Autumn Budget 2024
Lord Borwick Excerpts(1 month, 1 week ago)
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Lord Borwick (Con)
My Lords, in 1961 Viv Nicholson won £152,319—the equivalent of about £4.3 million today. She, or rather her husband Keith, won it on the Littlewoods football pools. It was unimaginable wealth, but she spent it in a few months. She gained flashy furs and a few cars but also widespread criticism and contempt. She announced that she was going to “spend, spend, spend”.
Rachel Reeves opened her maiden Budget speech with the ringing cry of “invest, invest, invest”, but what did she mean by that? There are many definitions of investment, but all of them try to draw the distinction with expenditure. I know that Whitehall would love to blur that difference, and I have heard that several Ministers in the last Government prohibited the use of the word “investment” when “expenditure” was meant.
Among the rotten ideas produced by the Chancellor is the imposition of VAT on school fees. Taxing behaviour that saves the state from spending money is daft. This particular change would have been impossible without Brexit, but that does not make me content. Children will be moved to state schools, increasing pressure on the best schools because those parents will be extra demanding by demanding that their child gets an education equivalent to that provided by a private school. Just recently, I was told by a headmaster of an excellent state school that his school has six teachers seconded from a private school, and there was no guarantee that generous gift will continue by the charitable arm of the private school.
We congratulate the right honourable Lady on being the first female Chancellor, even though there have been four female leaders of the Conservative Party and two or more of ethnic minority background, but none in Labour history. But “spend, spend, spend”—or “invest, invest, invest” is Rachel’s motto. It was remarkable how quickly the public in 1961 saw that Viv Nicholson was a spendthrift. However, it was Viv’s own money, not taxpayers’ money.
The Chancellor will increase the national debt by a huge amount. Borrowing money to spend it is not wisdom. I am sure that it is possible to borrow it in the short term, but is it wise? I am sure it is not. It is just deferred taxation. Increasing the national debt is not free money. It will have to be repaid eventually, and the interest on it will have to be paid continuously, by us, our children and our grandchildren.
It might be okay for companies to borrow to invest, but there is a stream of accounting standards defining investment. Those business standards are unknown to government and there does not appear to be much spending which does not get included in the phrase “invest, invest, invest”. Training schemes of remarkable idiocy will doubtless be included. Will we see training schemes to allow overpaid train drivers to work from home?
Any independent financial adviser who advised a client to borrow money to pay for day-to-day spending would lose their authorisation—a sad end for both adviser and client. What was the sad end for Viv Nicholson in the 1960s? Her last job was in a nightclub, singing “Big Spender”.
Budget Statement
Lord Borwick Excerpts(8 years, 8 months ago)
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Lord Borwick (Con)
My Lords, there has been much focus on specific elements of the Budget Statement in the week gone by, and rightly so. Each policy should be analysed to discover whether it will be good or bad for businesses, be helpful or harmful to those on the lowest incomes and simplify or complicate the tax system. But amidst the rush to take a scalpel to the Red Book and unearth a hidden nasty, we have to remember an important big-picture fact: the Government have done a very good job of steering the economy through some choppy waters.
The deficit we inherited from Labour has been trimmed back, taxes have been cut and the direction of travel has been very favourable for business, but the job is not yet done. There is no room to be complacent, like at the last Autumn Statement, when the Government found an extra £27 billion to spend over the course of the Parliament. Times are tough, but they are necessarily so because of the mess we inherited from Labour. We have to ensure that we maintain a robust stewardship of the economy to help businesses, taxpayers and those who rely on public services.
That is why I was pleased to see so many good measures in the Chancellor’s Statement. There were welcome moves to encourage enterprise, with a package of tax cuts to boot. Reducing the headline rate of corporation tax shows that we are serious about attracting and retaining businesses. The cuts to capital gains tax will increase economic activity, too, and evidence shows that lower rates of CGT bring in higher revenues because of the additional economic activity. There is a lesson in there for the Government in other areas of taxation, most notably with the additional rate of income tax. Speeding up the increase in the 40p income tax threshold will also encourage those who want to work hard and earn more for their own families.
