necessary or even appropriate in Western Australia, and I think that would be the case in other Australian jurisdictions.

One of the issues we have experienced is that there is a struggle to get people to take up the training, whether that be medical practitioners or nurse practitioners. One of the thoughts around that has been the very prescriptive nature of the model, which requires a lot of work on the part of the practitioners. It is worth bearing in mind when looking at your piece of legislation that the more prescriptive it is, the more work it requires on the part of practitioners, and that is a lot of work. We need those people to undergo the training in order that the process is done properly and all the safeguards that are included within the legislation—and they are extensive—are respected. That is something to bear in mind.

We have prescriptive provisions around capacity and voluntariness and lack of coercion. I would add that we also have a requirement around residency. If we are looking at when the legislation has come before a tribunal or judicial body, the only circumstance—in Western Australia, at least—where it has come before the tribunal, which is the State Administrative Tribunal, has been where the practitioner has regarded the patient as not eligible on the grounds of not fulfilling the residency requirements. There has been no other ground on which a matter has been taken to a judicial body.

You asked about the training. That is an essential requirement for practitioners who are involved in making assessments and in the whole process. It is intrinsic to the operation of the Act. The feedback I have heard is aligned with what Dr Furst has said—that no divisions have arisen within the practitioners here, and that those who have chosen to do the training are indeed very valued and very much appreciated by the people who have accessed the scheme.

I will say two more things about the regulation. One is that in the report that has been handed down, the only negative feedback has been about delays. That has been identified as being due to a lack of education among health professionals. One of the recommendations of the report is that education really needs to increase so that people’s journey on VAD is not unnecessarily delayed and, perhaps, their wishes are not able to be granted.

The second thing is on conscientious objectors: 13.7% of applications for VAD in Western Australia from 2023 to 2024 were declined on the basis of conscientious objection. But in Western Australia, unlike some other Australian jurisdictions, if a practitioner declines to become involved in the process, they are required by law to give the patient an information sheet outlining options around voluntary assisted dying. That is actually mandated in the legislation.

I have probably said enough for now, so I will hand over to Chloe.

Dr Furst: I completely agree with Meredith that the training is fundamental. For most jurisdictions, it probably takes a full day. It is often an in-person event followed by an exam, which you have to pass. In South Australia, we had a whole lot of mandatory questions that you actually had to pass to be eligible, to make sure that you were upholding the legislation.

This is so different from anything else in medicine. In any other part of medicine that I practise, if I see a process that I think can be improved—if I see efficiencies that can be made or bits of the system that are not adding to patient care—I can choose to adapt the process as I see fit to give the patient the care that I want to give or that is compatible with what the patient wishes. That is so different from voluntary assisted dying, where, as Meredith said, it is so legislated, down to who can be a witness for various documents. As a doctor, the amount of documentation that is required for voluntary assisted dying is second to nothing. We just do not do that kind of documentation in any other areas of medicine. So it is quite different, and it really does require being quite precise around that documentation and making sure that you are meeting all the timeframes and guidelines. The training is hugely important in terms of the operational component.

There is also the training around end of life and conversations, and how you support the patient and the families. That is a lot harder to teach. That is, I guess, why people will fall into this, and why a large number of palliative care doctors will do it—because it is already second nature to them or they already have the relationship with the patient and they see these conversations as something they are good at and good at facilitating.

So there are two parts of that training that are really important, and then, as Meredith said, there is also the training we need to be giving to the rest of our workforce, and really all health practitioners. A patient might ask the social worker, the orderly or the dietician about assisted dying, and they have to know how they can respond and how they can connect that individual to the right practitioner. That is really important. We have done a lot of work in South Australia, as all the other jurisdictions have, around upskilling the whole workforce, because this is everyone’s role and job.

I also wanted to speak briefly on what we in South Australia call the gag clause. In South Australia and Victoria, we are not allowed to bring up voluntary assisted dying with patients, and that is really, really problematic. From my perspective, it leads to poor provision of care. In medicine, when I am talking to a patient, in every other area, if they needed treatment, I would be obliged, and it would be good practice, to tell them about all the treatment options that are available to them. If someone had cancer, I would want to be telling them about good palliative care, potentially surgery, and radiotherapy and chemotherapy, yet voluntary assisted dying is the one thing we are not allowed to talk about and is taken off the menu. Some people may not know that voluntary assisted dying is available to them. They might be waiting for me as the doctor to bring it up to them. I have brought up every other option for them; why am I not able to talk about voluntary assisted dying? I just think it is really important that we do not stigmatise voluntary assisted dying and that we see it as a valid option for people.

Professor Blake: To add to what Chloe said, in Western Australia practitioners can raise voluntary assisted dying as long as it is in association with other end-of-life choices, but the way the legislation is worded is confusing, so one of the recommendations in the most recent report is that that be removed altogether so that voluntary assisted dying is treated like any other treatment option. As Chloe indicated, the evidence was that treating voluntary assisted dying differently can compromise the whole end-of-life journey, because it interferes with discussion of other end-of-life options. The strong recommendation from the board is that it be removed altogether and that voluntary assisted dying be treated just like any other appropriate treatment option so that the patient has a true choice.

Colleagues, before we continue, let me say that we have 13 questions and less than 30 minutes, so the question and the answer need to be no more than two minutes.

Q I want to ask about capacity. Chloe, I think you said patients are sometimes given the drug some time before they die, so I want to understand where capacity assessments are taken and at what stage during the process.

Dr Furst: Capacity assessments are taken every time a doctor sees the patient. In my state, that would be at first assessment—first request—then a consulting doctor would come and do another hour-long assessment of the patient and assesses capacity at that stage, and then I would come back as the co-ordinating doctor for a second or third assessment of the patient, and assess capacity. They would then be given their drug, if it is self-administered. We assume and hope that they retain capacity, and we strongly advise patients and families that, should they lose capacity, they will have voided their permit and they cannot take the drug, but there is less oversight of that. However, we know that the majority—over 80%—of these patients are connected with palliative care, so we often have community teams going in and seeing them, and we are still touching base with them, maybe more peripherally, and checking capacity as we are having conversations or as we are coming and doing home visits from a palliative care perspective. If it were deemed that the patient is quite delirious, the permit would be voided and we would remove the substance from the house. If it is practitioner administration, we are also, obviously, testing capacity right at the moment that we are administering the substance.

Q I will direct this question initially to Mr Greenwich. The issue of coercion has been a significant concern to many in the debate. In line with the New South Wales legislation, the Bill as proposed does not provide a definition of coercion, either explicitly or by reference to other legislation. Have you found that to pose a difficulty in your jurisdiction?

Alex Greenwich: In New South Wales, our legislation deals with and goes through coercion in quite some detail, with pathways to assess it. It deals specifically, for example, with a situation in which someone is under coercion from a person who is a beneficiary of their will; obviously, the person seeking voluntary assisted dying then becomes ineligible. In the space of coercion, that is a key part of the training for a doctor who will be a consulting or co-ordinating practitioner. We have made it a criminal offence in New South Wales, and indeed our board will report on it and on whether eligibility for access to voluntary assisted dying has been denied to someone. Our most recent report indicates that it has.

The overwhelming experience is that having voluntary assisted dying in place is itself a safeguard from coercion for people with a terminal illness. If someone wants to end their life quickly, voluntary assisted dying through a regulated process is not the option that they are going to take. Someone engaging in voluntary assisted dying will be assessed against coercion and against decision-making capacity, and will have to make sure it is an enduring decision.

When we talk about coercion, and the concern that people may currently have in the UK about people with a terminal illness feeling in any way coerced, the experience in New South Wales and elsewhere in Australia is that voluntary assisted dying has provided a safeguard in that regard. Our legislation, the training and the reporting is very clear on that.

Q Can I have one minute with Dr Furst and one minute with Mr Greenwich? Dr Furst, I have had a look at the reports of the South Australia Voluntary Assisted Dying Review Board, and I can find no data on referrals for additional assessments of eligibility or decision-making capacity, or reasons why people were considered ineligible. There is no provision for reporting on complications, the time between the administration of the drugs and loss of consciousness, or the time between the administration of the drugs and death, and as we have heard there is no requirement for a doctor to be present. I do not understand how you can say that there is no evidence of coercion, issues around capacity or complications at the death, because you clearly do not collect the evidence on those things.

Dr Furst: I do not think that is the case. We are seeking out from relatives—within a month, normally—around any complications. As I said, we are also informally speaking to the nurse practitioners who are on site, but I do not think that that has been published as part of our state report. In terms of coercion, I would say that it is much more likely that patients are being coerced into invasive and intensive treatments, like cancer treatments such as chemotherapy, than being coerced into voluntary assisted dying.

Q Okay. Thank you very much for that.

Mr Greenwich, you said a couple of things. You said that voluntary assisted dying supports palliative care in terms of funding. I read that although New South Wales committed to spending an extra 743 million Australian dollars on palliative care, in fact the budget was cut by 249 million Australian dollars in 2023; at the same time, New South Wales allocated 97 million Australian dollars in new funding to assisted dying. I do not understand how you think that palliative care benefited from this introduction.

You talked about suicide prevention. The fact is that unassisted suicide rises in states that have assisted suicide laws, because suicide is contagious. It is too early to tell what is happening in New South Wales, but in recent years in Victoria unassisted suicide rose by 50%, while in New South Wales, before it had this law, it stayed the same. Again, I do not understand how you think that this helps with suicide.

We have just heard about the so-called safeguards and we heard yesterday from Australian colleagues. Do you agree that the safeguards that were introduced were in fact impediments to access and that it would be the right thing to do to remove them?

Alex Greenwich: I will try in the time to answer all three of those questions and I am happy to provide more information on notice as well.

On the palliative care funding, it is accurate that New South Wales had a record boost in palliative care funding. Not all of that could be expended as the workforce was being trained up, but that commitment from all sides of our Parliament is there. You can always seek to improve palliative care funding; that in no way should be competing at all with voluntary assisted dying.

When it comes to the question of suicide, as I addressed in my opening statement, voluntary assisted dying is a form of suicide prevention. If someone wishes to end their life, voluntary assisted dying is not the process they are going to take. It is a process that provides a safeguard to ensure that people are getting full information on palliative care and getting social supports.

In terms of the safeguards in our legislation and being proposed in your legislation, it is really important that you have in your head and in your heart the experience of a person with a terminal illness who is going to have a cruel and painful death. We are talking about people who are dying and who want to have a death better than their terminal illness would otherwise provide them with. We are talking about a small cohort to whom we in New South Wales sought to give peace, dignity and control. We are really proud that we did.

I remind colleagues to stay within scope of the Bill, please.

Q I want to go back to the issue of gag clause/doctor initiation. Alex, could you quickly talk to us about the thought processes? Can you say why some states introduced it and why you did not? How in legislation have you circumscribed the way doctors should approach this with patients? Perhaps our two medical guests could talk about how, in territories where there is not a gag clause, doctors are obliged not to lean towards a particular recommendation, as they might do with other courses of treatment.

Alex Greenwich: Our experience in New South Wales was based on evidence from doctors and people with the lived experience of a terminal illness. It is an extremely confronting thing to be told that you have a terminal illness, to be told that you have six months to live or to be told, if you have advanced bowel cancer, for example, that your end of life will look like you are going to be choking on your own faeces.

In New South Wales, we decided that it is important that that person, who has been told that they have a terminal illness, is able to have a full conversation with their doctor about all their options—one of those options being that they could have a better death than their illness would otherwise provide them with. We decided that being able to really talk through with your doctor all your options—from access to palliative care, to social supports, to what the process of voluntary assisted dying looks like—was so important. We believe that it is working really well in practice. We would be concerned about gagging those conversations, as that would ensure that a patient is not receiving the full information about their end-of-life choices.

Q But how did you approach that in the legislation? Is it silent as to what doctors should do, or does it have a prescription?

Alex Greenwich: Yes. In our legislation we make it clear that the doctor has to make sure that the patient is aware of their palliative care options, and we have referral pathways for psychosocial support as well. All that is prescribed in the legislation. Obviously, in the training for voluntary assisted dying a lot of that stuff is covered. In the legislation, we also define the things we want to have in that training.

Doctors?

Professor Blake: In Western Australia, which was the second jurisdiction to introduce voluntary assisted dying—

Order. I am sorry, Meredith, but we have to move on to the next question.

Q My question is probably more for Alex. When you were coming to the criteria and the safeguards in the Bill in your state, how did that then interplay with other regions and states nearby? Obviously, in the UK the Bill that we are looking at would be applicable to England and Wales. Scotland has its own assisted dying Bill, which is happening at the minute, and we will hear about that later on. Is there information you can share? Can you talk about how different states and regions interplay with each other when they have assisted dying laws?

Alex Greenwich: New South Wales was last in the nation when it came to adopting voluntary assisted dying, and that was actually beneficial because we were able to draw on the experiences of particularly Victoria and Western Australia to make sure that things like the gag clause were not in place. With all respect to the introducer of the Bill, as a result of the Australian experience this is not a revolutionary law reform. It has been tried and tested, we have appropriate safeguards in place throughout Australia, and they work.

On that—

Order. I am sorry, but you are only allowed one question.

Q My question, directed at Chloe, is about the practical application of access to doctors for patients, as suggested in the proposed legislation, and how doctors have those conversations with patients—particularly, when it comes to geriatricians, older patients. We heard from somebody yesterday who said that there were concerns around how older people were treated, and the potential risk of elder abuse. I would be interested in the practical application of those conversations, in your experience.

Dr Furst: First up, a patient has to specifically ask me about voluntary assisted dying. They have got to use words that really imply that that is what they want. I will often ask any relatives to leave so that I can have a conversation just with them, to try and reduce the risk of coercion, and then invite the family back.

One of the practical things that I often ask the patient is when they started thinking about this. Is it something that they have always considered should be a right, or is it more of a new-found belief given their current suffering? I want to understand what their current suffering is. I ask specifically whether they feel a burden on their family and friends. It is an hour-plus long conversation to really understand them and their suffering.

Again, I make sure they understand all the other treatment options available to them and what good palliative care looks like. I will often be prescribing other medications as part of that good palliative care—opiates and anxiolytics. As a geriatrician, I am also making sure that their mood is also addressed, and that this is not a reactive depression. I am really doing a holistic and comprehensive geriatric assessment as part of that voluntary assisted dying assessment as well.

Q This question is for Dr Furst and Professor Blake. Many of us on the Committee are committed to the need to protect disabled people and to ensuring that the Bill has as many safeguards in as possible. We heard evidence yesterday that anorexia may qualify under assisted dying laws in other jurisdictions. Have there been any cases of people with anorexia accessing assisted dying in Australia, and in your view do the respective laws across Australia allow for that? Secondly, are there any lessons that we can learn on building in safeguards in relation to those with learning disabilities?

Dr Furst: All around Australia, mental health as the primary terminal illness is excluded, so anorexia by definition is excluded. I have had a patient come to me with anorexia as their terminal illness requesting voluntary assisted dying. It is a relatively easy assessment because they do not meet the standard criteria, and I was able to explain to them that they were not eligible. But it opens the opportunity to have good, in-depth conversations with them about what they are going through.

I cannot talk to the learning disabilities question, other than to say that every time a patient comes to me the assessment is directed to the patient. I saw a patient today with motor neurone disease who is on continuous bi-level positive airway pressure and is using Eyegaze. The assessment and conversations I have with her are based around what she can do for me. I have had patients who have been able to put a thumb up and down, and I have had trachy patients. I cannot necessarily talk about learning disabilities, but as a holistic practitioner you are trying to make sure that the patient in front of you understands everything and is given the full opportunity to express their wishes.

Professor Blake: I would just say—

Order. I can only take one answer. I am sorry, Meredith, but we have not got time. It is one answer to one question.

Q Dr Furst, can I ask a follow-up about anorexia? I know that anorexia is not classified as a terminal illness, but long-term starvation can lead to severe physical health conditions, and patients may end up in palliative care. Do you have any experience of those cases in Australia?

Dr Furst: We have experience of those cases in palliative care, but I would still say that they are not eligible for voluntary assisted dying. None of us would feel comfortable, because the condition has to be irreversible. Capacity-wise, you would have to make sure that they had capacity, and I would question whether someone that is anorexic truly has capacity around their illness.

Q Mr Greenwich, we are minded that as well as passing really good legislation we want to get public confidence behind this. We have heard a level of concern from disabled people’s representative bodies about the inadvertent implications of this law for disabled people. Were those concerns shared when you took your legislation through, and how it has gone since the implementation of the legislation?

Alex Greenwich: In New South Wales, and across Australia, having a disability or complex mental health issue like anorexia does not make you eligible at all for voluntary assisted dying. The legislation we are dealing with and you are dealing with is not for people with a disability or anorexia nervosa, and not for people who feel they are a burden. It is for people with a terminal illness who may want the choice of a death that is better than what the illness would otherwise provide.

We worked closely with disability groups in New South Wales. Their main concern was that they would be treated equally in terms of access to the law if a person with a disability had a terminal illness. The key point is that this legislation is a safeguard to those concerns. To the point about people who are starving themselves, that is happening today in the UK because people do not have access to voluntary assisted dying. They are starving themselves to death rather than accessing a regulated scheme where they can discuss all their options and choices.

Q This question is probably best for Alex. Yesterday we heard evidence about the health inequalities in our society and fears that they would be exacerbated by the introduction of assisted dying. What was the experience in Australia?

Alex Greenwich: If I think of our health system and how we adopted voluntary assisted dying, like all health systems we were under pressure following the covid pandemic. By legislating in this space you give your health system the priority of dealing with this, making sure doctors are trained to be able to address it and that there is a good implementation period. I believe the Bill has two years, and I think that is completely appropriate to make sure your health system gets up to speed. When it comes to end-of-life choices and healthcare, voluntary assisted dying provides a great deal of honesty and safeguards.

I think this will probably be the last question.

Q This question is for Meredith Blake. Does it concern you that a large proportion of people who opted for assisted dying cited being a burden as their reason?

Professor Blake: That is not the evidence that we have got.

Let me just clarify. The state’s own report in 2023-24 had 35%.

Professor Blake: We have in a place a system whereby at least 20 case studies are examined by the board every year to look at the reasons behind the taking up of the option. As a means of checking up on how the system is working, that has proven to be very workable.

