Autumn Budget 2024

Baroness Wheatcroft Excerpts

Monday 11th November 2024 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, the UK economy has been in structural decline for many years; that analysis is absolutely true. My only surprise on hearing it delivered during this debate was that it came from a leading economist sitting on the Conservative Benches. The noble Baroness, Lady Moyo, at least had the decency to acknowledge the state of this economy—an economy that has been run for 14 years in a way that has left it, as she said, in structural decline. So it is very difficult for anybody to come up with a Budget that will put things right overnight.

Things were made worse, of course, by Liz Truss. Just two years ago, inflation in this country was running at more than 11%. We have not heard much about that from the Benches opposite this evening. Nevertheless, the ramifications of that continue to be felt by people up and down this country. The Resolution Foundation reckons that Liz Truss alone cost the country £30 billion. That is a significant contribution to anybody’s black hole. No Chancellor would want to start from here—but Rachel Reeves had no choice.

She made things even harder for herself by making a series of promises that I am sure she has already come to regret. As an editor, I would have had some difficulty justifying them as having been kept, in the light of what she has done during the Budget. National insurance by any other name is a tax, and increasing employers’ national insurance ends up being a tax on working people—and let us not get into a semantics debate about what constitutes a working person. I think it is probably rather wider than the definition Ms Reeves has ended up with. Nevertheless, this is where she had to start from. It was not a great hand and it could probably have been better addressed.

But there are some things in this Budget which I really do applaud, including the change in the fiscal rules. Despite what we just heard from the noble Lord, Lord Borwick, it is sensible to borrow for investment. It is what households do and it is what a Government could and should do. We need investment, we need big projects—but we do not need to overspend, so the monitoring of those projects has to be absolutely watertight. It has to be constant and it has to be totally transparent. We cannot find ourselves in the sort of mess that HS2 has got into, where nobody really seemed to have a handle on what was being committed. So let us invest, but invest carefully.

Let us not go anywhere near PFI, which was disastrous. As others have said, we are still paying the price. I would like to see the Government look at what is left of those PFI contracts and, if they cannot renegotiate—in most cases, they cannot—they need to find a way to simply break the contract. There are PFI hospitals which have to spend ludicrous amounts on changing a lightbulb, when what they need to do is spend money on patients. So, if you cannot renegotiate, find a means of either putting the health authority into bankruptcy or walking away from the contract. We cannot afford them any longer.

I was pleased to hear, in the Budget, that we are going to spend more on trying to find the tax that people should have paid. An estimated £5 billion a year goes on tax evasion—let us have some, or all, of that back in the Government’s coffers. Investing in more inspectors will be a great way of making a start on that, but we also need much more investment in technology and we need to be tougher on finding where this money is.

We need to make sure that we actually tax what needs taxing, and we need to simplify the tax system. It is crazy having a tax guide that now runs to more than 1,000 pages—the last Tolley’s guide was 1,020. But we have done away with the Office of Tax Simplification. So let us see the Government pledge to simplify the tax system and begin looking at how to do that. It is crazy: people do not understand it and those who do, pay expensive advisers to avoid or evade tax. We need to change it.

The main thing we need to—in the short term, and easily—is simplify the system of property tax. I urge the Government to do that.