However, while tax cuts on entrepreneurs and businesses signalled a shift in the right direction, some fiddly changes to the structure of corporation tax and CGT will add more pages to the gargantuan tax code. On the sugar tax, for example, I appreciate that obesity is a problem—I certainly claim that for myself—and I would also say that there is some dreadful obesity in the national debt and some absolutely appalling obesity in the tax code. However, I cannot imagine anything more addictive than offering the Inland Revenue a completely new tax, which is far worse than giving a doughnut to an obese teenager.
It is said that the UK has more accountants than the rest of the EU combined, and their numbers are sure to be bolstered with more tax complexity. I have an affection for the accountancy profession, having once been awarded the “Saying of the Year” in AccountancyAge. However, I am not sure that the number of accountants we have in the UK improves our competitiveness. Changes to business rates seem positive on the surface, but it remains to be seen whether entirely exempting certain businesses simply means that their rent will increase.
There is also a legitimate debate to be had about the Government’s spending priorities. The row over welfare spending has dominated the post-Budget analysis and we should now start to seriously contemplate why we continue to implement spending reductions on in-work benefits but continue to protect all spending on pensioners. We know that it is not right for the richest pensioners in the country to be sent a cheque for their household energy bill, paid from the taxes of a warehouse worker who pulls night shifts to pay the rent. The richest over-75s should not get to watch the BBC for free thanks to the taxes of the cleaner who gets up at 4 am to do her first shift.
A poll for YouGov at the end of last week found that 44% see spending reductions as necessary, against 33% that do not. Despite all the hyperbole about savage cuts and the gloomy warnings of so-called austerity, the truth is that the public gets it. Now is a good time to think about the entire profile of spending reductions. It is not just welfare. The Chancellor’s welcome big-picture strategy is somewhat hamstrung by the decision to ring-fence certain areas of spending. Overseas aid is a perfect example, but we have also protected defence, health and education, quite often putting a wall up around waste and inefficient practices. A move towards pulling down ring-fences should be discussed in the run-up to the Autumn Statement and next year’s Budget.
Having covered the good and the bad, I should continue my homage to the spaghetti western and discuss the ugly—our complicated tax system. Indeed, the Chancellor himself once called the tax rules a “spaghetti bowl”, to stretch the metaphor. Is it a coincidence that the most dense and most incomprehensible legislation is our tax legislation—the stuff that is not improved by the attention of your Lordships’ House? The tax code now reportedly runs at over 21,000 pages, and it is for this reason that nobody trusts it. There is simply no way that HMRC can keep up with such a system, and real tax simplification should now be a strategic priority. I have a small, modest proposal. What would happen if, in another place, we required that the Chancellor of the Exchequer should read out in full the Finance Bill, and only those honourable Members who had been whipped to listen to it would be allowed to vote on it? This would require the Finance Bill each year to at the very least be readable.
The great British public voted for a Conservative Government because we are more reliable stewards of the economy. That much is clear. The last Government—and this one—have seen us through some tough times and the economy has created millions of jobs at the same time as returning to growth. However, there is still an awful lot more to be done.
Income Tax: Top Rate
Lord Borwick Excerpts(9 years, 9 months ago)
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Lord Forsyth of Drumlean
To ask Her Majesty’s Government whether income tax revenue received from top rate taxpayers has increased or decreased since the rate was cut from 50 per cent to 45 per cent; and by how much.
Lord Borwick (Con)
My Lords, in my noble friend Lord Forsyth’s absence, and at his request, I beg leave to ask the Question standing in his name.
Lord Newby (LD)
My Lords, the latest projections show that income tax receipts from additional rate taxpayers in 2013-14 were £45.9 billion, compared with £38 billion in 2012-13, which was the last year when the additional rate was 50%.
Lord Borwick
My Lords, there was therefore an £8 billion increase in revenue as a result of lowering tax by 5%. Would my noble friend agree that Labour’s policy of putting the tax rate back up would not increase revenue, but rather discourage entrepreneurs, who are so responsible for increasing employment?
Small Business, Enterprise and Employment Bill
Lord Borwick Excerpts(9 years, 10 months ago)
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Lord Whitty
In that case, my noble friend and I are on exactly the same point in the ideological spectrum—as ever. We are discussing these as amendments to the pre-existing text that we received from the Commons. Government Amendment 89A effectively rewrites that proposition from the Commons.
