Finance Bill: Second Reading

What happened: On 27 November 2024, the House of Commons voted to give the Finance Bill its Second Reading, passing it by 332 votes to 176. The Finance Bill is the legislation that implements the October 2024 Budget, the first Budget delivered by the Labour government under Chancellor Rachel Reeves. A Second Reading is the first substantive parliamentary vote on a bill, approving its general principles before it moves to detailed line-by-line scrutiny.

Why it matters: The Finance Bill translates the Budget's tax and spending decisions into law. It covers a wide range of measures including an increase in the energy profits levy on North Sea oil and gas producers, VAT applied to private school fees, changes to the non-domicile tax regime, an increase in the capital gains tax rate on carried interest, rises in employer national insurance contributions, adjustments to air passenger duty, and a package of measures intended to close the tax gap by an estimated 6.5 billion pounds by 2029-30. These measures affect businesses, farmers, private school families, pensioners, and the wider public sector. The bill also maintains the 25% cap on corporation tax and leaves full expensing and the annual investment allowance unchanged.

The politics: The vote divided almost entirely along party lines. All 295 voting Labour MPs and all 30 voting Labour and Co-operative MPs supported the bill, as did all four Green MPs and one independent. Every voting Conservative (96), Liberal Democrat (58), Scottish National Party (9), Reform UK (7), and Democratic Unionist Party (2) member voted against. The Conservatives moved a wrecking amendment at Second Reading, arguing the Budget would cost jobs, reduce investment, harm farmers through inheritance tax changes to agricultural property relief, and break manifesto pledges on national insurance. The government defended the measures as necessary to stabilise public finances after what it described as a deteriorating inheritance from the previous administration.