There are people who feel that they are a burden. People can feel that they are a burden, and that is part of their autonomous thinking. People have their own views of their own life. The system in place is adhering to the very well-established tests for valid decision making in healthcare generally. If we are talking about people making decisions because they feel like they a burden, well, people make decisions about their healthcare in all sorts of contexts. We have a system of ensuring that decisions are valid, which has proven to be long-standing and successful. That is that the person has capacity, that their decision is voluntary, and that they are informed of the relevant facts and information. That test has stood the test of time, and our legislation, and the legislation throughout Australia, seeks to replicate it.

I would add that with our voluntary assisted dying laws, there is a very clear emphasis on the information that the patient is entitled to. The information that the practitioner has to give to the patient is extensive. It must go through the palliative care options. It must go through with them what voluntary assisted dying involves, and it must also include discussion of, “What if the voluntary assisted dying moment does not work?”

The list of matters that must be discussed by the practitioner is very extensive. In no other sphere of medicine where a patient is working with their healthcare practitioner does this level of informed consent apply. In terms of medical practitioners ensuring that people have the capacity to make the decision, are making it voluntarily and have all the relevant information at their disposal, we cannot find anywhere, in any other context of healthcare, the level of safeguards and protections that we find in this sphere.

If there are people who are saying they are a burden, that does not mean that their decision is not voluntary. That does not mean that they do not have the capacity. It simply is an expression of how they feel. The key thing is not whether they think they are a burden; the key criteria are whether they have the capacity and whether their decision is voluntary and free from coercion. Health practitioners make those assessments all day, every day.

I am taking that as a no.

Order. I remind colleagues that it is unacceptable for a Member to interrupt a witness once they have started answering. That brings us to the end of the time allocated for the Committee to ask questions. I thank all witnesses on behalf of the Committee for their evidence.

Ordered, That further consideration be now adjourned. —(Kit Malthouse.)

Good morning everyone. Will Members please ensure that all electronic devices are turned off or switched to silent? We continue line-by-line consideration of the Finance Bill. The selection list for today’s sitting is available in the room and on the parliamentary website. It shows how the clauses, schedules and selected amendments have been grouped together for debate. If any Member wishes to press an amendment in a group to a vote—this includes the new clauses that have already been debated—they need to let me know before we reach them on the amendment paper.

Clause 57

Rate bands etc for tax years 2028-29 and 2029-30

Question (28 January) again proposed, That the clause stand part of the Bill.

It is a pleasure to serve on this Committee with you as Chair, Ms Vaz. Tuesday’s debate on this clause concluded before we came to the decision, but I think the Opposition indicated that they would not oppose it. I commend the clause to the Committee.

Question put and agreed to.

Clause 57 accordingly ordered to stand part of the Bill.

Clause 58

EBTs: prohibition on applying property for benefit of participators etc

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss clauses 59 and 60 stand part.

Clauses 58 to 60 make changes to strengthen the conditions that must be met for transfers of shares into an employee benefit trust to be exempt from inheritance tax. An employee benefit trust is a trust that provides benefits and rewards to employees of a company, often in the form of shares in the company. Under certain conditions, such shares are exempt from inheritance tax. All or most employees need to be capable of benefiting from the trust for the inheritance tax exemption to apply, so it cannot be limited to shareholders of the company or family members, for example.

In 2023, the previous Government launched a consultation on employee ownership trusts and employee benefit trusts. The consultation set out concerns that such trusts were increasingly being used as a tax planning vehicle for shareholders and their families, rather than for a wider class of employees. At the autumn Budget, the current Government responded to that consultation and announced changes to strengthen the conditions that must be met for the transfer of shares into an employee benefit trust to be exempt from inheritance tax.

The changes made by clause 58 will mean that restrictions on shareholders and their family members benefiting from an employee benefit trust must apply for the entire lifetime of the trust. The clause will address cases in which the trust deed allows individuals who are closely connected with a shareholder to benefit after the participator’s death. The clause ensures that the Government’s position is explicitly clear in legislation. The change will come into effect on Royal Assent.

Previously, family members of the shareholder who were excluded from benefiting from the capital of the trust could still receive income payments from the trust. The changes made by clause 59 will ensure that no more than 25% of employees who can receive income payments from an employee benefit trust may be family members of the shareholder. This reinforces the original policy intent of employee benefit trusts to reward and motivate a wide group of employees.

Previously, an individual could set up a company, immediately make a transfer of shares to an employee benefit trust, and obtain an inheritance tax exemption. The changes made by clause 60 will mean that shares must have been held for at least two years before being transferred into the employee benefit trust. The provision will take into account shares held prior to any share reorganisation, and will strengthen protections against employee benefit trusts being used purely for inheritance tax planning purposes.

Clauses 59 and 60 are treated as having come into effect for transfers of value to new and existing trusts on or after 30 October 2024. The clauses will ensure that the tax treatment of employee benefit trusts is consistent with the original policy intent of rewarding and motivating employees, while minimising opportunities for abuse. I commend them to the Committee.

It is, as always, a great pleasure to see you in the Chair, Ms Vaz.

As the Minister set out, clauses 58 to 60 make amendments to requirements for inheritance tax exemptions involving employee benefit trusts. Clause 58 provides that restrictions on shareholders and connected persons benefiting from employee benefit trusts will now apply for the lifetime of the trust. Clause 59 provides that no more than 25% of employees who receive income payments from an EBT can be connected to the shareholders in the company. Clause 60 provides that shares will now need to have been held for at least two years prior to being transferred to the EBT.

As the Minister said, the measures follow on from the consultation launched in 2023, which we referred to when we discussed clause 31 and employee ownership trusts. Although we will not oppose the clauses, I would be grateful if the Minister could comment on one specific issue that was raised during the consultation on the changes. In response to the measure introduced by clause 59, concerns were raised at consultation on behalf of smaller companies using EBTs that may now be forced to exclude certain employees from participating in share scheme arrangements in order to comply with the new requirement. What was the Minister’s assessment of that particular impact? Is he content that the benefits of the changes outweigh that particular risk cited in during the consultation?

I welcome the Opposition’s support for the clauses, which build on the consultation that started when they were in office. The shadow Minister’s question related to what effect the changes might have on small businesses in particular. I will try to answer now, but he is free to contact me if he feels I have not covered his point fully.

The changes we are making to employee benefit trusts will not have an adverse effect on small businesses, because the original policy intent of exempting transfers of value to employee benefit trusts from inheritance tax was to encourage businesses to reward and motivate a wide range of employees. To qualify for the exemption, conditions need to be met that ensure that EBTs that benefit only shareholders and their families, or other people closely connected to shareholders, do not receive preferential inheritance tax treatment. Given that that is the aim in the principles behind the clauses, I am confident that they will not have the adverse effect that the shadow Minister fairly raised. I hope that provides him with some reassurance.

Question put and agreed to.

Clause 58 accordingly ordered to stand part of the Bill.

Clauses 59 and 60 ordered to stand part of the Bill.

Clause 61

Agricultural property relief: environmental management agreements

Question proposed, That the clause stand part of the Bill.

The clause extends the scope of agricultural property relief from 6 April this year to land managed under certain environmental agreements. Agricultural property relief is an inheritance tax relief that reduces the amount that farmers and landowners must pay on land and other property that is owned and occupied for the purposes of agriculture. That will usually be land or pasture that is used to grow crops or to rear animals. Currently, access to APR may be lost where such land is taken out of agricultural production. Some tax advisers and industry representatives believe that provides a potential barrier for some farmers, particularly tenant farmers, to enter certain environmental land management agreements. Following consultation, the previous Government announced that they would extend agricultural property relief to such agreements.

It is of course welcome that more land is to be brought under the scope of agricultural property relief, but given the introduction of the £1 million cap on agricultural property, is it not somewhat redundant? I know the Government use different numbers, but the industry believes that the majority of farms will be over that threshold anyway, so bringing more land within the scope of APR does not actually make much difference to the bill they will have to pay at the end.

As the hon. Lady knows, because we have debated this many times, the data that we have published, based on His Majesty’s Revenue and Customs data, shows that the large majority of small farms will not be affected. I am sure she knows well the statistics on the 530 farms affected by the reforms to APR and business property relief in ’26-27, because she will have seen them in the Chancellor’s letter to the Treasury Committee and we have discussed them many times in this place.

Clause 61 relates specifically to land managed under certain environmental agreements, and was a measure proposed by the last Government. If the hon. Lady allows me to continue explaining why the clause is important, she might feel able to support it, given the benefits it will bring. The clause was welcomed by the sector, and the Government agree with the approach. I can confirm that there have been no changes to the design outlined by the previous Government in March 2024, which is why I hope to get the Opposition’s support for the clause.

As a result of the changes made by clause 61, from 6 April 2025 APR will be available for land managed under an environmental agreement with or on behalf of the UK Government, devolved Governments, public bodies, local authorities or approved responsible bodies. This includes but is not limited to the environmental land management schemes in England and equivalent schemes elsewhere in the UK, as well as any agreement that was live on or after 6 March 2024.

The Government are fully committed to increasing the uptake of environmental land management schemes in England, and we are providing the largest ever budget of £1.8 billion for this in 2025-26. The changes made by clause 61 will ensure that the tax system is not a barrier to uptake, thereby supporting farmers and land managers to deliver, alongside food production, significant and important outcomes for the climate and environment. I commend the clause to the Committee.

As the Minister said, clause 61 brings land managed under an environmental agreement—be that with the UK Government, devolved Governments, public bodies, local authorities or approved responsible bodies—within the scope of agricultural property relief.

I am afraid we have here Labour taking with one hand and providing far less with the other. For the £5 million, which we welcome, that they will give back to farmers each year with this measure, they will take away some £500 million a year through the family farm tax, if the Office for Budget Responsibility’s highly uncertain costings are to be believed. Many farmers, and bodies such as the National Farmers Union, have raised concerns about this. The Chartered Institute of Taxation has queried why the relief remains limited to schemes entered into with public authorities, rather than allowing enterprising landowners to enter into other schemes. I would be interested to hear the Minister’s thoughts on that, but we will not oppose the measure.

I thank the hon. Gentleman for his support for the measure. He made wider points about reforms to agricultural property relief, which we have debated several times. The clause focuses in a targeted way on environmental land management schemes.

The hon. Gentleman asked why private environmental land management that is outside of agreements is not included. I confirm that relief will be available for land managed under an environmental agreement with or on behalf of the UK Government, devolved Governments, public bodies, local authorities or approved responsible bodies. This will ensure that the extension of the relief applies only where there are high, verifiable environmental standards.

Question put and agreed to.

Clause 61 accordingly ordered to stand part of the Bill.

Clause 62

National Savings Bank: statements from HMRC no longer to be required

Question proposed, That the clause stand part of the Bill.

The clause makes changes to remove requirements in limited circumstances that the National Savings Bank, more commonly known as NS&I, obtains from HMRC a statement of inheritance tax paid before making a payment. The regulations concerned are consolidated regulations that confer powers and administrative obligations on NS&I which, before paying out a deceased person’s national savings and securities to personal representatives, must make due diligence checks, such as whether the payee has a grant of probate.

The changes made by the clause remove the requirement to contact HMRC directly to check inheritance tax paid in limited circumstances, including certain domicile conditions. This is no longer required in line with the modern compliance processes. This is a minor change that is connected to, but slightly out of scope of, the reforms for non-UK-domiciled individuals. It is consequential on the non-UK-domicile reforms. I commend the clause to the Committee.

The Minister may think that this is a minor issue—and he will be pleased to know that I agree with him. [Laughter.] I am just waking everybody up. The requirement is redundant and we will not oppose the clause.

I applaud the hon. Gentleman’s theatre in delivering his response, and welcome his support.

Question put and agreed to.

Clause 62 accordingly ordered to stand part of the Bill.

Clause 63

Rates of alcohol duty

I beg to move amendment 66, in clause 63, page 68, line 10, leave out “£32.79” and insert “£31.64”.

With this it will be convenient to discuss the following:

Clause stand part.

Clause 64 stand part.

New clause 2—Review of sections 63 and 64—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act and every six months thereafter, review the impact of the measures contained in sections 63 and 64 of this Act.

(2) Each review must consider the impact of the measures on—

(a) Scotch whisky distilleries,

(b) small spirit distilleries,

(c) wine producers and wholesalers,

(d) the hospitality industry, and

(e) those operating in the night-time economy.

(3) Each review must also examine the expected effect of the measures on exports and the domestic wine trade.

(4) A report setting out the findings of each review must be published and laid before both Houses of Parliament.”

New clause 4—Statements on increasing alcohol duty—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to Parliament about the increase to alcohol duty introduced by section 63 of this Act.

(2) The statement under subsection (1) must include details of the impact on—

(a) hospitality sector,

(b) pubs, and

(c) UK wine sector.”

This new clause requires the Secretary of State to make a statement about the impact of increasing alcohol duty.

The amendment would mean the relevant rate of duty would be unchanged from last year. I am one of the few MPs from Scotland on the Committee, but I am sure I am not alone in understanding the vital importance of the Scotch whisky industry not just to Scotland but to the UK economy. However, it bears repeating just how significant the industry is, and I would like to highlight a few key statistics.

Scotland is home to the production of 70% of UK spirits—whisky, gin and vodka. In 2023, Scotch whisky accounted for 74% of Scotland’s food and drink exports, and the industry employed 41,000 people in Scotland and an additional 25,000 throughout the UK. The Prime Minister himself recognised the importance of the industry. He went to the InchDairnie distillery in November 2023, and afterwards tweeted:

“Labour will put growth at the heart of our government and back Scotch producers to the hilt.”

The hon. Member for West Dunbartonshire (Douglas McAllister) echoed this sentiment when he co-signed a letter to the Chancellor prior to the Budget, urging her to:

“Back one of our great industries, undo the damage of last year’s duty increase, and allow Scotch Whisky to deliver for the economy.”

Despite those commitments, the 2024 autumn Budget fails to deliver the support that the Scotch whisky industry so urgently needs.

A new survey reveals that 43% of 18 to 34-year-olds have given up drinking alcohol entirely. The share prices of the biggest two spirit companies halved over the past year. The Bill proposes 1p off a pint of beer, which I think we can all agree is a bit of a stunt, while increasing the tax on spirits by 32p, with a related VAT increase of 6p. That means that the duty is £9.18 on a standard bottle of vodka, gin or Scotch whisky.

Over the past 16 years, the duty on spirits has doubled. I am concerned, and so are many others, that we are plucking the golden goose one time too many. UK alcohol duty is the highest in the G7. A double measure of spirits is taxed four times more than the average-strength pint of cider in pubs, even when the cider contains more alcohol. Effectively, we are taxing whisky, gin and vodka four times as much.

What is worse, this punitive duty does not even deliver more revenue for the Treasury. This is an important point. Last year, the previous Government increased the duty on spirits by 10.1%, but according to HMRC the revenue from the duty fell by £237 million in the following 17 months. That clearly demonstrates that higher taxes on Scotch and spirits do not lead to higher revenue. The increase was forecast to bring in £800 million. Revenue from the duty has therefore fallen dramatically.

I understand that in recent years alcohol duty has risen in line with inflation under the new system. However, freezing it in this Budget would send a clear message that the Government stand behind one of our greatest industries. The troubled hospitality industry and the Scotch whisky industry do not need hollow words of support: they need meaningful action. I urge the Government to freeze alcohol duty on Scotch whisky and other spirits, and keep their promise. The Prime Minister said that we need to

“back Scotch producers to the hilt.”

Let us give this industry the angels’ share that it deserves.

Does the shadow Minister wish to speak?

My hon. Friend the Member for North West Norfolk will speak to this clause, Ms Vaz.

I apologise for the confusion on our side, Ms Vaz. The Committee will be pleased to know that I have lots to say on this clause, so we can all settle in for a while.

Clause 63 increases the headline rate of alcohol duty in line with the retail price index, provides a reduction to the rates for draught alcoholic products and cuts to the rates paid by eligible small producers. The Government have also chosen not to extend the temporary easement for certain wine products. I say at the outset that His Majesty’s Opposition is a strong supporter of the broader alcohol sector, and we have some concerns about the impact that some of the provisions will have on important sectors. As well as speaking to clauses 63 and 64, I will speak to new clause 4, which stands in my name and that of my hon. Friend the Member for Grantham and Bourne.

In 2023, the previous Government introduced a progressive strength-based duty system following the alcohol duty review, which was the biggest review of alcohol duties for more than 140 years. The new and simplified alcohol duty rates system was based on the common-sense principle of taxing alcohol by strength, with the aim of modernising the existing duties, supporting businesses and meeting our public health objectives. That was the first time that public health objectives had been inserted into the alcohol duty system. The reforms also introduced two new reliefs: the draught relief to reduce the duty burden on draught products sold at on-trade venues, and small producer relief.

At the autumn statement 2023, the previous Government froze alcohol duty rates until August 2024, and that was extended until February 2025 at the following Budget. According to the OBR, alcohol duty receipts are expected to raise £12.4 billion this year, falling by 0.6% compared with last year as the rates remain frozen, but receipts are then forecast to increase by 5% a year on average, to reach £15.9 billion by the end of the Parliament.

Pubs make a huge contribution to our culture, economy and communities. When the Conservatives were in government, we recognised that and introduced a raft of supportive measures, including draught relief, small producer relief and the Brexit pubs guarantee, which I am sure all hon. Members remember and welcome. I therefore welcome the increased draught relief from February, from 9.2% to 13.9%, and the fact that the relative value of small producer relief will be maintained. Although we welcome the inclusion of both reliefs, the increase to draught relief will mean that beer duty on a 5% pint of beer is reduced from 54p to 53p—a 1p saving. I fear that drinkers will not be toasting the Exchequer Secretary over that.

Turning to whisky—although it is a little early in the day for me—as the hon. Member for Inverness, Skye and West Ross-shire set out, Scotch whisky is one of our most iconic and successful industries. Some 43 bottles of scotch whisky are exported per second and the industry supports more than 66,000 jobs across the UK, many of which are in rural areas. The decision to uprate duty rates by RPI has been met with deep concern by the industry—indeed, the Scotch Whisky Association said that it represents a broken commitment, after the Prime Minister claimed last year that his Government’s trade strategy would

“back Scotch producers to the hilt.”

That sounds rather like the promise that he gave to farmers, which Labour’s family farm tax has broken. The managing director of Diageo said:

“This betrayal will leave a bitter taste for drinkers and pubs, while jeopardising jobs and investment across Scotland.”

I would be interested to hear the Minister’s response to those comments. Have the Government calculated the risk to jobs in the sector more widely?