At Second Reading the Minister said on behalf of the Government that there were things that needed to be done to ensure that the proposition was going to be workable and did not have unintended consequences. I understand that, and that means there are parts of the noble Baroness’s amendment that I would be in favour of. But under the amendment as we now have it—and we have not had it for very long; the fact that we are debating it today puts us in some difficulty given that the consultation hitherto, as I said earlier, has been somewhat attenuated—the Government’s changes in detail do a number of things. They delay the implementation because whereas the proposition adopted by the Commons set the situation on the MRO in primary legislation, therefore bringing it into effect at the earliest point when the Bill came into law, we are, instead, reliant on the drafting of the code and the bringing forward of secondary legislation.
The Government’s amendments also change a number of the trigger points, thereby diluting the effectiveness of the MRO proposition. Amendment 89A changes the threshold because it confuses the issue of tied pubs with all tenanted pubs. The Pubs Code ought to relate to all relationships between the pubcos and their tenants, whether they are tied or not. The MRO relates to the tied pubs but the threshold of defining who this applies to should be the size of the company as a whole, which includes all sorts of tenancies. Restricting it to tied tenancies lays open the possibility of them ending one or two ties to get below the 500 mark. I do not suppose I could prove it in a court of law, but there are indications that some of the pubcos are looking to split their company structure so they would not hit the 500 mark for tied tenancies. We ought not to lay that temptation before them. The Government’s proposition fails to recognise that there is a distinction between how a Pubs Code—which I think we are all in support of—operates and the MRO option, which relates only to tied tenants. I hope, therefore, that my propositions do a number of things. They separate out the issue of the code from that of the MRO. The code is set out clearly in Clause 41 and, at the beginning of Clause 42, the MRO coming into effect is not dependent on the code. The amendments in my name would also change the definition of the threshold, although most of that comes up in a later group, in relation to Clause 66.
I do not like the procedure on this Bill because the Government have misjudged the mood, not just in the Commons and among those tied tenancies and other organisations which have pressed for this. They have succumbed unnecessarily to pressure from the larger breweries. There is no need for some of the changes to the proposition that we have received. There is, therefore, a need to reinforce those rather than go in the opposite direction, which the Government’s amendments are doing. What came to us from the Commons was not perfect, but the Government are proposing to make it worse. For that reason, we all need to take a step back and look at what we agree on in the original proposition, the amendments we are discussing today and the Government’s proposed complete redraft. We need to see whether we could, in discussion with all sides of the industry, come up with something closer to an agreement in time for Report or, possibly, send it back to the Commons and let them sort it out.
We are in an unfortunate position today. This is a complex group of amendments and none of us understands all the issues. Whatever comes out of this is going to be pretty unsatisfactory and not a good basis on which to go to Report at this point in a parliamentary Session. This does need sorting: it needs to be workable and I agree with the noble Baroness that we do not want to see unintended consequences. However, we need to be clearer as to what the consequences are that have led to the propositions in the Government’s redraft.
I hope that the Government take a step back and talk to everyone concerned. The easiest way to do that would be to withdraw all the amendments today. If the Government will not do that, we are probably in for a fairly rocky time between now and Report. If we have not met at least the overwhelming spirit of what the Commons decided, the Bill will be back in the Commons and we are in for ping-pong on the Bill. I cannot believe that the Government’s business managers really want that. There is a way to deal with this quietly and consensually. It may not work, but it might, and it would get the Government out of an awful lot of trouble. As usual, I am trying to be helpful to the Government, and I hope that they heed my words and those of my noble friends.
Lord Borwick (Con)
My Lords, I want to speak to Amendments 82A and 83A and thereby take in my noble friend’s Amendment 88. Amendment 82A concerns the amount of time for the negotiation of the MRO. In the original Bill, it was stated to be 21 days, which I think is too short. The difficulty for identifying a time for any negotiation is that the time required at the beginning of the process, when it is new to both parties, will be different to the time to produce a market rent in a negotiation in, say, five years’ time, when everyone knows what the rules are. When the lawyers are helping both sides with their arguments, it could take substantially longer than 21 days.
