Autumn Budget 2024

Lord Johnson of Lainston Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

My Lords, I thank the Minister for introducing this debate. I am very much looking forward to hearing the noble Lord, Lord Booth-Smith, make his maiden speech in this debate, and I welcome him to his place.

I congratulate the Minister on such an excellent performance: I slightly think that if he delivers it in one single tone, it will slip past us as if there are good things contained. Looking at the Benches behind him, I noticed there were no cheers of “Hear, hear”, no smiles and no congratulatory nods, because noble Lords, like me, see this Budget for the three things it is: dishonest, unkind and—worst of all for the sake of the British people, our economy and country—incompetent.

The Budget is dishonest because it breaches the promises Labour made to the British people. These were promises made by the Minister, his colleagues and the noble Lords I am regarding across this great historic Chamber of ours today. It is fundamentally unkind—and I never thought I would say this about a Labour Budget in this Chamber—because it hurts hard-working people at every stage of life. And I am afraid it is incompetent because, fundamentally, in almost every action, word and sentence of this Budget, there is not a single pro-growth measure. Everything is designed to make life more difficult for us to realise the best version of ourselves in whatever manner that may be.

During the general election, many Labour politicians spoke of fixing the foundations of the economy. They talked of their fiscal rules; their manifesto claimed that this changed Labour Party would be based on sound money and economic stability. Yet, in their first Budget, they have genuinely fiddled the rules. Frankly, they have plunged our country into a further £32 billion-worth of debt by the end of the Parliament. The Minister described it as a “once in a generation” Budget. Well, all I can say is, thank goodness for that, because we could not possibly put up with this year after year.

I find it distressing to be continually told about the so-called black hole. The numbers moved around, even in his speech, from £16 billion to £22 billion to £30 billion. I still cannot keep track of where the black hole actually is. We know full well that the black hole has been created by this Government to give excessive pay rises to those people who they want to ensure support them into the future. It is a perfectly sensible political tactic; in some respects, I may even admire it slightly. But it is fiscally incompetent, it causes huge long-term damage and it is fundamentally dishonest when it comes to running the economy.

The Prime Minister was asked many times this summer whether Labour would increase taxes. Do any noble Lords remember those comments? He said time and time again the same line:

“Labour will not increase taxes on working people”.


The Labour Party’s manifesto, quoted by the Minister, was categorical. He quoted these very words:

“We will not increase national insurance, the basic or higher or additional rates of income tax or VAT”.


We know now, however, that the Office for Budget Responsibility—about which we have heard so much from the Minister—has estimated that 60% of the cost of the increased employed national insurance contributions will be passed on to working people through lower wages and higher prices. I must ask the Minister: why have they done this?

Tesco came out over the weekend and said that its additional costs would be £1 billion a year—£1 billion a year for Britian’s biggest supermarket. I hear cries that it can come out of their so-called profits or through lower dividends to pension funds—probably in which many of the unions that have backed so many of my noble colleagues opposite invest—but the reality is that it will simply result in higher costs in supermarkets, or the organisation employing fewer people as it has less capital to deploy or less money to reinvest.

I see noble Lords opposite who know this to be a fact: if you raise costs on businesses at that level, the economic costs on the economy will be substantial. It is a simple, measurable economic fact. I find it very alarming that the Minister, who with his experience understands these economic principles, is not so aware as to be honest about the true long-term economic damage that the national insurance contribution change will have across the country. It will result directly in unemployment rising.

Sadly, for me, with young children coming into the labour market—particularly sadly since I have to pay their additional school fees before they get there—they will find it even harder to find work. We see this in other European countries, where tax rates are so high on the national insurance side that, if you are a young person coming into the market, you simply cannot find work. I do not understand how that could possibly be at the core of the tenets of the Labour philosophy. Frankly, I would feel a great sense of shame if I had to present this Budget from the Government Benches because it is doing nothing at all for the social values we purport to hear from their side.

It fundamentally goes against the principles of how they campaigned in the election—that they would effectively be tax-neutral on the working person. This was fundamental, not just in technical terms. People who have been in government understand the need to be flexibly minded. I am talking not about the details—a penny here or a point there—but the principle of how this Government went into the election saying that they would not raise taxes on working people. They have, in magnificent quantities and to huge effect. I would like to hear from the Minister and his colleagues how this could possibly be justified.

This is also unfortunately an unkind Budget that harms people at every stage of their lives. The first announcement made by the Labour Administration—going into the election, in fact—was that they would raise VAT on tuition fees, which the OBR believes will affect 600,000 students. It will have huge ramifications on the private education sector, which is an enormous export. Aside from anything else, it is a crucial component of our economy. This is aside from all the specialist and small schools that provide such an enormous, essential service to people in their communities.

Why would this Government, who talk about growth and their desire to see a stronger and growing economy, want to attack aspiration? It is because of ideology. That is what I find so depressing. This should be a Budget about economics, to make people richer and make our country stronger, but it is about ideology, the dislike of people having some type of advantage and the idea that a parent does not want the best for their children. I will say one thing to the Minister: you are not attacking me. I have been to school, although it may not look like it. The people you are attacking are children. I do not understand why your first measure—I see the guilty expressions on the faces of the noble Lords opposite—should be to attack the aspirational opportunities and life chances of children. Shame on the Government for doing this. I feel sorry for my colleagues opposite for having to face their constituents and their Peers knowing what they have done to young children’s futures in the name of socialism.