A similar picture is painted by the cider industry, which supports more than 11,500 jobs and attracts more than 1 million tourists each year. The National Association of Cider Makers has raised fears that raising the headline rate, alongside the national insurance increases and the family farm tax, could put elements of the UK cider industry at risk. Has the Minister calculated the cumulative impact that these tax rises will have on the sector?

At this point, we should consider the wider context in which we are discussing these increases. Time and again we hear about the Budget placing a range of cost pressures on the hospitality industry, which is a key contributor to the UK economy. According to UKHospitality:

“In the past six years, hospitality has increased its annual economic contribution by £20 billion to £93 billion.”

The tax rises in the Budget, including the £25 billion a year jobs tax, will make it much harder for the industry to succeed. Just look at the impact of recent measures. Colliers, a professional property services company, reported that cutting the hospitality business rate relief from 75% to 40% means that restaurants will face a bill of, on average, over £13,000 a year, up from £5,500.

Will the Minister comment on whether, when the Government fix all these additional taxes, they take into account what happens in Scotland, where many in the hospitality industry do not get business rate relief? We are getting it twice on exactly the same issue.

The hon. Gentleman makes an important point that I am sure the Minister will want to cover when he responds.

The average bill for pubs will go from £4,000 to £9,642 a year. Any hon. Member who talks to hospitality businesses in their constituency will know the real-world challenges they are facing. As it happens, my favourite pub in my constituency closed its doors on Sunday, in part due to the increased costs and taxes the sector is facing. Have the Government considered the impact of the combination of these tax rises on pubs and the wider sector?

Turning to wine, as part of our reforms we introduced a wine easement for 18 months until February 2025. The Minister will be aware of the concerns of some in the sector that because that easement is coming to an end, duty will increase by 98p in just over 18 months. While we support the transition to the new regime and the end of the easement, I would be grateful if the Minister clarified what engagement he has had to understand how prepared the industry is for the new system.

We have many incredible wineries here in the UK. In 2023, sales rose 10% to reach nearly 9 million bottles. Supporting domestic wine producers should be a priority. In my constituency, I am fortunate to have Burn Valley winery, Cobble Hill winery and others. They are producing great products, proving very popular and helping to improve the rural economy and employment. However, growers have higher production and establishment costs, which will be made more challenging by the tax rises in these clauses and the wider Budget.

To support the industry, WineGB has proposed the introduction of a cellar door duty relief scheme modelled on the Australian scheme, to promote wine tourism, which a VisitBritain survey demonstrated could attract 16 million visitors. The Government have an ambitious target to increase annual visits to the UK to 50 million by 2030—up from 38 million last year. In the spirit of trying to help the Government lift their foot off the growth brake lever, perhaps the Minister will have a look at that idea and consider whether introducing it has any merit.

It is because of the challenges facing producers and the hospitality sector that we have tabled new clause 4, which would require the Chancellor, within six months of the Bill being passed, to make a statement to Parliament about the impact on various sectors of the increases in alcohol duties. As we have heard, increases to duty rates place significant additional costs on hospitality, pubs, whisky, spirits, wine, cider and other sectors, and we are concerned that this could inhibit growth and business investment. The previous Government recognised the significant contribution made by those sectors and saw an increase in business investment in the hospitality sector. Given the headwinds facing alcohol producers and hospitality businesses, which support so many jobs, it is only right that the Government report back to Parliament on the impact of their choices.

Clause 64 abolishes the duty stamps scheme for spirit drinks from 1 May 2025, fulfilling a commitment made by the Conservative Government in the spring Budget. We welcome this. The scheme was important when it was introduced, but it became an increasingly diminishing part of HMRC’s compliance response. Unnecessary regulation should of course be removed where possible, and I welcome this Government’s apparent commitment to deregulation, as set out in the Chancellor’s speech, though it would have more credibility if the Government were not also bringing forward the unemployment Bill that will add £4.5 billion to business costs.

As I set out, we support this change to reduce administrative burdens. I look forward to the Minister’s response to the concerns I have raised on behalf of the sector and producers in relation to these clauses.

It is a pleasure to serve under your chairship, Ms Vaz. May I draw Members’ attention to my entry in the Register of Members’ Financial Interests? I own a bar called Cellar Door—though not the same cellar door as the ones the hon. Member for North West Norfolk just referred to.

I want to speak about wine and the hospitality and night-time economy in general. Under the current regime of the wine easement, 85% of all wine sold in the UK is subject to the same rate of duty. That is now to be replaced by 30 different rates. That fails to take account of fundamental differences between wine and other manufactured alcoholic drinks.

The alcohol by volume of wine cannot be predicted with precision before or during the wine-making process. The alcohol content is stable only at the point when the wine goes into the bottle. The ABV varies between different years and different vats. Until bottling, we do not know the ABV of a particular bottle of wine. It therefore creates huge uncertainty about price and profit margins for the industry if there are different rates of duty depending on the specific ABV, down to a gradation of 0.1% ABV. This is particularly important with low-cost wines. The point is that this regime is utterly impractical for wine producers and wine merchants.

Hal Wilson, co-founder of Cambridge Wine Merchants, told me:

“In my business this feels like death by a thousand cuts, or even two thousand cuts. We sell over 2,000 different wines each year and from February will need to know the precise ABV of each and every one before being able to calculate their full cost. For each 0.1% ABV difference there is a different amount of tax to be paid.”

I wrote to the Minister about this and got a long and detailed response, for which I am grateful. He made the point that HMRC will change its practices and accept the ABV on the label of the bottle to the nearest 0.5%, but that is current practice; it is not in the legislation as I understand it, and it is still far too complex and much of my criticism still holds. Secondly, the letter fundamentally misunderstands why people drink wine. Wine is consumed for the taste, not the strength. An ABV goes through the taste profile. Compare a light Beaujolais with a robust Rioja. It is all about taste, not about whether it is stronger so one can get more drunk. That is not how people consume wine.

The hospitality and the night-time economy industry is facing an existential crisis owing to rising energy prices, recent inflation, labour shortages following Brexit, changes to commuting patterns and the more than doubling of business rates. Now, alcohol duties are to be another burden. It is death by a thousand cuts. Every incremental cost makes survival more difficult. That is why we are asking for a review after six months to see the effect on the wine industry, hospitality industry, night-time economy and other industries.

I will attempt to address the points raised by the Opposition parties. Let me make it clear that clause 63 makes changes to the alcohol duty rates from 1 February 2025. Alcohol duty rates for products qualifying for draft relief will be cut by 1.7% to take a penny of duty off an average-strength pint, while rates of all other products will increase by the retail price index.

May I intervene?

You can respond to the debate at the end. Would you still like to make an intervention?

In that case, I will not, Ms Vaz.

As I was saying, the clause also increases the relative value of small producer relief for both draught and non-draught products, and clause 64 ends the alcohol duty stamps scheme. To reassure Members, in consideration of what position to take at the autumn Budget, I had meetings and officials had further meetings with representatives from the wine, beer, spirits and cider industries, as well as with public health people, to understand the full range of opinions and how we could carefully calibrate our policy response.

The Scotch Whisky Association is not on the list of people the Minister met. Can he confirm whether he did meet the association?

The association is included under “spirits”.

As we know, alcohol duty is frozen until 1 February. The OBR’s baseline, reflected in its forecast, is that alcohol duty will be uprated by RPI inflation each year. The Government have decided to maintain the value of alcohol duty for non-draught products by uprating it from 1 February. At the same time we are recognising the social and economic importance of pubs, as well as the fact that they promote more responsible drinking, by cutting duty for draught products, which account for the majority of alcohol sold in pubs.

A progressive strength-based duty system was introduced on 1 August 2023 by the previous Government following the alcohol duty review. The reforms introduced two new reliefs: a draught relief to reduce the duty burden on draught products sold in on-trade venues, and small producer relief that replaced the previous small brewers relief. The clause increases the generosity of both reliefs.

The alcohol duty stamps scheme is an anti-fraud measure applied to larger containers of high-strength alcoholic products, typically spirits. It requires the mandatory stamping of certain retail containers with a duty stamp. In 2022, HMRC was commissioned to review the effectiveness of the scheme. It found that it is outdated, susceptible to being undermined and now plays a diminished compliance role, and concluded that the cost and administrative burdens imposed on the spirits industry could no longer be justified. The previous Government announced the end of the scheme at spring Budget 2024. That is a decision that this Government will implement from 1 May 2025. That date was chosen after consultation with businesses, which requested sufficient time to prepare.

Clause 63 makes four changes. First, it increases the rates of alcohol duty for non-draught products to reflect RPI inflation. Secondly, it reduces the rates of alcohol duty on draught products by 1.7%. Thirdly, it amends the tables in schedule 9 to the Finance (No. 2) Act 2023 that are used by small producers to calculate their duty discount under small producer relief. This increases the value of small producer relief for both draught and non-draught products in relation to the main rates for these products.

In cash terms, the current cash discount given to small producers for draught products is maintained, while the discount provided to small producers for non-draught products is increased. Small producer relief provides the same relative discount, irrespective of whether a product also qualifies for draught relief. As a consequence of the RPI increase in non-draught rates, it increases the simplified rates in schedule 2 to the Travellers’ Allowances Order 1994, which is used for calculating duty on alcoholic products brought into Great Britain.

Some hon. Members raised questions about the impact of these measures on pubs and the hospitality industry. To support the hospitality industry, particularly recognising the role that pubs play in local communities, the Government have announced a reduction in the alcohol duty rates paid on draught products. This reduces businesses’ total duty bill by up to £100 million a year and increases the duty differential between draught and non-draught products from 9.2% to 13.9% for qualifying beer and cider.

As we have mentioned a couple of times in this debate, the reduction to draught relief rates will also result in the average alcoholic strength pint at 4.58% ABV paying 1% less in duty. Draught relief provides a reduced rate of duty on draught products below 8.5% ABV packaged in containers of at least 20 litres designed to connect to a qualifying system for dispensing drinks.

Clause 64 ends the alcohol duty stamps scheme from 1 May this year, removing the provisions in the Finance (No. 2) Act 2023 and the secondary legislation in the Duty Stamps Regulations 2006. It also makes consequential changes and removes references to the scheme where they appear elsewhere in legislation.

Amendment 66 would freeze alcohol duty for alcoholic products above 22% ABV. That is contrary to the Chancellor’s decision at the autumn Budget to increase those duty rates to reflect inflation, and would cost the Exchequer £150 million a year.

Specifically in relation to the Scotch whisky industry, I would like to set out that the overall alcohol package balances commercial pressures on the alcohol industry with the need to raise revenue for our vital public services and reduce alcohol-related harms. Consumers and brewers in Scotland will benefit in line with the rest of the UK, with consumption and production patterns roughly equal nationwide. Of course, 90% of Scotch whisky is exported, which means it pays no duty. The Scotch Whisky Association’s own figures show the health of the industry. The Budget offers support to the Scotch whisky industry by removing the alcohol duty stamps scheme, which we have just considered, and through investment in the spirit drinks verification scheme by reducing fees for geographical verification.

New clauses 2 and 4, which were also tabled by Opposition Members, would require the Chancellor to make additional statements about the impact of the alcohol duty measures. The Government do not believe further statements to be necessary. As usual, a tax information and impact note was published at the autumn Budget, outlining the anticipated impacts of the measures on alcohol producers and the hospitality sector. Alcohol duty, like other taxes, will be reviewed in future Budgets.

New clause 2 also requires a review of the impact on trade, but UK alcohol duty is, of course, not charged on exports. Some hon. Members raised the impact of the changes to business rates on the hospitality sector in Scotland, but business rates are, of course, devolved. The Scottish Government are accountable to the Scottish Parliament on devolved areas.

Hon. Members also raised questions around the wine easement and why it had not been extended or made permanent. I remind them that the wine easement was intended as a transitional arrangement to give the wine industry time to adapt to the strength-based duty calculation for wine. The revised alcohol duty system simplified and reduced differences between categories of alcohol. Making the wine easement permanent would introduce a new differential into the system and add to the complexity of that system. It would further lead to a duty regime in which stronger ABV wines pay less in proportion to their alcohol content than lower ABV wines. Making the wine easement permanent would, therefore, undermine the simplification and public health objectives of the revised alcohol duty system.

In conclusion, the changes to the alcohol duty balance public health objectives, fiscal pressures, cost of living pressures and the economic and social importance of pubs, while also supporting small producers by increasing the generosity of small producer relief. Furthermore, the end of the alcohol duty stamps scheme will simplify procedures for approximately 3,500 registered alcohol importers and producers, reducing overall costs on the spirits industry by an estimated £7 million a year. I therefore commend the clause to the Committee, and urge it to reject amendment 66 and new clauses 2 and 4.

I do not have a great deal to add. I did miss out, when we declared our interests earlier, the fact that I own a pub, which hon. Members are very welcome to visit when they are next in Fort William—do not all rush at once. It never rains there.

I want to come back, briefly, to the 1p a pint reduction that we were promised. The whole hospitality industry and beer industry have come together to agree that that is a stunt, and that that 1p will not be passed on to the customer. It is just not relative at all, because the reduction in business property relief and the national insurance and minimum wage increases effectively mean that the cost to the hospitality industry is going through the roof. The Minister knows that perfectly well, but he still continues to trot out his line.

On the whisky industry, I am not sure that account has been taken of the potential tariffs. We talk about exports being very strong, but they are not actually very strong at the moment.

Lastly, on tax overall, when I make a submission to Scottish Government Ministers about the tax on hospitality, the whisky industry and so on, they all blame Westminster, but when I speak to Westminster Ministers about it, they all blame Scotland. The net result is that industries such as hospitality in Scotland are suffering from both sides, and that is simply not fair.

On business rates, they are clearly devolved to the Scottish Government, so it fully sits within their remit to help the hospitality industry. If we are talking about standing behind the whisky industry, one of the first things that the Secretary of State for Business and Trade did was go to Brazil to work out that protected status for the Scotch whisky industry, which will mean millions of pounds extra in exports to Brazil.

We are also discussing clause 64, which deals with the abolition of duty stamps for alcoholic products, and that will also help the whisky industry. The Government are doing a number of things to support the whisky industry and stand behind it, including the provisions on its tax status and the Secretary of State’s efforts to increase exports. The hon. Member should perhaps reflect that in his comments.

I have finished my remarks.

Would you like to press the amendment to a vote?

Yes.

Question put, That the amendment be made.

With this it will be convenient to discuss the following:

New clause 5—Review of effects of section 65 on illicit tobacco market—

“The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes introduced by section 65 of this Act, on the illicit tobacco market.”

This new clause requires the Chancellor to review the impact increased rates of tobacco duty on the illicit tobacco market.

The clause implements changes announced at the autumn Budget 2024, concerning tobacco duty rates. The duty charged on all tobacco products will rise in line with the tobacco duty escalator, with an additional increase being made for hand-rolling tobacco to reduce the gap with cigarettes. Smoking rates in the UK are falling but they are still too high; around 12% of adults are now smokers. Smoking remains the biggest cause of preventable illness and premature death in the UK, killing around 80,000 people a year and up to two thirds of all long-term users.

We have plans to reduce smoking rates further to achieve our ambition of a smoke-free UK. To realise that ambition, we announced our intention to phase out the sale of tobacco products for future generations, as part of the Tobacco and Vapes Bill, along with powers to extend smoke-free legislation to some outdoor areas.

At the autumn Budget, the Chancellor announced that the Government will increase tobacco duty in line with the escalator. Clause 65 therefore specifies that the duty charged on all tobacco products will rise by 2% above RPI inflation. In addition, duty on hand-rolling tobacco increases by 12% above RPI inflation. These new tobacco duty rates will be treated as taking effect from 6 pm on the day that they were announced, 30 October last year.

Recognising the potential interactions between tobacco duty rates and the illicit market, HMRC and Border Force launched their refreshed illicit tobacco strategy in January 2024. The strategy is supported by £100 million of new funding, which will be used to scale up ongoing work and support new activities set out in the strategy, including enhanced detection and intelligence capabilities.

New clause 5 would require the Chancellor to review the impact of increased tobacco rates on the illicit tobacco market within six months of the Bill being passed. The Government respectfully will not accept this new clause, as the potential impact on illicit markets is already one of several factors the Government take into account when a decision on tobacco rates is made. I also note that the approach used in the costings at the Budget, certified by the Office for Budget Responsibility, accounts for behavioural responses to changing excise rates, including the impact of illicit markets. HMRC also publishes tobacco tax gaps annually, which allow for an analysis for the long-term trends in illicit trade.

Although the Government are rejecting new clause 5, I assure Committee members that the Government will continue to monitor illicit trade and to support the efforts of our enforcement agencies to counter it. HMRC and Border Force have had strategies in place to reduce the illicit trade in tobacco for over 20 years, which have helped to reduce the tobacco tax gap from 21.7% in 2005-06 to 14.5% in 2022-23. That happened during a prolonged period in which tobacco duties were consistently increased, as the attitude of all Administrations, including I believe the last one, has been that the threat of illicit tobacco needs to be addressed by reducing its availability, rather than allowing it to dictate our public health and tax policies.

On that matter, I hope that all Committee members, and I assure them that that will continue to be this Government’s approach. The clause will continue the tried and tested policy of using high duty rates on tobacco products to make tobacco less affordable. It will help to continue the reduction in smoking prevalence, supporting our ambition for a smoke-free UK, and will reduce the burden placed by smoking on our public services. I comment the clause to the Committee and urge it to reject new clause 5.

As we have heard from the Minister, clause 65 increases excise duty on all tobacco products and the minimum excise tax on cigarettes by the duty escalator RPI plus 2%. In addition, the excise duty rate for hand-rolling tobacco increases by an additional 10%. This is a one-off increase in addition to the restated policy of increasing rates in line with RPI plus two percentage points. We are broadly supportive of these measures but I have some questions around purchaser behaviour and its impact on the illicit market and enforcement. In addition to speaking to clause 65, I will also speak to new clause 5, which stands in my name.

Tobacco receipts are expected to be £8.7 billion this year, down by 2.7% on last year. They are forecast to decline by 0.5% a year on average over the rest of the forecast period to £8.5 billion, as declining tobacco consumption offsets increasing duty rates. The tax information and impact note explains that over the four years from 2019 to 2023, the tobacco escalator coincided with a reduction in smoking prevalence from 14.1% to 11.9% of people aged over 18. That is clearly welcome. The Government are bringing forward the Tobacco and Vapes Bill, which the Minister referred to and which includes lots of measures to make vapes less attractive to children and harder to get hold of. There is a lot to be said about that Bill, but fortunately, that is the job of another Committee.