My noble friend may say that that will come out in the detail of the Pubs Code and the statutory instrument, but how will that time be judged? Will it change from the beginning of the period and a few years’ time?
Amendment 83A concerns the problem that under the Bill and the government amendments, existing tenancy agreements would continue. So the lease would continue in all respects other than in the rental. That brings up the difficult subject of SCORFA—an acronym standing for “special commercial or financial advantages”, and is designed not to flummox the great people of Hansard but to refer to all the advantages given to the pub tenant, all the way down to providing glasses, ashtrays and beer mats.
If the lease is being changed to rent only, it is unreasonable to leave the landlord, the pub owner, in the position of providing those benefits when he is not providing the rent. My noble friend may say that all those points will be dealt with in the statutory instrument that forms the Pubs Code, but it will be subject to consultation. What if the result of that consultation is a mass of people saying that it should not be included? If so, will we have landowners subject to a lease that is not right, where one important clause has been removed?
Surely my noble friend will agree that a matter as reasonable and important as this should be in the Bill and bring forward government amendments to deal with the issue.
Infrastructure Bill [HL]
Lord Borwick Excerpts(10 years, 1 month ago)
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Lord Borwick (Con)
My Lords, I think that the period for monitoring proposed in Amendment 113G—the previous 12 months—is unnecessary. The British Geological Survey found that background methane in aquifers is generally low. It also concluded that the majority of sites it studied showed little change in methane levels. That says to me that we should monitor situations on an individual basis, based purely on risk and not on anything else. Extensive monitoring like that proposed in the amendment is only going to delay safe projects from going ahead. Once we get a green light at an extraction site, we should get on with it.
On Amendment 115A, I do not see a great need for the Government to spend time putting together a report on fugitive emissions. Industry will already monitor emissions from the site; indeed, all the companies involved are committed to doing so. Fugitive emissions occur from leaks and poor-quality construction. In the UK the well design and plans have to be signed off by the regulators and reported on, so that is unlikely to be a major issue. Civil servants could spend their time far more productively than in producing such a report.
Baroness Jones of Moulsecoomb (GP)
I support Labour’s amendments. They attempt to improve the regulatory framework but they do not go far enough. I hope that other amendments will be pushed through. We need a complete rejection of fracking. The things that have been said so far are not borne out by the facts and it would be very interesting to see future examples of just where fracking has gone very badly wrong.
We need to see a reprioritisation of renewables and energy efficiency. That would reduce our overall energy demand and make us much more able to fulfil our agreement under the Climate Change Act. Energy efficiency and renewables are already delivering jobs. They are very good at supplying employment and will do much more for energy security, lower bills and reduced emissions than an unacceptably risky shale gas industry can ever do.
The Bill contains some very worrying new measures that will, if given the green light by Parliament, threaten the UK’s wildlife. No one seems to take that into account. It will also promote the unfettered extraction of unconventional fossil fuels, which will undermine the Climate Change Act and our ability to avoid, as one nation among many nations, dangerous climate change.
The coalition talks endlessly about its supposed concern for future generations when it comes to reducing the budget but the same level of commitment is, surprisingly, absent when it comes to the environment and handing on a planet fit to live on. The next generation will be given a very degraded natural world if we do not understand the sort of damage that fracking can do.
If we want any more evidence that this is not the “greenest Government ever”, we need look no further than Clauses 32 to 37 and the deeply worrying and hugely unpopular new provisions to give companies the freedom to frack under our homes without letting us know. The Government have pushed ahead with this change despite recent polling showing that 75% of people are against it and the fact that 99% of respondents to the consultation rejected the proposals. I remind noble Lords that those people are voters.
If we look at just how much we have to do if we are not to allow the world to heat by more than 2 degrees—although it is probably already too late to avoid that—it is clear that fracking cannot be part of it. It is not even as though shale gas will bridge the gap that we keep hearing about between now and a future based on renewables. Shale gas will not be online until about 2020, or even well into the 2020s, so if the Government stick to our commitments under the Climate Change Act and coal is offline by the early 2020s, shale gas will not be replacing coal. We will see exactly what we have seen happening in the United States, which is that it is simply able to export more coal when shale gas fills its own energy needs. Shale gas merely displaces fossil fuels; it does not replace them. Professor Dieter Helm of Oxford University has told us that there is enough gas and coal to fry the planet several times. But of course we cannot use it. It must stay locked up. That is the most efficient form of carbon capture: leave it as coal.