The next group in the catalogue of people to whom this Government have been unkind in this Budget is the vulnerable elderly. I will not repeat the well-made arguments on the iniquities of changing the regulations on the winter fuel allowance, but I would like to come on to the second component, which is relevant. I declare an interest in that I had rather hoped to inherit relations’ pension pots tax free, but now that will not be the case. These people, who have worked all their lives, paid their taxes and built up their pension funds, will now be taxed on the point of inheritance and then further taxed when their beneficiaries and descendants try to access those funds. Can that be right?

This goes back to the Minister’s point on predictability and certainty. The Government want to bring some type of consistency back to the Budget process, which I thoroughly applaud. But how can it be considered predictable and certain? How can we make long-term investment decisions when at every turn they are making significant, radical and deadly changes to the very essence of our system of economic foundations, which is to have long-term pensions that are allowed to be invested in this economy to try to produce the growth this Government want? How does the Minister defend this concept of eating into our pensions savings and destroying the principle of the inheritability of the pensions pot?

I turn to two groups that particularly deserve representation. I can understand that a socialist Government do not like private schools or people who make money on capital gains. I can understand a Government who may not want people to inherit the pension pots built up by their parents and grandparents. But why would any Government want to attack small family farmers and small businesses by ending the business inheritance relief on agricultural inheritance? I do not understand that, when this entire country is based so centrally on small businesses. This is not just an economic question but a social point about the vitality of small businesses and small family-owned farms. Why would a Government want to deliberately target those two sectors of our communities and our economy, to make their lives not just difficult but impossible? It will be fundamentally impossible to inherit an average-sized farm in this country in two years’ time.

I do not know how many noble Lords on my Benches or elsewhere are from the farming community, but I ask all noble Lords, and the Minister: who on earth will feed us? Who will be the guardians and custodians of our countryside if the farming community does not take the baton from the previous generation? I am genuinely interested to know how many people have gone out today and said, “I wish to buy a 250-acre dairy farm and make that my living”. As the noble Lord has just intimated, I would have thought there is hardly anyone. The only reason why these people do what is frankly a national service is because they inherit this legacy, and it is shameful and destructive to target that community in such a way. Frankly, it is also deadly for the long-term survivability of our nation.

I turn to young people and stamp duty. The Minister calls it “stamp duty land tax”—by using as many acronyms as possible, you can cover up what is actually happening. We promised to cut the rate at which it is paid, and that has now been reversed. Again, I do not understand this. Before the election we went clearly into that process, with clear commitments from the Labour Opposition at that time—which I and many of my noble friends on this side of the House thoroughly supported, by the way—to build more homes and give more people in this country greater access to the dream of home ownership. Why on earth would the Minister and his colleagues decide to make that more difficult? Why would they decide to end—or, in fact, restrict and narrow—the passageway to owning your own home, when we all agreed that this was a central and good thing to do? This is particularly true given that I do not believe it will raise a significant amount of money for the Exchequer.

I turn to the other areas of the economy that we depend on: the voluntary sector, charities and the Government themselves. Increasing these levies on how people operate with their employees will increasingly make it incredibly difficult for so many of these smaller organisations. I know full well that so many noble Lords in this House are associated with voluntary and community organisations that will no doubt have come to them in the last week and said, “Please do something about this iniquitous change in the tax rule, which will prevent us carrying out work that people rely on”. This is not just hitting hedge fund managers or taxing carried interests in a different way; it is a hypodermic syringe of poison into the very root of our community activity. The Government have a lot of serious questions to answer about how they will ameliorate these measures for these organisations.

I turn to the third point that I made at the beginning. If noble Lords think that the Budget is both dishonest and unkind, it is also, unfortunately, incompetent, which is probably worst of all. We have had a chance to look at the OBR’s economic and fiscal outlook, and we now know how much damage this Budget will do to our economy. Across all the key metrics, the Government’s policies will leave the UK with a weaker economic future. The Minister spouted various statistics, but the OBR has actually now revised down its estimates for GDP growth. I am never quite sure how important GDP growth is, but I would have thought it is probably better if it is going up rather than down—and it is going down by nearly 0.5% from the March forecast, when the last Government were purported to have colluded with their officials to obfuscate the information given to the OBR. That is a very serious claim in its essence, and it should be looked at closely.

Instead, the Government have put taxes up and they are borrowing more. The Minister mentioned the concept of “no money without reform” but I have seen absolutely no evidence of reform. I say in all truth and sincerity, as a patriot before I am a party-political politician, that we need reform of public services—desperately. Yet I see no evidence of that at all. It is irresponsible and, frankly, bad politics to have paid out so much money at the beginning of the process without any sign of reform. I am afraid that this Government will live to regret this significantly.

If I may come to a conclusion—

[Noble Lords]

Oh!

[Lord Johnson of Lainston (Con)]

I thought that noble Lords opposite would be pleased. I could go on. There are so many other areas where the Government have driven a dagger into our economy that if your Lordships want me to, I would be delighted to carry on listing them. However, given the many speakers after me who will no doubt be repeating the points I have made and, almost assuredly, building on them in a more intelligent and capable manner, I say this. After all the promises and pledges made by Labour, we now know the truth. Working people, small business owners, farmers, charities, young people—all will be worse off under Labour. Ministers have shamefully broken the promises they made earlier this year, leaving us with an economic forecast bleaker than when they took office. This Budget is nothing less than dishonest, unkind and incompetent. I am afraid to say that, after 100 years of testing socialism to destruction, it appears that we are still giving it another try. The British people placed their trust in this Government, in all truth, and through this Budget they have shown themselves to be unworthy of this trust. I ask the Minister: why he has done these things to our country?