Increasing the price of tobacco clearly comes with the risk of boosting the illicit market. The tax information and impact note suggests that some consumers might engage in cross-border shopping and purchase from the illicit tobacco market. HMRC will monitor and respond to any potential shift. Indeed, the OBR has suggested that the duty rate is beyond the peak of the Laffer curve—the revenue-maximising rate of tax. Can the Minister confirm what measures will form HMRC’s response to any shift in illegal consumption?

There are also questions around the figures. Although HMRC estimates that 10% of cigarettes and 35% of hand-rolling tobacco consumption is from illegal and other non-UK duty paid sources, evidence submitted by the industry believes that is a significant understatement. Its data shows that the consumption of tobacco from non-UK duty paid sources currently accounts for 30% of cigarettes and 54% of hand-rolling tobacco consumption. Has the Minister discussed with HMRC the difference between those figures and the basis on which they have been put together?

The Tobacco Manufacturers’ Association said that the illegal market is not in decline but that, contrary to HMRC’s claims, it is expanding. As well as providing more accurate figures on the scale of the illegal market, it would be useful to know whether the Government have calculated the potential consequences for retailers and law enforcement of an expanding illegal market.

Does the hon. Member agree that the tobacco market’s estimates are not unbiased? It has form in exaggerating the scale of the illicit tobacco market in the UK.

The hon. Member has probably seen the same evidence produced by the industry as I have; I do not think that we should dismiss it out of hand. Representatives from the industry do, for example, go around football terraces, pick up the empty packets, see where they came from, and do sampling or take other measures. Of course the industry’s evidence should be challenged and tested, but my point is about whether HMRC has worked with the sector to see if its figures are wrong. If they are, and HMRC’s are perfectly right, we can follow the HMRC figures. I am raising a legitimate concern about the accuracy of the data to make sure that we are all operating from the same page because, as the OBR has pointed out, we may already have reached the peak point where the tax will be doing harm.

The Minister referred to the success of enforcement over the last couple of decades. In March last year, the previous Government set out a new strategy to tackle illicit tobacco. With evidence of a substantial illegal market—and whichever set of figures we take, it is substantial—what steps are the Government taking? Are they taking the previous Government’s strategy forward or will they introduce their own strategy?

The industry has specifically proposed that the Government provide trading standards with full access to the powers granted to HMRC under the Tobacco Products (Traceability and Security Features) (Amendment) Regulations 2023. At present, the legislation allows trading standards to refer cases to HMRC, which will then consider imposing on-the-spot penalties of up to £10,000 on those selling tobacco.

The industry proposed that it would be far more effective for trading standards to apply the penalty at the point of enforcement rather than having to refer the case to HMRC. It also suggested allowing trading standards to keep the receipts from any such penalties to reinvest in its enforcement action—we are all familiar with the pressures that trading standards is facing. Will the Minister say whether the Government have considered those proposals and, if they have not, will he?

I have tabled new clause 5 to ensure there is better understanding of the risk around the illicit market. The Minister respectfully dismissed the need for it, but it would require the Chancellor to, within six months of this Act being passed, publish an assessment of the impact of the changes introduced by clause 65 of the Bill on the illicit tobacco market. As we have heard, increasing tobacco duty could alter the behaviour of consumers, and we could see greater illicit market share.

Evidence from the industry—which may be contested—shows that non-UK duty paid sources are significant. There is clearly a risk that a further increase to tobacco duty could boost the illicit market, and HMRC needs to act to protect lawful revenues for the taxpayer. We would therefore welcome the Chancellor publishing an assessment of the impact of the changes. As I set out, we will not oppose clause 65, but I look forward to the Minister’s response to my points, particularly on the illicit market.

I welcome the Opposition’s support for these measures. I will write to the hon. Gentleman in response to some of the queries he raised about specific figures. I will address the points that he made about the illicit tobacco market, because that is obviously something we all want to consider in some depth in connection with anything that we do around the tobacco duty.

As I mentioned in my earlier remarks, HMRC and Border Force launched their refreshed illicit tobacco strategy in January 2024. That is being implemented under this Government. It is supported by £100 million of new funding, which will be used to scale up the ongoing work and support the new activities outlined in the strategy, including enhanced detection and intelligence capabilities.

The hon. Gentleman also asked about the impact of increasing tobacco duty on the demand for illicit products, and whether increasing duty rates might push some smokers towards illicit products. It will be helpful if I set out the context for this discussion. Under the assumptions that were used in the tobacco costings for the autumn Budget, which were of course certified by the OBR, the overall level of increase decided on by the Government raises revenue while continuing to reduce tobacco consumption.

The approach used in costings, certified by the OBR, takes into account a number of potential behavioural responses to changing excise duty rates, such as quitting or reducing smoking, substituting with vapes, and moving from UK duty paid consumption to the non-UK duty paid market, including the impact on illicit products. However, the threat from illicit tobacco needs to be addressed by reducing its availability, rather than allowing it to dictate our tax and public health policies.

Finally, the hon. Gentleman asked whether HMRC had worked with the sector to authenticate its figures. HMRC has analysed how external figures are calculated, but World Health Organisation rules prohibit extensive engagement with the industry on such issues.

Question put and agreed to.

Clause 65 accordingly ordered to stand part of the Bill.

Clause 66

Rates of vehicle excise duty for light passenger or light goods vehicles etc

With this it will be convenient to discuss new clause 6—Review of effects of £40,000 expensive car supplement threshold—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the £40,000 expensive car supplement threshold included in section 66.

(2) The assessment in subsection (1) must consider the effects of the threshold on the proportion of new cars sold which are Electric Vehicles.”

This new clause requires the Chancellor to review the impact of the £40,000 expensive car supplement threshold.

Clause 66 makes changes to the uprating of standard vehicle excise duty rates for cars, vans and motorcycles, excluding first-year rates for cars, in line with the retail prices index, from 1 April. The clause will also change the VED first-year rates for new cars registered on or after 1 April, to strengthen incentives to purchase zero emission and electric cars.

As announced at the autumn Budget, the clause will freeze the zero emission rate at £10 until 2029-30, while increasing the rates for higher-emitting hybrid, petrol and diesel cars from 2025-26.

Vehicle excise duty—VED—is a tax on vehicle ownership, with rates depending on the vehicle type and the date of first registration. Vehicle excise duty first-year rates were introduced as part of the wider changes to the VED system implemented in 2017, and they vary according to emissions. Vehicle excise duty first-year rates are paid in the first year of a car’s life cycle, at the point of registration. From the second year, cars move to the standard rate of VED. From 1 April, new zero emission vehicles registered on or after that date will also be liable for the VED first-year rates.

Vehicle excise duty first-year rates have been routinely uprated by the RPI since their introduction in 2017, and as announced by the previous Government at the autumn statement in 2022, from April 2025, electric cars, vans and motorcycles will begin to pay VED in a similar way to petrol and diesel vehicles.

The clause will set the VED rates for 2025-26, increasing the standard rates for cars, vans and motorcycles in line with the RPI. As part of this uprating, the standard rate of VED for cars registered since 1 April 2017 will increase by only £5. The expensive car supplement will also be increased by £15, from £410 to £425. The rates for vans will increase by no more than £15, and motorcyclists will see an increase in rates of no more than £4.

From 1 April 2025, the VED first-year rate for zero emission cars will be frozen at £10 until 2029-30. For 2025-26, first-year rates for cars emitting 1 to 50 grams per km of carbon dioxide will go from £10 to £110, and cars emitting 51 to 75 grams per km of CO₂ will go from £30 to £130. Rates for cars emitting 76 grams per km or more of CO₂ will double.

New clause 6 would require the Chancellor to review the impact of the £40,000 expensive car supplement threshold and consider its effects on the proportion of new cars sold that are electric vehicles. As set out at the autumn Budget, the Government have already committed to considering increasing the £40,000 threshold for EVs at a future fiscal event. The Government recognise that new electric vehicles can still often be more expensive to purchase than their petrol or diesel counterparts, and we acknowledge the need to ensure that EVs are affordable as part of our transition to net zero. In the light of that commitment, a separate review is unnecessary so I urge the Committee to reject new clause 6.

The changes to the VED first-year rates outlined in clause 66 will increase the incentives to buy new zero emission cars at the point of purchase and support the uptake of new electric vehicles. Revenue from that change will also help to support public services and infrastructure in the UK. An increase in VED standard rates for cars, vans and motorcycles by the RPI in 2025-26 will ensure that VED receipts are maintained in real terms. I commend clause 66 to the Committee.

As we heard from the Minister, clause 66 provides for increasing certain rates of VED for light passenger and light goods vehicles in line with the RPI. There will also be changes to the first-year rates for zero emission vehicles and low emission vehicles. We broadly support the measures, but as well as discussing clause 66, I will consider new clause 6, which is in my name and that of my hon. Friend the Member for Grantham and Bourne.

According to the OBR, VED receipts are expected to raise £8.2 billion in 2024-25, up by £0.5 billion compared with 2023-24. It expects an increase through the forecast period to £11.2 billion, driven by an increasing number of cars, more cars paying the expensive car supplement and the extension of VED to electric vehicles from 2025. It was the last Government who decided that EVs would no longer be exempt from VED and moved to make the system fairer. I will raise some points about the implications of that, and particularly the expensive car supplement for electric vehicles. New zero emission cars, registered after 1 April, will be liable for that charge, which currently applies to cars with a list price exceeding £40,000. That threshold has not changed since 2017, despite inflation and changing technologies. The Society of Motor Manufacturers and Traders has called on the Government to look at that.

The current ECS threshold will add more than £2,000 to the cost of a zero emission vehicle in the first six years of ownership, and more than £3,000 including the standard rate VED that must also be paid. That will deter potential buyers from purchasing zero emission vehicles and will have an impact on residual values. According to figures quoted by the SMMT, the ECS is likely to capture more than half of the zero emission vehicle market from 2025.

The Minister referred to the Government saying that they may look at the threshold in future, and I will come on to that when I discuss new clause 6. Can he confirm how much the ECS currently raises and how much it is forecast to raise as a result of the changes? Given that the Government are committed to a 2030 ban on new petrol and diesel vehicle sales, what impact will the ECS have on the Government’s progress towards that goal?

For those reasons, we have tabled new clause 6, which would require the Chancellor, within six months of the Bill being passed, to publish an assessment of the impact of the £40,000 expensive car supplement threshold in clause 66. The assessment must consider the effects of the threshold on the proportion of new car sales that are electric vehicles.

As we have heard, the threshold has remained unchanged since 2017 and the Government are pushing ahead with the 2030 date. My right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak) introduced some welcome common sense to the debate by moving the date for the ban on new petrol and diesel car sales back to 2035. That is the date that the major car manufacturing countries in Europe and the rest of the world have adopted, and one that we should have stuck to.

The Government’s policy is odd because it makes people less likely to move to EVs—because it makes it more expensive to do so. Perhaps the Treasury is not quite as signed up to the Energy Secretary’s dogmatic approach as he is; perhaps it secretly agrees with Opposition Members who certainly think that he is the most expensive Cabinet member in many ways. Although I recognise that the Minister said that the Government have committed to look at the threshold, the new clause would make that binding and make sure that it happened within a specific timeframe. We therefore want the new clause to be taken forward. As I have set out, we will not oppose the clause, but I will press new clause 6 to a Division.

Hybrid vehicles will start paying road tax at the standard rate, as well as paying the ECS where applicable. Those changes will hasten the departure from hybrids, as my hon. Friend the Member for Grantham and Bourne said earlier. I would be grateful if the Minister provided an assessment of the decision to disincentivise hybrids and if he could say how many jobs in the UK are based on producing hybrid vehicles.

I thank the shadow Minister for indicating the Opposition’s support for the clause. I understand what the Opposition are doing by proposing new clause 6, and the points that they want to raise, and the Government have considered it. We consider our commitment, which was made at the autumn Budget in the public domain, to be a strong commitment from the Government: we will consider increasing the £40,000 threshold for EVs only at a future fiscal event.

We recognise that when electric vehicles are new, they can still often be more expensive to purchase than their petrol or diesel counterparts. There is a need to ensure that EVs are affordable as part of the transition. We also recognise that, as transport is currently the largest-emitting sector, decarbonising it is central to the wider delivery of the UK’s cross-economy climate targets.

As I said, it was announced at Budget ’24 that the Government will consider raising the threshold for zero emission cars only at a future fiscal event. The Government have no current plans to review the threshold for petrol, diesel and hybrid vehicles, but we keep all taxes under review as part of the Budget process.

Question put and agreed to.

Clause 66 accordingly ordered to stand part of the Bill.

Clause 67

Rates of vehicle excise duty for rigid goods vehicles without trailers etc

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to consider the following:

Clauses 68 and 69 stand part.

Clause 71 stand part.

Government new clause 1—Rate of vehicle excise duty for haulage vehicles other than showman’s vehicles.

New clause 7—Statements on HGV Vehicle Excise Duty (VED) and HGV Road User Levy—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to Parliament about the increase to HGV VED introduced by sections 67 to 69 and increase to the HGV Road User Levy under section 71 of this Act.

(2) The statement under subsection (1) must include details of the impact on—

(a) the haulage sector,

(b) the decarbonisation of the logistics industry, and

(c) the UK economy.”

This new clause requires the Chancellor to make a statement about the impact of increasing Vehicle Excise Duty on HGVs.

Clauses 67, 68 and 69 make changes to upgrade VED rates for heavy goods vehicles in line with the retail prices index from 1 April. They also make changes to the VED rates for rigid goods vehicles without trailers, rigid goods vehicles with trailers and vehicles with exceptional loads. Clause 71 uprates the heavy goods vehicle levy in line with the RPI from 1 April.

The registered keeper of a vehicle is responsible for paying VED. The rates depend on the vehicle’s revenue weight, axle configuration and Euro emission status. Furthermore, the HGV levy, which was introduced in August 2023 and frozen at the autumn statement in 2023, is payable for both UK and foreign HGVs using UK roads. Similarly to VED, the levy rates depend on the vehicle’s weight and Euro emissions status. Clauses 67, 68 and 69 will set the VED rates for heavy goods vehicles for ’25-26, increasing them in line with the RPI. For example, the annual VED liability of the most popular HGV—tax class TC01, VED band E1—will increase by £18, from £560 to £578. Hauliers will not see a real-terms increase in VED costs, as rates have increased to keep pace with inflation only.

The changes made by clause 71 will increase the annual rates for domestic and foreign HGVs using UK roads and the associated daily, weekly, monthly and six-monthly rates in line with the RPI. For example, the annual rate for the most common type of UK HGV will increase by £21, from £576 to £597. As part of that uprating, the £9 and £10 caps on the daily rates paid by foreign HGVs, which are a consequence of retained EU law and are now obsolete, will be removed.

Government new clause 1 corrects an omission in the Bill of an uplift to the general haulage rate announced at the autumn Budget. We are inserting a new clause to ensure that the legislation operates as intended by updating the currently recorded rate for the general haulage tax class—tax class 55—from £350 to £365 in line with the RPI.

New clause 7 seeks to require the Chancellor to make a statement about the impact of increasing VED on HGVs. The new clause is not necessary, as the Government have already published the tax information and impact note that sets out all the expected impacts of the measure. It makes clear that hauliers will not see a real-terms increase in their VED or HGV levy liabilities, as rates are being increased in line with the RPI to keep pace with inflation only. The measure is not expected to have any significant macroeconomic impacts.

Increasing both VED rates for HGVs and the HGV levy by the RPI for ’25-26 will ensure that VED receipts are maintained in real terms and that hauliers continue to make a fair contribution to the public finances in the wider context of a Budget in which hauliers have benefited from a further freeze in fuel duty, worth nearly £1,100 a year to the average HGV. I therefore commend clauses 67, 68, 69 and 71 as well as Government new clause 1 to the Committee, and I urge the Committee to reject new clause 7.

As the Minister says, clauses 67, 68 and 69 provide for changes to certain rates of VED, and clause 71 increases the rates for the HGV road user levy. We will not oppose the provisions, but we have some concerns and points to make about the timing of the changes and the lack of support for impacted industries, such as the logistics sector. As well as discussing those clauses, I will consider new clause 7, which is in my name and that of my hon. Friend the Member for Grantham and Bourne.

Heavy goods vehicle VED is a complex picture, with more than 80 different rates. The characteristics of HGVs determine their rates, and the increases to HGV VED represent the first rise since 2014. Heavy goods vehicles may also be liable for the additional HGV road user levy, which was introduced in 2014 and is a charge for using the road network, ranging from £150 to £749 a year. The levy was suspended in August 2020, demonstrating the previous Government’s support for the haulage sector during the pandemic. A reformed levy was introduced in 2023 and was frozen at the autumn statement in 2023. The new levy divides qualifying HGVs into six levy bands rather than the previous 22, which is a welcome simplification.

I thank the hon. Gentleman for confirming that the Opposition will support these clauses. He asked about the wider challenges faced by the road haulage industry. Road haulage is key to the UK’s economy, and the Government acknowledge the pressures the industry has faced in recent years. As a result of the changes in these clauses, hauliers will not see a real-terms increase in their VED or HGV levy liabilities, as rates will be increased in line with the RPI to keep pace with inflation only.

Of course, revenue from HGV VED and the HGV levy helps to ensure that we can continue to fund the vital public services and infrastructure that people across the UK expect, so it is right that the taxes are regularly reviewed. In the wider context, hauliers will also benefit from the further freeze in fuel duty for 2025-26 that the Chancellor announced in the Budget, which is worth nearly £1,100 a year for the average heavy goods vehicle.

Question put and agreed to.

Clause 67 accordingly ordered to stand part of the Bill.

Clauses 68 and 69 ordered to stand part of the Bill.

Clause 70

Vehicle excise duty: zero-emission vehicles

Question proposed, That the clause stand part of the Bill.

The clause makes minor amendments to ensure the legislation for the application of vehicle excise duty to zero emission vehicles operates as intended. In the 2022 autumn statement, the former Government announced that from April 2025, zero emission cars, vans and motorcycles would begin to pay VED in line with their petrol and diesel counterparts. The clause will ensure that the legislation governing the application of VED to zero emission vehicles operates as intended by making minor technical amendments to the legislation. The changes will clarify the current VED exemption for electric vehicles, clarify the interpretation of data entries on the certificate of conformity and ensure that all zero emission vans registered between 1 January 2007 and 31 December 2008 pay VED, in line with their petrol or diesel counterparts, from 1 April 2025. The clause will ensure that the legislation for the application of VED to zero emission vehicles operates as intended.