These clauses will also allow fracking companies to undertake activities that have not yet been assessed for their environmental safety, including the keeping of substances within infrastructure on the land with no limits on what can be kept or for how long. Injection wells could be extremely damaging. They have caused problems in the United States, particularly in Ohio, where there have been earthquakes.
We know that the existing regulatory framework is full of gaps. Rather than continue the obsession with deregulating fracking and allowing the industry—an industry that the Chancellor proudly stated has the most generous tax regime in the world—to regulate itself, the Government should see this as an opportunity to introduce regulation that is fit for purpose in order to safeguard the climate. Balcombe, which has been the scene of a lot of interest in the context of fracking, has now decided to go carbon-neutral. If Balcombe can do it, the rest of us can do it.
Lord Wigley
As I was saying before such diverse interventions, I welcome these amendments. They exclude important parts of these islands from the impact of fracking.
I come back to the experience of the United States—I will be talking more about that in the next group of amendments. The experience of the United States has been scorned in our previous debates, but it teaches us to be extremely careful before allowing such developments in our more sensitive rural areas. I accept that perhaps the rules will be different in the United Kingdom compared to the United States. That is one of the reasons why we need to have rules in the United Kingdom to look after these areas. Most certainly in the United States, to my knowledge, there are areas that have suffered not just from the effects underground but also very badly on the surface.
Noble Lords will be aware of the classic book Rape of the Fair Country by Alexander Cordell. We in Wales know what such extractive industry can do to our beautiful countryside and its effect on all sorts of wildlife. My only reservation with this amendment is merely that it does not go far enough and that many sensitive environments are excluded from being governed by it.
Lord Borwick
My Lords, I only wish that I could agree with the noble Lord, Lord Judd, that it is a short-term exercise to get planning permission for this sort of development. The planning permission process will take many months, probably years, and cost a large amount of money. It is not a short-term exercise, and that is why I think this amendment is unnecessary because it will be up to the local council or local planning authority to grant the planning permission, with all the pressures put upon them to make the decision to protect the environment. With these sites listed in this amendment, I do not think they are going to get the planning permission which the noble Baroness fears they will. I really do not think it is going to be possible.
Secondly, I am sorry that—despite trying to listen to it—I am not sure I fully understood the meaning of “functionally linked”. How wide a definition will that actually be in practice? I wonder whether the noble Baroness could help in explaining that?
The Earl of Caithness
My Lords, I rise to oppose these amendments. I understand the principle behind them but, as my noble friend Lord Jenkin has reminded us, we are talking about something that is going to happen well below the surface. Having taken that into account, and while I agree with him that the amendment is in the wrong place, I also think that the principle of the amendment is quite important. However, what the noble Baroness has totally failed to do, and what the noble Lord, Lord Judd, has failed to do, is to explain why the present system of controls is not adequate.
I do not class myself as an environmentalist; I class myself much more as a countryman. I have a much broader range of interest than an environmentalist would have. The house that I used to own very recently up in Caithness was right beside an SSSI, and on that SSSI there wintered whooper swans and lots of geese and ducks. Around us there are now eight wind turbine farms. This is a huge area—an important one for nature—but the argument was looked at for every single one of those turbines. More recently, a planning application was made for four wind turbines to be sited much closer to the SSSI. My house was perhaps one of the nearest that was going to be affected by that and I lodged my objection on the grounds of nature and what effect the four wind turbines—which are considerably bigger than anything we are talking about in the fracking process and would be at a higher level for much longer—might have on the flight path of geese and swans.
The planning process worked perfectly and the decision was turned down. It has gone to appeal and I do not yet know what the result of that is, but my point is that the existing procedures are there now to protect such sites as these. I used the existing procedures and the planners looked at the existing procedures and agreed with all of us that had objected to these four wind turbines. I believe that what we have got in place is sufficient and we do not need any more.