I will be very brief on this one. It is a perfectly sensible measure, and we will not be opposing it.

Question put and agreed to.

Clause 70 accordingly ordered to stand part of the Bill.

Clause 71 ordered to stand part of the Bill.

Clause 72

Rates of air passenger duty until 1 April 2026

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Clause 73 stand part.

New clause 8—Review of bands and rates of air passenger duty—

“(1) The Chancellor of the Exchequer must, within eighteen months of this Act being passed, publish an assessment of the impact of the changes to air passenger duty introduced by section 73 of this Act on—

(a) the public finances;

(b) carbon emissions; and

(c) household finances.

(2) The assessment under subsection (1)(c) must consider how households at a range of different income levels are affected by these changes.”

This new clause requires the Chancellor to publish an assessment of this Act’s changes to air passenger duty on the public finances, carbon emissions, and on the finances of households at a range of different income levels.

Clause 72 sets the rates of air passenger duty for 2025-26, as announced in the 2024 spring Budget, and they will take effect on 1 April 2025. Clause 73 sets the rates of APD for 2026-27, as announced in the 2024 autumn Budget, and they will take effect a year later, on 1 April 2026.

APD rates have fallen in real terms, because they are set more than a year in advance using forecast RPI, and inflation has subsequently been much higher than originally forecast. The former Government announced that in 2025-26, rates would be uprated by forecast RPI and non-economy rates would be adjusted to account partially for previous high inflation. For 2026-27, the current Government are making a broad-based adjustment to all rates to compensate in part for previous high inflation and are raising the higher rate on larger private jets by an additional 50%. These changes aim to ensure that the aviation industry continues to make a fair contribution to the public finances. As is standard practice, the Government have given the industry more than 12 months’ notice.

Let me go into some detail. The changes made by clause 72 will raise all APD rates by forecast RPI, rounded to the nearest pound, for 2025-26. Non-economy rates will be further adjusted to correct partially for previous high inflation. For domestic and short-haul international economy passengers, these changes mean that rates will stay at their current level in 2025-26. Rates for other economy-class passengers will rise by £2. For non-economy international passengers, rates will rise by between £2, for short-haul commercial passengers, and £66, for those travelling ultra-long haul in larger private jets that incur the higher rate.

The changes made by clause 73 will raise all APD rates in 2026-27 to account partially for previous high inflation, and increase the higher rate on larger private jets by an extra 50% above the increases to other rates. For economy-class passengers, this means that those flying domestically will face an increase of £1. Rates for short-haul economy passengers will increase by £2, and those for long-haul economy passengers will increase by £12. The increases for non-economy passengers and those travelling in private jets will be greater. Whereas the short-haul international rate for economy passengers is increasing by £2, that for non-economy passengers is rising by £4 and that for private jet passengers by £58.

Taken together, the corrections to non-economy rates announced at the spring and autumn Budgets do not raise rates by more than RPI over the period since 2021-22, based on the latest figures. From 2027-28, rates will be rounded to the nearest penny, to ensure that they track forecast inflation more closely.

New clause 8 would require the Chancellor to publish an assessment of the impact of the APD changes on the public finances, carbon emissions and the finances of households at a range of income levels. At the autumn Budget, the Government published a TIIN that outlined the expected impacts of the APD changes, including the Exchequer, household and environmental impacts. New clause 8 is therefore unnecessary, and I urge the Committee to reject it.

These changes will help to maintain APD rates in real terms, following high inflation. I therefore commend clauses 72 and 73 to the Committee and urge it to reject new clause 8.

As we heard from the Minister, clause 72 sets the rates of air passenger duty for the year 2025-26—those rates were announced in the 2024 spring Budget, precisely to give the sector time to plan—and clause 73 sets the rates for 2026-27. The higher rates that apply to larger private jets will increase by an additional 50%, as the Minister said. We will not oppose these measures, but we want to raise some points and seek more detail about their impact.

APD was first introduced on 1 November 1994. Initially, it was charged at a rate of £5 on flights within the UK and to other countries in the European Economic Area, and £10 on flights elsewhere. Since then, it has been reformed by successive Governments. Currently, it is chargeable per passenger flying from UK airports to domestic and international destinations, and rates vary by destination and class of travel. According to the OBR, APD receipts are expected to be £4.2 billion in 2024-25, and then they are forecast to increase by 9% a year, on average, to £6.5 billion in 2029-30, driven by increasing passenger numbers and the higher duty rates. The changes mean that a family of four flying economy to Florida, for example, will be taxed £408—a 16% increase on the current rates.

I turn first to the changes in clause 73 that relate to the higher rate, which will increase by an additional 50% on business and private jets. There is some concern from the industry about the impact of the measure on economic growth—the Government’s driving, No. 1 mission, in which we support their efforts. In reality, most private jets are corporate aircraft that are used as capital assets. One industry commentator said:

“They allow businesses to increase productivity and the amount of time they have in the day, which means they can make more money, employ more people and pay more in taxes. ”

That is something I think we all support. Has the Minister calculated what impact the 50% increase will have on economic growth and developing our trade relationships? The Prime Minister rightly travels a lot around the world to make connections and promote trade in our economy. Can the Minister confirm whether the Royal Squadron is subject to the higher rates, or is it exempt?

There has also been some concern about the impact on our constituents—people going on holiday or to see family and friends. The changes may limit flight options. Airlines UK has said that the rise will make it harder for British carriers to put on new routes. Does the Minister think the increase will impact the ability to consider new routes? It will certainly increase ticket prices; I woke up this morning to hear the boss of Ryanair on the radio saying that the increases in APD will mean that a third of an average £45 fare will now be tax.

It is because of the impacts that the rate rises might have on consumers, industry and economic growth that we tabled new clause 8, which would require the Chancellor to publish an assessment of the impact of the changes introduced by clause 73 within 18 months of the Bill being passed. The assessment would have to consider the impact of the changes on the public finances, carbon emissions and household incomes. The industry has been clear in its warnings in this regard, and we need to take them seriously. The Minister said that the new clause is unnecessary and that a review has been covered anyway, but reviews should be an important part of the Treasury’s toolkit in understanding impact.

We will not oppose these measures, but we will continue to raise industry’s concerns, particularly on behalf of our constituents and people who want to go on holiday.

It might be worth my saying at the outset that our support for the aviation industry more broadly is very clear. I am sure the hon. Gentleman was listening to the Chancellor’s growth speech yesterday, in which she announced that we will no longer shy away from decisions about airport expansion, which can be delivered to support economic growth while meeting our climate obligations. People in the aviation industry can have no doubt about this Government’s desire and willingness, and concrete actions, to work with them to drive economic growth in this country.

In relation specifically to APD, which is the subject of these clauses, I say to the hon. Gentleman that the adjustment to the APD rates for ’26-27 is proportionate, because the rates have fallen significantly behind inflation in recent years. These changes will help to compensate for that fact. The short-haul international rate on economy passengers will increase by £2 on 1 April 2026. That rate has not increased since 2012. Even after 1 April 2026, for a family of four—two adults, two children—flying economy class to Spain, the total APD increase will be only £4, since under-16s travelling in economy class are exempt from APD.

By contrast, the increases for non-economy passengers and those travelling in private jets will be higher, to ensure that they make a fair contribution to the public finances. One other bit of context is that, unlike other sectors, no VAT applies to plane tickets and there is no tax on jet fuel. It is only fair that aviation pays its fair share through APD.

Question put and agreed to.

Clause 72 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Christian Wakeford.)

When we adjourned on Tuesday evening, we were talking about this clause, which relates to shipping and a power to prohibit vaping and so on ships. We were —or I was—talking about the history of maritime restrictions on tobacco and cigarette use and why that has been the case. I had a couple of questions about the clause for the Minister.

My first question relates to the fixed penalty notices and the powers of entry mentioned in relation to previous enforcement. How would they apply on board ship, given the international nature of shipping? What is the role of maritime authorities and enforcement, or is it down to the captain? Who is going to enforce this? How will it work across different jurisdictions? Many ships operate internationally, so it is relevant to consider how the regulation interacts with international maritime law. For example, if a ship is registered in one country but operates in another jurisdiction, how will enforcement of the new provisions vary?

Enforcing a vape ban on ships operating in international waters, or outside the jurisdiction of the United Kingdom, raises the question of which laws apply. Ships registered under a particular nation’s flag are typically subject to the laws of that nation, but in international waters, enforcement may be complicated by the lack of physical presence of the authorities in the country whose law is being enforced.

It is a pleasure to serve under your chairship, Mr Pritchard. On the questions that the hon. Member is asking about maritime law, are those kinds of issues not already tackled? Drinking, gambling and so on can happen on ships, but do not happen when they enter countries, and that is based on agreements between international partners, shall we say.

We are talking about something that will be illegal in the United Kingdom and how United Kingdom law is enforced. My question relates to how people might behave in other countries’ waters on the basis of local laws. The question is, if this is a law that we are bringing in to apply to British ships, how will the Government expect it to apply when the British ship is not in a British port or in British waters, but perhaps in international or foreign waters? It could lead to difficulties in compliance and potential jurisdictional conflicts where the local laws do not agree. If the ship is operating in another nation’s territorial waters, that country might have its own laws on vaping or smoking. Which law prevails? Another question is when trying to enforce a ban when transporting humanitarian aid or refugees, in that the people who are being picked up might not realise that there is a ban. How would that be enforced in such circumstances?

Some people might ask whether the extent of the regulations for vaping and heated-tobacco devices is too inflexible? Such devices do not pose the same fire risks as cigarettes or pipes, although they are not without risk. Modern Royal Navy deployments, as I understand them, can typically last six to nine months, and vaping is used when smokers are trying to quit as a cessation tool. What discussions has the Minister had about the health of our military personnel deployed for such periods of time? How will he ensure access to nicotine replacement therapy and smoking cessation services so that we are not leaving people without access to what would, for them as an adult, be a legal product?

It is a pleasure to see you back in the Chair, Mr Pritchard. There is light at the end of the tunnel: today is the day that we will have a Bill in one shape or another, having reached the end of Committee stage and deliberated everything; and if not, of course everything that has not been debated gets accepted anyway, so we will have a Bill.

The clause amends an existing regulation-making power in section 85 of the Merchant Shipping Act 1995, so that any safety regulations—this is what we are talking about here. Health and safety regulations in merchant shipping that are made under section 85 provide for heated tobacco and vape-free provision for ships, which will correspond with the provisions in the Health Act 2006.

The shadow Minister, the hon. Member for Sleaford and North Hykeham, put a couple of questions. We have the power to make provision about health and safety in the merchant shipping sector already, under the 1995 Act. Those powers are already there, are already being implemented and are already being enforced. All that this measure will do is extend the provision to vapes and heated-tobacco devices, to bring it into line with everything else we have done over our debates.

The matter is one for the Department for Transport. It owns this policy, and health and safety in merchant shipping. We will continue to work with the Department for Transport as we consider any future regulations to create additional smoke-free places, but it is for the Department for Transport to implement and to enforce health and safety regulations in merchant shipping, as it does now. It will continue to do that, but with an extension of its powers. With that, I commend the clause to the Committee.

Question put and agreed to.

Clause 158 accordingly ordered to stand part of the Bill.

Clause 159

Application to Parliament

Question proposed, That the clause stand part of the Bill.

This is an interesting clause, because it applies the Bill to the parliamentary estate. According to Erskine May, there has been some confusion about whether statute law can apply inside the parliamentary estate, because of the principle of exclusive cognisance. That means that Parliament has control over its own internal matters and that not all laws automatically apply within Parliament. To quote from Erskine May directly:

“Actions in respect of which exclusive cognizance is claimed and has been admitted are not restricted to formal acts of either House. This privilege has been held to extend to the sale of intoxicating liquor within the precincts of the House, though those responsible did not hold a licence.”

Smoking, for example, has technically been prohibited in the Commons Chamber, public and Members’ Lobbies and Committee Rooms since 1694. According to Erskine May, MPs agreed

“That no Member do presume to take tobacco in the gallery of the House or at a committee table”.

Around the estate, however, historically it was the custom to smoke in the bars and the Tea Room, and in the Committee Corridor outside this very Committee Room we are in today. There are legal exceptions and exemptions that are worth discussing now.

The Office of the Parliamentary Counsel published guidance on Crown application in 2021 and noted that the Palace of Westminster is Crown land. The guidance explains the general presumption that an Act does not bind the Crown unless it does so expressly or by necessary implication. Often, an Act includes a clause on Crown application, specifying whether the Act applies to Crown land, but the Health Act 2006 does not include such a clause.

The position set out by case law is that the Health Act 2006 does not apply to the Crown, as in the 2017 case of R (on the application of Black) v. Secretary of State for Justice. In that case, the prisoner, named Mr Black, was serving an indeterminate sentence at Her Majesty’s Prison Wymott. He was a non-smoker with a number of health problems that were exacerbated by tobacco smoke—we talked about prisoners and vaping earlier. He complained that the smoking ban was not being properly enforced in the common parts of prisons, and issued proceedings for judicial review of the Secretary of State’s refusal to provide access to the NHS smoke-free compliance line to prisoners.

The Supreme Court unanimously dismissed Mr Black’s appeal, holding that Parliament must have intended the Crown to not be bound by the smoking ban, otherwise it would have made an express provision for it in the Act. In the words of Lady Hale:

“there are powerful indicators in the language of the Act itself that the Crown was not to be bound by the smoking ban.”

In 2013, the Joint Committee on Parliamentary Privilege noted that the ambiguity had led to many inconsistencies in statute law. That Committee considered that it was not practicable to resolve the inconsistencies without sweeping retrospective change, which could have unforesee- able consequences. It concluded that in the absence of legislation, the safest way forward—however undesirable it might be as a statement of principle—was to reiterate and formalise the current presumption that legislation does not apply to Parliament unless it expressly provides otherwise. That was agreed on, and now there is a rule that legislation creating individual rights that could fit with parliamentary activities must expressly say that it applies within Parliament.

Here we are today, with clause 159, which stipulates that the Bill and regulations made under it will apply to the parliamentary estate. The Bill does not replace the smoke-free provisions in the Health Act 2006 and does not otherwise provide directly for the smoke-free restrictions discussed above. There is no obvious means by which clause 159 will place the parliamentary estate within the scope of the 2006 Act. However, clause 136 enables Ministers to add to the list of places designated as smoke-free by introducing new regulations under proposed new section 4(1) of that Act. It is therefore possible for new regulations to designate the parliamentary estate as smoke-free, but I have seen no indication from the Government that they plan to do that. Clause 136 also enables Ministers to make exceptions to smoke-free legislation.

The extent to which the Bill can be used to place the parliamentary estate within the scope of smoke-free legislation is therefore a matter for legal interpretation, and I would be interested to know the Minister’s thoughts on that. Earlier in the debates that we have been having during line-by-line scrutiny of the Bill, we talked about the snuff that is kept outside the door, with the Doorkeepers, and the Minister suggested there was no reason why that could not continue, but I am interested to understand his thoughts in relation to clause 159.

I concur with the rationale and explanation that my hon. Friend has just given. The question about how we will deal with snuff and other products in the House is an interesting one, because we do not want to see any of our Doorkeepers perhaps being criminalised for having something on the estate or how they have supplied it. I know that earlier discussions focused on the BBC—

I thank my hon. Friend for her support in this discussion. Is it not also the case that the House has a lot of peculiarities and traditions that are sometimes eccentric, but interesting, and that although we would not necessarily want to create exceptions for MPs to use a product that is not available to members of the public, the inability to have the box there would be a loss of a tradition, which would be a bit of a shame?

I agree. One of the things that I have most enjoyed over the last few weeks and months has been learning all the different traditions and the meanings behind them. Having done my original degree in history, I appreciate all that, so the many history lessons that we have had from the shadow Minister in the course of these debates have been much appreciated by me. It is interesting that that is why clause 159 has been put in place, but I would like the Minister to expand on how he thinks that it will work in practice. Will we see the removal of the snuffbox? How will that work in the future?

This is a standard clause. It provides that the measures in the Bill and regulations made under it apply to the parliamentary estate. I hope that Opposition Members do not think that the parliamentary estate should be above the law that Parliament will, I hope, pass. This clause requires the parliamentary estate to adhere to the tobacco and vaping control measures under the Bill and regulations made under it, ensuring consistent application of the law. The wording of the clause was previously agreed with the Clerks of both Houses of Parliament—both the House of Commons and the other place—so that the whole of the parliamentary estate will be covered by the same laws that will apply outside the parliamentary estate. It will include, for example, the shops, to ensure that there is consistent application of the law. It appertains to the House of Commons shop, the House of Lords shop and the retail outlets on the parliamentary estate. Those regulations that apply to retailers outside the parliamentary estate will apply within the parliamentary estate.

Is the Minister aware of any retailers on the parliamentary estate at the moment that actually do sell any tobacco or cigarette products?

No, I am not, but the point is that the law has to apply equally within Parliament and outside of Parliament. There has to be a consistency of approach, and just because a person cannot get the House of Commons snuff from the House of Commons shop does not mean that the House of Commons shop should have a different set of regulations from any other retail outlet in the United Kingdom. Parliamentary Clerks and the Cabinet Office were consulted before the inclusion of this clause. They were content for it to be included, and that is why it is in the Bill.

With this it will be convenient to discuss schedule 21.

I know that the Minister enjoyed grandstanding about equality, but I am not sure that he actually answered the question. Clause 160 talks about consequential amendments, and one question that I asked him about clause 159 was whether it would have the effect that he says it will. It says:

“To the extent that this Act or regulations made under it would not…apply in relation to the Parliamentary Estate, they do so apply”,

but it does not include the Health Act. As there are consequential amendments in clause 160, would there need to be a consequential amendment to the Health Act? It is that Act, as amended, that provides for the regulations in relation to smoking.

Clause 160 and schedule 21 provide further general consequential amendments relating to this Bill. The specific amendments to existing legislation are set out in the schedule. Those amendments help the provisions in the Bill to function effectively within the existing legislative framework. This is a standard supplementary clause that enables the legislation to function as intended following the Bill’s introduction.

The shadow Minister refers to different aspects of legislation. Many of the clauses that we have already debated bring together existing tobacco control legislation in one place, so the consequential powers that we are seeking through this clause will make sure that the existing legislation set out in the schedule will be amended, to ensure the smooth running of the legislation. I therefore commend the clause and schedule to the Committee.

Question put and agreed to.

Clause 160 accordingly ordered to stand part of the Bill.

Schedule 21 agreed to.

New Clause 2

Tobacco products statutory scheme: consultation

“(1) The Secretary of State must consult and report on the desirability of making a scheme with one or more of the following purposes—

(a) regulating, for the purposes of improving public health, the prices which may be charged by any producer or importer of tobacco products for the supply of any tobacco products,

(b) limiting the profits which may accrue to any producer or importer in connection with the manufacture or supply of tobacco products,

(c) providing for any producer or importer of tobacco products to pay to the Secretary of State an amount calculated by reference to sales or estimated sales of those products (whether on the basis of net prices, average selling prices or otherwise) to be used for the purposes of reducing smoking prevalence and improving public health.

(2) In this section—

‘importer’, in relation to tobacco products, and ‘tobacco products’ have the meaning as in Part 5 (see section 112),

‘producer’, in relation to tobacco products, is to be construed in accordance with the meaning of ‘production’ in Part 5 (see section 112).”—(Mary Kelly Foy.)

This new clause would require the Secretary of State for Health and Social Care to consult on proposals for regulating the prices and profits of, and to raise funds from, tobacco manufacturers and importers.

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

I will not be pushing this new clause to a vote; nevertheless, I think it is a policy that the Minister should take into consideration. New clause 2 would require the Secretary of State for Health and Social Care to consult on a “polluter pays” levy. The Minister will know that I and members of the all-party parliamentary group on smoking and health have campaigned for this for some time. It was also recommended in the Khan review in 2022 and, more recently, by the Institute for Public Policy Research’s commission on health and prosperity.

Action on Smoking and Health estimates that smoking costs England more than £43 billion a year. That is more than £27 billion in productivity costs, nearly £14 billion in social care costs and more than £1.8 billion in NHS costs—and much more. A “polluter pays” levy on tobacco manufacturers could raise around £700 million a year, with that money coming from tobacco companies’ profits, not raised from consumers.

A levy of this kind would provide sustainable funding for tobacco control and could be given to organisations such as Fresh, the tobacco control programme in the north-east, which does such vital work in ensuring that no one gets left behind as we move to a smoke-free future. In fact, all the Government’s programmes on tobacco, including mass media campaigns, incentives for pregnant women and support for smokers with mental health problems, could be funded many times over, with cash to spare that could go to other public health initiatives.

This would be subject to consultation, but the model proposed by Action on Smoking and Health would cap the wholesale price of tobacco, similarly to how we cap the prices of essential utilities and hence limit profits. The big four tobacco companies account for 95% of UK sales and make excessive profits selling a highly addictive product that kills two in three long-term users when used as intended by the manufacturer. Tobacco manufacturers make an estimated £900 million in profit per year in the UK, with an average net operating profit margin of about 50%. For context, the average profit margin for UK manufacturing is 10%.

There is widespread public support for this measure: 79% of adults in Great Britain would support a levy on the tobacco industry, with only 5% opposed. I hope the Government will seriously consider this, because it would complement the intentions of the Bill.

I am interested by this new clause. Tax is applied to some products that the Government would like us to consume less of, to make them more expensive so that we consume less of them, and that has been the case with tobacco for some time.

Looking at the current levels of tobacco duty, we see that tax on cigarettes is 16.5% of the retail price of £6.69 for a pack of 20, which is quite a substantial proportion of the cost. Cigars are taxed at £4.17 on a 10 gram cigar, and there is 14.3% tax on a £30 packet of hand-rolling tobacco.

The Government introduced an escalator for further increases in tobacco taxation in their autumn Budget. In addition, they have introduced a tax on vaping products, which will help to take them out of the reach of pocket money. Personally, I have been quite concerned about the fact that vaping products are so cheap that children can easily buy a vape with pocket money, and if they are potentially about to get caught, they can discard it without worrying and then buy another one. A tax on vaping products is, therefore, a welcome initiative.

However, as I understand it, the Government make £8.8 billion per year from tobacco taxation—I am sure the Minister will correct me if that figure is wrong—and it is in the gift of the Chancellor to increase these taxes if she wants to. She is quite good at increasing taxes, so I am sure she knows that that is the case.

As I understand it, the hon. Member for City of Durham proposes that the tax on these products should automatically go towards improving the health—including the public health—of the nation, as opposed to going into general funds. In practice, the Government are already free to spend the money that they receive from tobacco and vape taxation on the health service. They certainly already spend more on the health service than they receive in tobacco taxes. It is a choice. To govern is to choose, and they are choosing how they wish to spend the taxes they raise.

The new clause proposes

“limiting the profits which may accrue to any producer or importer”.

Presumably, that would require some sort of open-book system, and I am not quite sure how the hon. Lady thinks that would work. This level of regulation of the market would require quite detailed open-book working. Perhaps she would like to explain why she thinks that is necessary, when the Government already have in their remit the levers of taxation specifically for these products.

The difference is that the tax would not come from the consumers. This would be a tax on the big four tobacco companies, rather than raising taxes from consumers. We know that consumers of these products are already likely to come from deprived backgrounds. In addition to raising revenue, the measure would allow us to impose much tighter controls on the prices of tobacco products. That would disincentivise the tobacco industry from creating so much profit from their products.

Although the Chancellor can use taxes for whatever purpose, this measure would be a tax on those companies whose product, as we know, kills one in two of the people who use it. Just raising taxes in the way that the hon. Lady describes would be an extra burden on the consumers who we are trying to help quit tobacco.

I thank the hon. Lady for her explanation, which was really helpful. I am grateful that she, as a Labour MP, understands that a tax on business will be passed on to the consumer, because it seems that the Chancellor does not. Perhaps the hon. Lady should apply for a new job.

The hon. Lady is right that if taxes are applied to a business, the business will pass them on to the consumer. The only way to avoid that is through price control. Nevertheless, I do not think that makes price control a desirable thing for the Government to interfere with. That level of regulation would go too far, and other measures in the Bill already seek to restrict and disincentivise smoking in so many different ways. I hope that they will be effective and that there will be no need for such onerous regulation.

The hon. Member for City of Durham has proposed a very interesting concept. Although she may not be pressing the new clause to a vote, it is interesting to discuss the concept in principle, so I thank her for tabling it.

Essentially, the proposal is that the Secretary of State would have to consult on a scheme that would regulate prices and limit profits, and then they would calculate the tax:

“by reference to sales or estimated sales of those products”.

That is an interesting concept, but I wonder whether it could be deemed anti-competitive. I know that the ultimate aim is to close down the tobacco companies, and that is essentially what the measure would drive towards, but in the interim, when many people will still be legally able to smoke, what arguments might the companies make in that regard? The Chancellor says she is pro-business and is encouraging business. The tobacco companies are perhaps not the businesses she has in mind, but the provision would have wider repercussions that could flow into other areas.

The new clause would be a game changer. One of the questions was whether the measure might later be applied to other areas—I presume that the hon. Member means taxing the big alcohol and gambling companies—but tobacco is a uniquely lethal and addictive product, so in this case the intervention is justified. She makes a good and compelling point, but I think the Government’s overall health strategy is to shift from sickness to prevention, which will require looking at all habits and supporting people to live healthier lives in healthy environments.

I have been listening carefully to the hon. Lady. Does she have a price for tobacco products in mind? Governments of different colours have increased tobacco duty a bit at a time, presumably to nudge behaviour. If we do not increase it enough, we do not have the desired effect, but if we increase it too much and too fast, we potentially drive people into illicit-market tobacco. We heard from the chief medical officer about the difficulties people have in giving up cigarettes because of the profoundly addictive nature of nicotine, so if we were to increase the prices too quickly, we could end up making life difficult for people who are poor and addicted to nicotine, without the necessary support in place. If the prices are going to go up to somewhere in the middle, how is that different from taxation?

The new clause asks for a consultation, so a lot of issues would need to be worked through with the Chancellor. However, the tobacco companies make exorbitant profits from a product that kills the folk to they sell it to, so I am sure that the shadow Minister would agree that that means we should use some of their profits to pay for the damage being done.

I certainly agree that it is immoral to sell products that they know are addictive, are dangerous and kill people.

I am almost glad that my hon. Friend the Member for Windsor is not here, because at this point we would probably be launching into a much longer and more protracted debate, so we are lucky in that regard—[Interruption.] I am being chastised by the shadow Minister.

We should consider that interesting point and its knock-on impact because, in common with the hon. Member for City of Durham, I have concerns about the illicit tobacco market. I very much agree that we should be moving to a new system of preventive medicine. As I have mentioned, I have type 1 diabetes, and I want to see a greater and earlier use of technology to prevent long-term problems. The new clause provides a useful point for discussion, and I thank the hon. Lady for tabling it.

I am grateful to my hon. Friend the Member for City of Durham for tabling the new clause, because it allows us to have a debate about a really important matter. As has been discussed, the new clause would require the Secretary of State for Health and Social Care to consult and report on a scheme to regulate and to raise funds from the prices and profits of tobacco manufacturers and importers.

Duty on tobacco raises around £8.8 billion a year. The Government’s preferred approach is to continue with a proven and effective model of dealing with tobacco products through increases in tobacco excise and through duties. This generates finances that can support a full range of public services, including public health and the NHS, as well as smoking cessation services. We believe the proposed scheme would be complex to implement and might take several years to materialise.

Alongside the Bill, we are taking strong action to reduce the affordability of tobacco, which is an effective measure to trigger smoking cessation. The United Kingdom already has some of the highest tobacco taxes in the world. The World Health Organisation recommends that total taxes on tobacco are at least 75% of the retail price on typical cigarettes. The United Kingdom comfortably meets this target, with taxes at around 80% of selling price.

As announced at the autumn Budget 2024, duty rates on all tobacco products were increased in line with the tobacco duty escalator by 2% above retail price index inflation. The duty rate on hand-rolling tobacco was increased by a third of 10%, to 12% above RPI inflation, to reduce the gap with duty on cigarettes. Those changes came into effect on 30 October 2024.

Cigarettes are also subject to minimum excise tax, which sets a minimum amount of duty collected on a pack of cigarettes. That discourages manufacturers from selling cheap cigarettes, as it reduces the profitability of cigarettes sold at or below minimum excise tax trigger prices. The new minimum excise tax is £8.93 for a pack of 20, and it applies to cigarettes sold at or below £13.59 for a pack of 20.

We are still going further on tobacco tax. As announced in the autumn Budget, there will be an additional one-off increase for all tobacco duties. That will come into force on 1 October 2026, when the vaping duty comes into effect. From a financial perspective, that will maintain the incentive for smokers to switch to vaping once the new excise duty on vaping products comes into force.

On one last technical note, His Majesty’s Treasury can consult on tobacco taxation and fiscal policy at any time, so that does not need to be set out in the Bill. For those reasons, I ask my hon. Friend the Member for City of Durham to withdraw her new clause.

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 4

Ban on supply of cigarette filters

“(1) The Secretary of State must make regulations under section 140 of the Environmental Protection Act 1990 having the effect of prohibiting the supply of relevant cigarette filters or cigarettes containing relevant cigarette filters, whether by way of sale or not, in the course of a business.

(2) The notice required under section 140(6)(b) of the Environmental Protection Act 1990 in relation to the regulations mentioned in subsection (1) must be published no later than the end of the period of 6 months beginning with the day on which this Act is passed.

(3) In this section,

‘relevant cigarette filter’ means a filter which contains plastic and which is intended for use in a cigarette, whether as part of a ready made cigarette or to be used with hand rolling tobacco or other substances to be smoked in a cigarette.”—(Dr Caroline Johnson.)

This new clause requires the Secretary of State to make regulations which would prohibit the supply of cigarette filters which contain plastic or cigarettes containing cigarette filters which contain plastic. The regulations would be made under section 140 of the Environmental Protection Act 1990.

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

I am sorry that the hon. Member for Dartford is not here to discuss his important new clause 4, which is about a ban on cigarette filters. I asked the Minister why cigarette filters were not included in clause 1, along with cigarette papers and tobacco products. Cigarette filters have a health effect, but it is not necessarily the effect that most people think. Filters were first introduced in the 1950s in response to mounting scientific evidence highlighting the dangers of smoking. The tobacco industry seized upon the opportunity to present the filter as a way to make cigarettes safer. It claimed that they reduced the inhalation of harmful substances such as nicotine, tar and other toxicants.

The early filters were made of cork, which is the origin of the cork pattern that can still be seen on many cigarettes. By the end of the 1950s, sales of cigarettes with filters had surged to more than 40% of the market, and by 1965, more than 60% of cigarettes were manufactured with filters. Alongside that shift, the marketing of light and mild cigarettes with ventilated filters further enhanced the illusion—and it is an illusion—of reduced harm, making smoking appear to customers more palatable, and to some extent reducing customer awareness of the risks involved.

There were some early studies that appeared to support the tobacco industry’s claims. Filter tip cigarettes at that time were thought to be associated with lower rates of lung cancer and mortality, compared with their unfiltered counterparts. However, when comprehensive and rigorous studies were completed over time, the initial findings were disproven. Subsequent epidemiological data revealed that both ventilated and non-ventilated filter tip cigarettes were just as harmful as unfiltered cigarettes. In fact, the incidence of lung adenocarcinoma—a type of lung cancer that has increasingly replaced the more prevalent squamous cell carcinoma—has risen significantly in recent decades. The rise in adenocarcinomas is believed to be linked to the use of ventilated filters, as they affect smoking behaviour and the combustion of the product.

One of the key reasons why filter tip cigarettes fail to reduce the risk of lung cancer and other diseases is the changes they cause in smoking behaviour. When cigarette filters were introduced, they altered the way people smoked. For example, smokers began taking longer and deeper puffs, increasing their exposure to harmful chemicals in the smoke. Such behaviours may have upset the potential benefits that some individuals thought filters might have in reducing the toxic smoke inhaled.

The presence of a filter, especially those with ventilation, changed the combustion of the cigarette itself. That led to a greater exposure in smokers to tobacco-specific nitrosamines, which are potent carcinogens and a major contributor to lung cancer. The filtering process did not remove those harmful substances, and in some cases may even have enhanced their presence in the smoke that smokers inhaled.

Another concerning aspect of modern cigarette filters is the material from which they are made. The most common material used is cellulose acetate—a synthetic plastic that, when inhaled, can contribute to respiratory issues. The fibres and microplastics from filters can embed in the lungs, potentially leading to long-term damage. Although that material can be effective in filtering out some particles, it does not remove gases of low molecular weight, such as carbon monoxide, which are also harmful to health.

Despite cigarette filters being marketed as a safer option, their widespread use over the past 60 years has had little effect on reducing the health risk of smoking. In fact, it may have contributed to a decrease in public awareness about the dangers of smoking, and may have led to more people becoming addicted to smoking without fully understanding the risks involved.

I note that new clause 4 suggests that the Environmental Protection Act 1990 should be used to ban the supply of cigarette filters, because they have a significant environmental impact. Roughly 4.5 trillion cigarette filters are disposed of annually, making them the most littered man-made waste item in the world and accounting for roughly a third of all litter found in coastal and urban clean-ups. Despite their small size, the sheer volume of discarded cigarette butts would fill almost 50,000 shipping containers every single year, and that is expected to increase by 50% in 2025.

I was absolutely shocked to learn that cigarette butts account for one in five pieces of discarded plastic. When it is predicted that by 2050 there will be more tonnage of plastic in the ocean than fish, we should look at every way possible of protecting the environment and wildlife from plastic pollution. Back in 2019, a third successful dive was made to the Mariana trench—the deepest part of the ocean; it is 36,000 feet deep, which is greater than the height at which jumbo jets fly—and I was surprised that when the people were down there documenting previously unseen life forms, they came across plastic pollution. This is such a serious issue that we need to look at every way possible of reducing plastic pollution. Those tiny cigarette butts in particular can be swallowed by a huge number of creatures, as well as contaminating the environment.

I thank the hon. Gentleman for that important intervention. He is absolutely right that these items are a huge danger to the environment, and it is sad when we go to parts of our world that are still not well explored, such as the Mariana trench, and find evidence of damage caused by the human race, such as plastic pollution. Although I have huge sympathy for people who have become addicted to nicotine and find it difficult to quit smoking, there is no excuse for the litter that it creates all over our beaches and our urban and rural areas.

Cigarette filters are neither biodegradable nor effectively recyclable. They are made, as I said, primarily from cellulose acetate—a plastic material that does not biodegrade. Even after two years of decomposition, cigarette filters will have lost only about 38% of their mass, and the remaining material continues to persist in the environment. During that time, filters leach harmful substances, including heavy metals and toxic chemicals such as arsenic, that have been inhaled through the filter and into the surrounding environment, further contaminating soil and water sources.

Cigarette butt waste has been shown to impact marine and coastal environments. Studies have demonstrated that cigarette filters affect the micro-biodiversity of coastal sediment and that they pose harm to marine animals that ingest them. That is a growing concern, as the hon. Member for Winchester said, as plastic waste continues to accumulate in the ocean, harming wildlife and disrupting ecosystems. The Ocean Conservancy’s international coastal clean-up has, over the course of 32 years, collected more than 60 million cigarette butts from the ocean. Although that sounds like a lot, that accounts for just 0.00001% of all cigarette filters thrown away in a single year, so this is a difficult thing to clean up.

Despite the growing awareness of the environmental impact of single-use plastics, cigarette filters have not been subject to the same regulations as other plastic products. For example, the European Union banned many forms of single-use plastic in 2019, but cigarette filters were not included, leaving a significant loophole. As cigarette consumption remains widespread, the environmental impact of the filters continues to grow. In October 2024, Santa Cruz county in California became the first jurisdiction in the world to approve a ban on filtered cigarettes and cigars.

One of the questions I have for the hon. Member for Dartford who tabled the new clause—he sadly is not here—is why he has chosen to use the 1990 Act. The previous Conservative Government banned a number of single-use plastics on the basis that they were harmful to the environment, that there were non-plastic, more environmentally friendly and more suitably priced items available, and that it would help to improve the environment, which is a very good thing. However, one of the reasons for introducing those bans through secondary legislation under the 1990 Act was that there was not an opportunity to do so in primary legislation, because of the time constraints of the parliamentary calendar. The Minister has talked about getting time for primary legislation already.

This Bill is a piece of primary legislation, and to add cigarette filters to it only requires the Government to write in clause 1 “and cigarette filters too”, and to make consequential amendments through the Bill on that basis. I agree with the principle that cigarette filters are a bad thing for the environment, and they are not good for people’s health, but I am not entirely sure why the 1990 Act is being used and why the Minister has not included filters in clause 1 and consequentially throughout the Bill. Perhaps he can tell us in winding up.

I thank my hon. Friend for her explanation. I did not know that it was cork that gave the colouring, so that is another benefit of her history lesson. We are aware that the previous Conservative Government took strong action to try to remove plastics in the environment. We introduced the UK-wide prohibition on the use of plastic microbeads in the manufacture of some cosmetic and personal care products, such as face scrubs, toothpastes and shower gels, where the little beads could wash into the sea. That was one of the reasons why those beads were banned. It is therefore an interesting argument to make that we should ban cigarette filters with their plastic content, because we do not want further pollution of our beautiful natural environment.

The World Health Organisation has advocated for banning those filters. As my hon. Friend compellingly said, there are no health benefits to such filters being used—which I had not appreciated. One would assume that those filters would have helped, but it is interesting that they do not. I note that the UN General Assembly is also advocating for a ban on filters, particularly given their plastic content.

My hon. Friend makes the point about the plastic content. I just spotted that in the explanatory statement for new clause 4 from the hon. Member for Dartford, he talks about wanting specifically to ban cigarette filters that contain plastic, as opposed to other cigarette filters. That would improve the environment, but a question is raised by the fact that when a cigarette filter is in use, the toxic chemicals present in the cigarette flow through that filter and becoming lodged in it. So as well as the plastic pollution as the filter is littered into the environment, causing a hazard, there is also the fact that as it decomposes, those other toxic chemicals present in the tobacco smoke are in the filter and leach out into the environment. That presumably would be the case even if the filter was not made of plastic, although the plastic is clearly extra harmful.

I agree. That is a good conclusion to have worked through, which we perhaps had not had the opportunity to turn our attention to. I would like to see a provision of this nature. I am intrigued, as my hon. Friend said, by why the Minister has not included filters in the outright initial ban. That should be considered, perhaps on Report.

As a general principle, we need to look after our natural environment. A ban on the plastic contained in cigarette filters would surely be a sensible move. As my hon. Friend has said, however, the filters do not achieve what anyone was hoping and do not make smoking safer. I therefore think we must have further discussion. Will the Minister give a little more explanation on some of the rationale and whether the measure can be included in the Bill?

I am grateful to the shadow Minister for moving this new clause for debate and to my hon. Friend the Member for Dartford for tabling it. New clause 4 would require the Secretary of State to make regulations under the Environmental Protection Act 1990 to prohibit the supply of cigarette filters that contain plastic or cigarettes containing cigarette filters that contain plastic.

I am incredibly sympathetic to the premise of the new clause. Cigarette filters, as we heard from the shadow Minister, have historically been marketed as making smoking safer, and we know that smokers can perceive cigarettes with a filter as tasting smoother and being of lower risk. Evidence shows that there is no proven health benefit to cigarette filters. All tobacco products are harmful to health.

However, as with all regulations, it is important that any measures are fully considered and evidence-based, to ensure that there will not be any unintended consequences—[Interruption.] Did the hon. Member want to intervene?

The hon. Member for Dartford has now arrived, so perhaps the Minister would be so kind as to allow him to intervene.

Hang on. It is for the Minister to decide who he wants to give way to. Minister, carry on speaking; if somebody catches your eye, it is up to you whether you allow them to intervene.

If my hon. Friend the Member for Dartford wants to intervene, he need only ask.

I thank the Minister for giving way and welcome the fact that I am serving under your chairship, Mr Pritchard; it is an honour. I apologise to the Committee that I was not present to move the new clause and thank those who have moved it and spoken on it. The Minister has outlined some of the health dangers connected with filters. They do not prevent any of the toxins and carcinogens that—

May I pause the hon. Gentleman for a moment? If he wants to make an intervention, that is great, and he can make as many as he wishes. If he wants to make a speech, he can also do that, but that will come a little later.

I am quickly coming to the point of my intervention; I reserve the right to say something else later. The Minister has outlined the fact that the health benefits of filters are non-existent, but is he also aware that, according to Keep Britain Tidy, cigarette butts make up 66% of all littered items and cost UK local authorities around £40 million per year to clean up? Would he consider that relevant to this new clause?

My hon. Friend is absolutely right. Litter is something that this Government take seriously. Tobacco litter remains a concern for the Department for Environment, Food and Rural Affairs, with cigarette filters consistently scoring as the most littered item in surveys. Local authorities already have the powers to punish those who litter through prosecution. They can also create smoke-free areas through the use of public space protection orders.

Nevertheless, my colleagues in DEFRA believe that the best way to tackle littering of filters is through a reduction in smoking rates. We therefore continue to support all initiatives designed to encourage people to quit smoking. This Bill aims to reduce smoking prevalence in the UK. Our published modelling, which I have referred to, shows that smoking rates in England among 30-year-olds and under could be close to zero as early as 2050, which is likely to reduce overall litter levels, as there will be fewer tobacco and tobacco-related products sold and disposed of each year.

We need to be very wary of unintended consequences. I know for certain that my hon. Friend, like me, does not want to give tobacco manufacturers the opportunity to greenwash and to say that they have created a product that is not only healthier for people because it has a filter—we know that that is utter nonsense, but it is the lie they have peddled to date—but better for the environment. We will not allow the tobacco industry to improve its reputation by making itself appear to be environmentally aware and taking action.

Without necessarily endorsing the ban that the new clause would lead to, is the Minister prepared to think about supporting a move to other parts of Government, and perhaps about even moving to ban cigarette filters, as part of the consultation that his Department is about to undertake? That would generate momentum for what he rightly says would be a positive move for the environment and for health.

We are very clear about the measures in the Bill that we will consult on, but I reassure my hon. Friend that I am in regular contact with Ministers across Government about a whole range of issues, not least because the health mission board has decided that I have a lead role in bilateral discussions on the health mission. I will certainly continue to raise the issue of cigarette end litter with colleagues in DEFRA, and to see whether we can get DEFRA to use some of the powers at its disposal in order to meet the aims and ambitions of my hon. Friend, but it need not be included in this Bill specifically, because it is a DEFRA-led policy.

The shadow Minister and the hon. Member for South Northamptonshire asked why cigarette filters were not covered in earlier clauses. In the Bill, we have taken a power to update the legislation to include tobacco devices and accessories that enable a tobacco product to be consumed, such as a pipe. It would not cover filters, as they do not enable a product to be consumed. That is the legalistic reason that cigarette filters are not in scope of the Bill, as we debated way back when. I ask my hon. Friend to withdraw the new clause.

Given that the shadow Minister moved the new clause, it is for her to press or withdraw. Shadow Minister, do you want to withdraw it or press it to a vote?

That depends on whether the Minister can assure me that he intends to bring forward legislation under the Environment Act 2021 to deal with plastic filters.

That is way above my pay grade. It is a matter for the Department for Environment, Food and Rural Affairs, and I have already assured my hon. Friend the Member for Dartford that I will speak to ministerial colleagues in DEFRA. We are very sympathetic to the aim of the new clause, but we do not support the Bill being the mechanism to achieve it.

I thank once more the shadow Minister for moving my new clause in my absence. If I were moving it, I would be content, given the Minister’s assurances to pursue this matter, to withdraw it. I know that there are others on both sides of the Committee who will work with me to make the right representations to DEFRA to see the point of the new clause carried forward in another part of Government. Were I moving my own new clause, I would be happy to withdraw it at this point.

I am grateful to the hon. Gentleman for making that clear, although it is technically your decision, shadow Minister.

I take the Minister at his word. He is an honourable man and I hear that he has sympathy for the new clause. The important thing is that it gets done, not necessarily that it gets done in a particular piece of legislation. I will take him at his word and look forward to seeing the legislation come before an SI Committee for DEFRA. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 5

Ban on manufacture and sales of high-strength nicotine pouches

“(1) It is an offence to manufacture a high-strength nicotine pouch.

(2) It is an offence to—

(a) sell or expose for sale a high-strength nicotine pouch, or

(b) offer or expose a high-strength nicotine pouch for sale.

(3) It is an offence for a person to have a high-strength nicotine pouch in their possession with intent to supply it to another in the course of business.

(4) In this section “high-strength nicotine pouch” means a nicotine pouch that—

(a) is intended for oral use,

(b) is not intended to be inhaled,

(c) does not contain tobacco, and

(d) contains more than 20 milligrams of nicotine per pouch.

(5) It is a defence for a person charged with an offence under subsection (2) to prove that they took all reasonable steps to avoid the commission of the offence.

(6) A person who commits an offence under this section is liable—

(a) on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court, or a fine, or both;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years, or a fine, or both.”—(Mary Glindon.)

This new clause provides for a ban on the manufacture and sale of high-strength nicotine pouches.

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

New clause 5 was tabled by the hon. Member for Newcastle upon Tyne East and Wallsend (Mary Glindon), who is not on the Committee, and addresses an important issue that is causing me huge concern as well: that of nicotine pouches. We have heard repeatedly in this Committee, and from our witnesses in the evidence sessions, about how the tobacco industry behaves—how it seeks to addict people to nicotine for a lifetime and how it seeks to do so in relatively young people, who are most susceptible to its marketing and to the nicotine addiction itself.

Nicotine pouches are tobacco-free products that are becoming increasingly popular in the UK. They first entered the market in 2019 and are most prevalent among smokers trying to quit, although there is now a substantial market for non-smokers, in the same way that we have seen with vaping and other products over time—this is the latest one, as it were. The main type of oral nicotine products comes from brands like Zyn, Velo, Nordic Spirit, LOOP and White Fox. There are also stronger variants, like Siberia and Killa. They are a tobacco-free product that is placed between the lip and the gum and held there for oral absorption of nicotine, similar to Swedish snus. They are pre-packaged, pre-portioned pouches produced in a variety of flavours.

The Health and Social Care Committee went to Sweden last spring—around the time that the previous Government’s Bill was in Committee—where we saw rows upon rows, floor to ceiling, of these products in shops across Sweden, where they are very popular. We have seen the same pattern of marketing towards children as we are seeing for vapes and have seen for tobacco in the past. If mint is one’s favourite flavour, one could go for crispy peppermint, mighty peppermint, peppermint storm, witty spearmint, humble spearmint or even spiffy spearmint. If fruit flavours are more your thing, Mr Pritchard, choices include wintry watermelon, blueberry boost, hot berries, blushy berry, groovy grape, breezy mango and punchy lime. These pouches are now available in a whole variety of flavours, also including cinnamon flame, nutty Virginia and fizzy lemonade, and they have become more popular. They have attracted investment from the world’s biggest tobacco companies, eager to shift to so-called reduced-risk products as regulation and health concerns tighten worldwide, and have become a viral hit with consumers, many of whom are too young to already be smokers.

Philip Morris International acquired Zyn maker Swedish Match in 2022 for about $16 billion and said that the product had helped to boost its revenues by almost a fifth in the first nine months of last year as it delivered its third quarter results. It said that Zyn was now available in 30 countries, with recent launches in Greece and the Czech Republic. British American Tobacco owns the Velo brand and said in August that nicotine pouches were its fastest-growing new category, with organic revenue up more than 48% in the first half of 2024 compared with 2023. I am sure the Minister will look at this carefully and, as he seeks to protect the population’s public health in relation to nicotine products, I am sure he will be cognisant of the need to protect under-18s from these products.

New clause 5 focuses specifically on the nicotine content of these products. The nicotine content of oral nicotine pouches can vary. Typically, it is between 4 mg and 18 mg of oral nicotine per pouch, but there are many that contain much more. Some online retailers sell products containing up to 150 mg of nicotine per pouch. Oral nicotine pouches are sold in a variety of flavours but also in a variety of strengths. The comparison with a cigarette is quite stark:

“Researchers at the University of Stirling found that some pouches for sale on the UK high street had a nicotine content equivalent to 10 cigarettes.”

Those products are being put on people’s gums and giving them the equivalent of 10 cigarettes over a short period of time. The Financial Times article from 5 November 2024 goes on:

“‘They are strong enough to be psychoactive and they can cause local irritation,’ said Rosemary Hiscock of the Tobacco Control Research Group at the University of Bath. ‘Even if flavours are safe for food, we can’t be sure that they’re actually going to be safe if they’re held in the mouth for a long time, next to the gum line. There’s not been research on the interactions of that at all.’”

Oral nicotine pouches, alongside other novel nicotine products such as nicotine toothpicks and nicotine toothpastes that could emerge or have already emerged on to the market, are regulated under the General Product Safety Regulations 2005. Under the regulations, there is no current age of sale for retailers to impose, so these products are legally being bought by those under the age of 18, though the Bill will help to resolve that. Nicotine products are also not regulated by the Medicines and Healthcare products Regulatory Agency, because no medical claims are made and they are not an alternative to an authorised medical product. They are not being used as a medical prescription stop smoking device, but are sold more as a recreational form of nicotine by tobacco producers, who see their market in tobacco shrinking and want to find another way to addict the next generation of people to nicotine, thereby removing their choice and potentially damaging their health.

We have seen social media and website, content and brand advertisements promoting nicotine pouches as performance enhancers for gaming and sport. We have seen the promotion of JTI’s Nordic Spirit pouches at music festivals; and Zyn and Velo, which are owned by tobacco companies, run reward programmes allowing consumers to swap empty packets for prizes such as iPads. I hope the Minister can confirm that those will be prevented by the Bill—they will be prevented by legislation if the Minister regulates, as he is given the powers to do by the legislation. We hope that he intends to do so.

The Advertising Standards Authority has tried to control this within current powers; a major nicotine pouch brand implying mood enhancement and stimulation was banned by the ASA in 2021. There is little reliable evidence that nicotine has any performance-enhancing benefits in sports, but a report by Loughborough University in May 2024 found that one in five 5 professional footballers in England currently use nicotine products and that two in five have used nicotine products at least once.

UK survey data shows that nicotine patches are becoming increasingly prevalent in the UK. In 2020, a survey of the UK showed that 2.7% of people had tried nicotine patches, but that had essentially doubled by 2024 to 5.4%, with an increase in popularity among young people, which shows increased awareness among young people; shop displays, bus banners and social media promotion are making them more and more of a problem among young people.

Does this matter? Well, of course being addicted to something one does not want to be addicted to does matter, but what health issues might be caused by these nicotine pouches? According to the impact assessment for the Bill,

“a recent scoping review, found that oral nicotine pouches claimed to be less toxic than cigarettes and deliver comparable nicotine, although data was mainly available from industry funded studies. Despite potentially lower toxicity than cigarettes, oral nicotine pouches still contain nicotine, which”

is still addictive and still

“can have harmful effects. A systematic review considering the harmful effects of nicotine found nicotine to adversely affect various systems within the body including the cardiovascular, renal, respiratory and gastrointestinal systems, it has also been shown to be a carcinogenic.”

I find high-strength nicotine pouches incredibly concerning, as I had not been aware of their existence. There is a Member of the House who happens to use them; I had simply thought that that hon. Member was partaking of mints, but that is clearly is not the case.

This is an interesting area. As the shadow Minister has noted, pouches are discreet. When they are aimed at children, it is hard for parents to know what their children are taking, so they are particularly pernicious in their effect.

Many hon. Members will know that I often go back to social media. Apparently one of the main brands is called Zyn and is now trying to promote the trending of “Zynfluencers” via Instagram. The aim is to appeal to the younger generation. I do not think that that is acceptable, especially when some of these pouches are of a strength of up to 100 mg, as the shadow Minister mentioned.

Like the shadow Minister, I ask whether the Minister has any thoughts about whether the cap should be reduced further, because 20 mg may not be the right number. Given that the impact of long-term use of these pouches, which I happened to raise with the Member I saw taking one, includes mouth sores, gum irritation and oral cancer, I think we probably need a further discussion about them. I welcome any comments that the Minister may have.

I am grateful to the shadow Minister for moving the new clause tabled by my hon. Friend the Member for Newcastle upon Tyne East and Wallsend.

New clause 5 would introduce a ban on the manufacture and sale of high-strength nicotine products, with the maximum level of nicotine in a pouch set at 20 mg. Unlike nicotine vapes, there is currently no set nicotine limit for nicotine pouches; as we have heard, nicotine strengths vary from 2 mg per pouch to as high as 150 mg per pouch. There is also significant variation in these products internationally.

I am incredibly sympathetic to the arguments from the shadow Minister, from the hon. Member for South Northamptonshire and indeed from my hon. Friend the Member for Newcastle upon Tyne East and Wallsend. It is important to define the correct and safe nicotine level of a nicotine pouch. That is why we are already taking powers in the Bill that would allow the Government to limit the amount of nicotine in a pouch and to ban any other ingredient in a pouch that might be harmful.

We believe that secondary rather than primary legislation is the appropriate way to legislate on these matters, for all the reasons we have already debated. Legislation always has to be flexible enough to be amended based on new and emerging evidence. That allows the Government to set the right level of technical detail to ensure legal clarity. We will therefore consider the matter very carefully in our consultations post Royal Assent. I note that the shadow Minister referred to “if” we decide to use these regulations. Let me be very clear: these are precisely the kinds of things we will be looking at when we are moving like the clappers to get the regulations through.

In addition, nicotine pouches will be covered by all our other measures designed to reduce the appeal and accessibility of such products to children, such as powers to restrict flavours and regulate packaging, as well as those on general advertising. The shadow Minister gave an example of promotions that give out iPads in exchange for empty pouches. We clearly need to look at that specific promotion, but we are confident that it would be banned under the advertising restrictions that we have already debated and agreed to in Committee. I therefore ask her to withdraw the amendment.

I am grateful for the Minister’s comments. I understand that he is sympathetic. I know that he is going to go like the clappers; “going like the clappers” is apparently an RAF phrase, but I doubt that he is going as fast as a Tornado jet or a Typhoon—[Interruption.] Maybe he will: he is indicating that he might.

I reassure the shadow Minister that on some of these things I am going to go supersonic.

Hear, hear. However, in reality, regulations take time, and a sonic boom could damage the windows of this beautiful Palace of Westminster.

I do not know where the hon. Member for Newcastle upon Tyne East and Wallsend, who tabled new clause 5, has got the 20 mg figure, but my understanding is that 20 mg is a higher level than we would expect in a cigarette. Anything stronger than a cigarette could certainly not be considered a stop smoking device: it will just get people more addicted to nicotine than they would ever wish.

I will press the new clause to a vote, because I feel very strongly that over time we will see these pouches becoming the latest thing for children to become addicted to, despite the Minister’s best intentions.

Question put, That the clause be read a Second time.

It is a great pleasure to serve under your chairmanship, Ms Vaz. The clause makes changes to the main rates of the climate change levy, or CCL, with effect from 1 April 2026. The Government are increasing the main rates of CCL on gas, electricity and solid fuels by the retail prices index to maintain the incentive for businesses and the public sector to be more energy efficient.

Since 2001, the CCL has encouraged businesses and the public sector to be energy efficient by adding a tax on the non-domestic supply of energy. The Government have announced a national mission to make Britain a clean energy superpower and accelerate our journey to net zero, and improvements in energy and resource efficiency will play a significant role in reducing industrial emissions in the 2020s. Delivering on this mission will help to make the UK energy independent, protect billpayers, create good jobs and tackle the climate crisis.

The previous Government followed a trajectory of rebalancing the gas and electricity rates over a five-year period to reflect that electricity emissions are progressively lowering due to the increasing contribution of renewable and lower-emission energy in electricity generation. The CCL rates for electricity and gas equalised in April 2024, and at the autumn statement 2023, under the last Government, rates were frozen for the year 2025-26.

Now that the rebalancing has been achieved, uprating the main rates on gas, electricity and solid fuels from April 2026 will continue to provide an incentive for energy efficiency. At autumn Budget 2024, this Government also announced that the main rate of CCL on liquefied petroleum gas will continue to be frozen. This is to ensure better consistency between LPG and other portable fuels—for example kerosene, which is zero rated under fuel duty—for commercial premises not connected to the gas grid.

The changes made by the clause will increase CCL rates on gas, electricity and solid fuels by RPI with effect from April next year. Non-domestic energy supply users will see an increase on their CCL bill of around 0.025p per kWh of gas or electricity supplied. The rate on solid fuels will increase by 0.2p per kg. However, participants of the climate change agreement scheme are eligible to pay reduced CCL rates in return for meeting negotiated energy-efficiency and carbon targets. The CCA scheme enables energy-intensive industries to receive discounts of up to 92% on their CCL bill. The new six-year scheme, announced on 16 October, will provide an estimated £1.9 billion of relief to 2,600 businesses in 53 industrial sectors over its lifetime. Overall, we expect a reduction in greenhouse gas emissions as a result of the clause compared with freezing the rates.

In conclusion, the changes made by the clause will help to incentivise businesses to improve their energy efficiency, thereby progressing the Government’s climate objectives, which are vital for the UK’s long-term economic prosperity and energy security. I commend the clause to the Committee.

As the Minister said, the clause amends the main rates of the climate change levy from April 2026, in line with RPI, for electricity, gas and other taxable commodities, while continuing to freeze the rate for LPG. We will not oppose the measures in the clause.

I was pleased to see the Government confirm their plans to extend the climate change agreement scheme at the Budget. The scheme allows energy-intensive industries to claim a discount on the climate change levy, subject to taking steps towards increasing their energy efficiency and reducing emissions. At autumn statement 2023, we announced a new six-year CAA scheme, and I am genuinely pleased that the Government have chosen to reaffirm our announcement and take that forward, following consultation.

However, as the Minister may expect, I want to raise an issue with her. It has been raised at oral questions, so will not be a surprise to her. There have been several reports in recent weeks about the UK chemicals industry that are directly relevant to climate change and the CCA scheme, as the Minister will know better than me. Sir Jim Ratcliffe has warned that the UK chemicals industry is at risk of “extinction”. His firm, INEOS, closed its synthetic ethanol plant at Grangemouth this month, which will result in the loss of many jobs. That was the last remaining synthetic ethanol plant in the country. Given the ongoing concerns, I would be grateful if the Minister could provide an update on what consideration has been given to the UK chemicals industry in calibrating these policies.

As the Minister knows, the UK chemicals industry is the third-largest manufacturing sector in this country. It contributes £30 billion to our economy and directly employs 138,000 people across the country in 4,100 businesses. I presume that the Chancellor has met representatives of the sector, but I would like to hear the Minister confirm that, given how topical this issue is, how concerned the industry is and how widely reported the issues have been.

As always, I speak on behalf of the highland industries. In rural areas, only electricity and kerosene are available; mains gas is not. Electricity users pay four times more for their energy than mains gas users, so a hotel on the island of Skye may pay £80,000, whereas one in a city may pay £20,000. That causes enormous issues for people in the windiest, coldest, darkest part of Great Britain. The reason for the big disparity is that the tariffs and taxes are largely on electricity, rather than gas, and of course electricity is largely renewable. In my constituency, people can see wind farms out of their window, yet we still pay four times more for our energy than people in cities. Will the Minister elaborate on what could be done to make us more competitive?

I welcome the Opposition’s support for the clause. For quite some time there has been cross-party support for the CCA scheme. I welcome what the shadow Minister said about the Opposition’s support for the extension of that scheme for energy-intensive industries.

The shadow Minister asked me about the UK chemicals industry. As he said, it is a very valuable sector of our economy. It is obviously included in the climate change agreement scheme, which exists to ensure that businesses for which energy makes up a larger proportion of their operating costs, and that are at higher risk of carbon leakage, are supported to make changes to their processes to reduce their energy intensity. The example he provided is concerning, but we have introduced measures to help such industries to cope with the fact that they are energy intensive. I hope that answers his question. I do not know whether the Chancellor has met representatives of the sector, but I am happy to write to him on that.

The hon. Member for Inverness, Skye and West Ross-shire spoke about the cost of energy for people in his constituency. As I said, the rates on kerosene are frozen, which is why we are not uprating the rates on LPG. That will go someway towards helping those in rural areas. I declare an interest: I am not on the gas either, so we also rely on this form of energy.

LPG is not the issue; electricity, along with kerosene, is largely the issue. Very few people use LPG to heat their properties or businesses. It is electricity where the taxes are. I would be delighted to share information; I am doing a big thing about it shortly, so I have done a lot of research.

Obviously kerosene is zero rated, but the effect of the clause is to increase the main rates of CCL on gas, electricity and solid fuels by RPI. That is in line with what we announced at the Budget, and takes forward those measures, so hopefully it will come as no surprise to hon. Members.

Question put, That the clause stand part of the Bill.

The clause increases the lower and standard rates of landfill tax from 1 April this year. The rates will increase in line with RPI, adjusted to account for the high inflation in the period 2022 to 2024, and were first announced in the spring Budget 2024.

Landfill tax is charged on material disposed of at a landfill site or unauthorised waste site in England and Northern Ireland. The objective of landfill tax is to divert waste away from landfill and support investment in more circular waste management options, such as recycling, composting and recovery. Since 2000, landfill tax has contributed to a 90% decrease in local authority waste to landfill in England. Increasing the lower and standard rates of landfill tax by RPI in recent years has helped to maintain a strong price incentive to divert waste away from landfill.

The changes made by clause 70 would increase the lower rate of landfill tax from £3.30 a tonne to £4.05 a tonne from April 1 this year. They would also increase the standard rate of landfill tax from £103.70 a tonne to £126.15 from April 1. Landfill tax rates are rounded to the nearest 5p. The clause increases the rates of landfill tax in line with RPI adjusted for recent high inflation from April 1 2025, to maintain a strong price incentive to divert waste away from landfill.

Clause 75 amends the landfill tax rates to increase them in line with RPI, adjusted to account for high inflation between 2022 and 2024. As the Minister knows, when in government, we uprated landfill tax in line with RPI in the 2023 and 2024 Finance Acts. We also reduced the landfill tax gap from £275 million in 2017-18 to £100 million in 2022-23. How will the Government continue those strong efforts to further reduce the gap? I know it particularly exercised the Minister when he was in opposition—he certainly asked me a lot of questions on it. We will not oppose the clause, and I cannot wait to find out the Lib Dem position on it.

I thank the hon. Gentleman for supporting the clause. I fondly remember the questions I asked him about landfill tax when I was on the other side of this Committee Room, or a similar one on this corridor. I can reassure him that the current Government are considering the options for landfill tax reform, following the call for evidence that was undertaken in 2021. We will announce further steps in due course. The Government are considering options for landfill tax reform including opportunities to design out opportunities to commit waste crime, including landfill tax fraud. We will announce next steps in due course.

Question put and agreed to.

Clause 75 accordingly ordered to stand part of the Bill.

Clause 76

Rate of aggregates levy

Question proposed, That the clause stand part of the Bill.

The clause increases the rate of aggregates levy from April 1 in line with the RPI as forecast by the Office for Budget Responsibility when the rate was announced at autumn statement 2023. Aggregates levy is charged on the commercial exploitation of virgin aggregate, which includes rock, sand and gravel. The object of aggregates levy is to encourage the use of recycled rather than virgin aggregate in construction. The changes made by clause 76 will increase the aggregates levy from £2.03 per tonne to £2.08 per tonne. The clause increases the rate of aggregates levy in line with RPI from April 1 to ensure that the real-terms value of the price incentive to manage aggregate more sustainably does not fall in future.

As the Minister said, the clause uprates the aggregates levy in line with inflation. These provisions in this Finance Bill are pretty much identical to those that we put forward in the Finance Act 2024. It is therefore right that we do not oppose them.

Question put and agreed to.

Clause 76 accordingly ordered to stand part of the Bill.

Clause 77

Rate of plastic packaging tax

Question proposed, That the clause stand part of the Bill.

The clause makes changes to increase the rate of the plastic packaging tax from April 1 in line with the consumer price index. The plastic packaging tax was introduced on 1 April 2022 as part of the previous Government’s resources and waste strategy. The tax provides a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging, thereby stimulating the collection and recycling of plastic waste and diverting it away from landfill or incineration. Increasing the rate of the tax in line with CPI maintains the real-terms value of the price incentive to use recycled plastic.

The changes made by clause 77 will increase the rate of plastic packaging tax, as set out in section 45 of the Finance Act 2021, from £217.85 to £223.69 per tonne, with effect from 1 April 2025. The new rate will affect UK manufacturers and importers of plastic packaging containing less than 30% recycled plastic.

In conclusion, this clause increases the rate of plastic packaging tax in line with CPI from 1 April to maintain the real-terms price incentive to include recycled plastic in plastic packaging. I commend the clause to the Committee.

As the Minister said, clause 77 uprates the plastic packaging tax in line with inflation. The provisions in this Finance Bill are pretty much identical to those that we put forward in the Finance Act 2024, and we will not be opposing them; but on this particular tax measure, I seem to remember the now Exchequer Secretary to the Treasury questioning me about the possibility of an impact report or assessment, and I just wonder how much progress he is making with that.

I reassure the hon. Gentleman that the Government are making progress across a whole range of issues every day, and we will update the appropriate authorities in the appropriate way at the relevant time.

Question put and agreed to.

Clause 77 accordingly ordered to stand part of the Bill.

Clause 78

Rates of soft drinks industry levy

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss new clause 9—Statements on soft drinks industry levy—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to Parliament about the increase to the soft drinks industry levy introduced in section 78 of this Act.

(2) The statement under subsection (1) must include details of the impact on—

(a) encouraging reformulation of packaged soft drinks, and

(b) the UK soft drinks industry.”

This new clause requires the Chancellor to make a statement about the impact of increasing the soft drinks industry levy.

Clause 78 legislates for the new rates of the soft drinks industry levy, to apply from 1 April 2025. The levy came into effect in April 2018—it was introduced by the previous Government, with cross-party support—and is considered a successful mechanism for changing behaviour and encouraging reformulation of packaged soft drinks, resulting in reduced sugar content. That is seen through the levy’s significant success in reducing the sugar content in UK soft drinks by 46%.

The levy applies to packaged soft drinks containing added sugar. It has a lower rate, which applies to drinks with a total sugar content of 5 grams to 7.9 grams per 100 ml, and a higher rate for drinks with 8 grams or more per 100 ml. Producers, manufacturers and importers of liable soft drinks must register, report, and pay the levy on the volume of liable soft drinks packaged in and imported into the UK.

The levy rates have not been increased since their introduction many years ago, in 2018, and so have gradually reduced in value against inflation. In 2018, SDIL made up approximately 11% of the price of a 330 ml can of full-sugar Coca-Cola; in January 2025, it makes up only 6%. Uprating the levy in line with inflation will ensure that it remains effective and continues to encourage reformulation, by protecting its value in real terms.

Clause 78 amends section 36(1) of the Finance Act 2017 to reflect the new rates of the levy to apply from 1 April 2025. Those are £1.94 and £2.59, per 10 litres of prepared drink, for the lower and higher bands respectively. The new rates reflect forecasted changes in the consumer prices index in the year to 1 April 2025, as well as an additional increment to help to catch up for previous inflation. The catch-up reflects the 27% CPI change between 2018 and 2024 and will be spread evenly over the five rate increases from 2025 to 2029. That is to support soft drink manufacturers to adjust to the higher rates. The rates have also been adjusted to apply per 10 litres rather than per litre, so that rate changes can be made in smaller increments to reflect changes in CPI inflation more precisely. To illustrate using the current lower rate, 18p per litre becomes £1.80 per 10 litres—I think people could have probably worked that one out.

We do not accept new clause 9, which would require the Chancellor to make an additional statement about the impacts of the measure. The Government do not consider that necessary, as a tax information and impact note detailing the anticipated effects of the measure was published at autumn Budget. I would also highlight that the Government are taking a gradual approach to restoring the original real-terms value of the soft drinks industry levy. From 1 April, the levy will still be worth significantly less, compared with general prices, than it was in 2018.

Clause 78 will protect the real-terms value of the levy and build on its significant success, by increasing both the lower and higher rates in line with inflation.

As we heard from the Minister, clause 78 amends the Finance Act 2017 to uprate the soft drinks industry levy, to reflect the change in the CPI from April 2018 to April 2024. The uprating represents an increase of 27%. We support the soft drinks industry levy, but we have strong concerns about the backdating of the tax rate.

As we all know, the consumption of too many high-sugar drinks can lead to weight gain and the risk of medical conditions. It also leads to tooth decay, which is a particular concern for younger people. As the Minister pointed out, this levy was introduced by a Conservative Government with cross-party support to tackle those issues, and it has been a successful, highly effective policy, delivering against the stated objective of encouraging reformulation. The British Soft Drinks Association has said that the levy

“has achieved its intended goal of promoting significant sugar reduction and 89% of soft drinks are now non-SDIL liable. Reformulation has clearly not lost pace with the volume of soft drinks with less than 5g sugar per 100ml increasing by 17.5%> between April 2023 and March 2024.”

Our main concern is about the unprecedented backdating of this tax increase. New clause 9 would require a review of its impact. The decision to backdate inflation over an extended period, creating a 27% retrospective increase, appears to have no parallel in recent tax policy. The backdating is a fundamental departure from the predictability that should be at the heart of tax policy.

Given that the levy has been so effective, why do the Government see a need for such a large increase? As the British Soft Drinks Association points out, it appears that their rationale is primarily focused on revenue raising, rather than public health outcomes. The introduction of such retrospective elements requires close examination of both precedent and consequences, as demonstrated by examples of duty freezes and restarts in recent years.

Comparative excise goods such as alcohol, fuel and tobacco are reviewed annually. Where rates have been frozen across several years, they have not subsequently been subject to those missing years’ inflation rates being applied in this way. Figures from the House of Commons Library calculate what impact a similar backdated increase would have on fuel duty. Following the approach used for the soft drinks levy, if inflation since 2011 was added to fuel duty, using the RPI measure, the duty on a litre of petrol or diesel would increase from 57.95p per litre to 95.18p per litre—a rise of 64%. I am not sure about the Minister’s constituents, but I am pretty sure that mine would be very alarmed at the potential for such a backdated increase to be applied.

Are the Government establishing such backdated increases as a new norm within their tax policies? Companies making long-term investment choices need certainty—the Exchequer Secretary has used that word many times in Committee—to be able to plan and invest in the country. Can the Minister give us an assurance that the Government will not pull off similar tax raids in other sectors, particularly with regard to fuel duty?

We have also heard concerns about the impact assessment, which had limited engagement. The measure is expected to generate £95 million in revenue by 2029-30, yet the assessment does not model how established price elasticity in soft drinks will affect those projections. The assessment acknowledges that both reformulation and reduction in demand will occur, but provides no quantification of the effects. I would be interested to hear the Minister’s comments on that point.

The assessment also does not examine how changes to tax policy without consultation could affect future investment decisions, nor does it explore the market distortions of applying different principles to soft drinks as opposed to other categories of drinks. Will the Minister confirm that these issues have been considered? If they have not, will they be?

I thank the shadow Minister for reiterating that there was indeed cross-party support in 2018 when the previous Government introduced the soft drinks industry levy. I say gently to him that if the previous Government had kept the levy in line with CPI, we would not be in this situation.

The shadow Minister asked what considerations have been made about the impact of the measure. As I said in my opening speech about the clause, the catch-up reflects the 27% CPI change between 2018 and 2024. Because we have considered the impact on soft drinks manufacturers, it will be spread evenly over the five rate increases from 2025 to 2029. The shadow Minister should consider the fact that we are gradually spreading the increase.

It is worth considering the views of those who have supported the Government’s change. For example, Barbara Crowther, the children’s food campaign manager at Sustain, has said:

“It’s absolutely right that after six years, the government should now increase the penalties for all the companies who have not done enough to reduce the sugar levels in drinks, and we urge them to ensure all money raised by the levy is reinvested in children’s health.”

The levy has been globally recognised as a transformative health tax intervention. Modelling studies have associated it with up to 5,000 fewer cases of obesity in girls aged 10 to 11 and a 28.6% reduction in hospital admissions for tooth extractions for children under the age of five. Our Government take children’s health very seriously, particularly given the worrying levels of obesity in our society and the issues with children’s dental health. That is why we are bringing forward the change.

Will the Minister address directly the point about backdating and say whether it represents a change in approach to taxation policy by this Government? They have introduced a 27% increase from the date when the levy was frozen. As I said, if that approach had applied to fuel duty, it would result in a 64% increase. People will be concerned; will the Minister give reassurance about the Government’s approach to taxation?