Autumn Budget 2024

Lord Lexden Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Lexden (Con)]

My Lords, this Budget makes history for the wrong reason. It is the first ever Budget to place a tax on education in our country.

Over the years, all Governments have regarded education as being so invaluable to individuals and society alike that nothing should ever be done to obstruct its success and growth in all the varied forms that it takes. Other countries agree. Greece briefly thought otherwise but quickly recognised its mistake. The Government are now breaking a universal golden rule by slapping VAT on independent school fees, not at a fairly modest rate to ease the process of adjustment but at a whopping 20% from 1 January, just a few weeks from now, during the course of a school year, which is the worst possible time.

Far from taking money from independent schools, Tony Blair’s Government provided a little—just a little—in order to get more state and independent schools working together in the interests of all their children. Modest government funding in 1998 for a joint state/independent partnership group helped stimulate all manner of hugely successful projects. There are now thousands of them up and down our country. Last week, inspiring teachers and other representatives from both sectors came to Parliament to celebrate their latest achievements. They are helping many independent schools to thrive, which is what the Prime Minister said in September last year that he wanted to see, telling the publication Jewish News:

“We have got fantastic independent schools”.


How can these words be squared with his VAT levy, which reverses the policy of the last Labour Government and jeopardises the partnership work that is one of their legacies?

I was able to give that work a small helping hand as general secretary of the Independent Schools Council—that gives me an interest in this subject, which I declare along with my current position as president of one of the council’s constituent bodies, the Independent Schools Association, which works on behalf of some 670 schools, most of them small in size and widely cherished, often because they provide with great care and warmth for special needs, different religious faiths, the performing arts and other specialisms.

That leads me to a crucially important point. The kind of independent schools I have mentioned are far more numerous than the large schools with their well-known names that attract so much media attention. It cannot be said too often that 40% of independent schools have under 100 pupils. Enormous value is placed on them by their local communities. Who will be most seriously and widely affected by the VAT levy? Not the rich, who are the Government’s target in this Budget. Their children go to a small minority of independent schools, which can certainly be expected to go on thriving. The education tax will fall mainly on working families of limited means—just the kind of families the Government say they want to protect. They cannot rely on the Government’s assurances that they will escape most of the tax because schools will be able to absorb it. Small schools have no handy financial reserves into which they can dip. Absorbing a proportion or all of the VAT levy—which the Minister says he expects—would mean cuts, above all to staff, who account for some 70% of school costs.

What have the teacher unions got to say about this? They have called for the tax to be delayed until the start of the new school year so that its impact can be properly assessed first. Amazingly, the Government think that there is no need for a proper and full impact assessment before inflicting this unprecedented tax on our country.

So the Treasury and the Government sail complacently on, insisting that the many worries that are driving thousands of parents to distraction will evaporate when education VAT comes in a few weeks’ time. They say there will be no large, involuntary movement of children to state schools, some of which will be unable to provide the courses that such children have been studying. They say that irreplaceable little faith schools for Jewish and Muslim children will not fold. They say that service families will not be driven from boarding schools, and that some 100,000 special needs children without EHC plans will not suffer. These are mere hopes.

A policy that breaks all precedent ought not to proceed on the basis of mere hope and a single report from the Institute for Fiscal Studies that other experts dispute. Above all, it ought not to come into effect on 1 January, just five months after independent schools, then on their summer holidays, were told that their plans and budgets for the next school year would have to be redone. Was that not utterly unforgivable? Can there be a single teacher who believes it is right to upset and distress children during the course of a school year?

Independent School Fees: VAT

Lord Lexden Excerpts

Monday 21st October 2024 Lords Chamber

[Lord Livermore (Lab)]

At the Budget, we will set out an assessment of the expected impacts of this policy in the normal way by publishing a tax information and impact note. In this assessment, we will consider, first, the likely pass-through of VAT to school fees. Here, after a cover of VAT on input costs, we expect schools to be liable for VAT of an average of around 15% of their fee income. The Government expect that private schools will take steps to absorb a significant proportion of this VAT liability. Secondly, we will consider the likely elasticity of demand, which will be consistent with the elasticity used by the OBR in the costing of this policy. It is worth noting that, despite a 75% real-terms increase in fees since 2000, the number of children in independent schools has remained steady, which suggests an inelastic demand for private school places.

[Lord Lexden (Con)]

Should we not all be grateful to the noble Lord, Lord Hacking, who has sent a very thorough report to the Prime Minister, showing the dire consequences that the Government’s education tax will have? Is it not time that the Government realised that their education tax—the first in our history—is likely to force a large number of parents, particularly those using small special needs schools in the independent sector, to move their children next term to state schools which are wholly unprepared for them?

[Lord Livermore (Lab)]

The answer to the noble Lord’s question is no, because the assumptions underlying that report are incorrect. We expect that a large number of private schools will take steps to absorb a significant proportion of this VAT liability, so the majority of that fee will not be passed through.

Destitution: Low Median Wage

Lord Lexden Excerpts

Thursday 23rd November 2023 Lords Chamber

[Baroness Vere of Norbiton (Con)]

This Government are absolutely committed to ending a low-wage economy, and that is why we have just introduced the largest ever rise in the national living wage. Also, it is not just about the national living wage; I absolutely accept that there will be people who are living on benefits—that may be for a temporary period—and that is why we uprated benefits by 6.7%, which was the September CPI, versus a forecast inflation rate next year of 3.1%, so people will see more pounds in their pocket.

[Lord Lexden (Con)]

My Lords, should we not express the hope that yesterday’s measures will represent a real turning point in the economic life of our country, opening the way for sustained growth and greater prosperity for all our people?

[Baroness Vere of Norbiton (Con)]

I absolutely agree with my noble friend. It is an absolute turning point. It is about the long-term decisions that have to be made, and that is about investing not only in businesses but also in our people. From a business perspective, the full expensing has been widely welcomed across the economy. It will add an extra £3 billion of new investment. We already have the lowest corporation tax in the G7 and now, with full expensing, that will bring in the investments that my noble friend Lord Johnson really needs to see.

Local Authorities: Budgets

Lord Lexden Excerpts

Tuesday 19th September 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, I just set out the position on broader reform to the funding system for local government. The Government recognise the pressures that local authorities are facing. At the spending review 2021, the Government confirmed that councils in England would receive £4.8 billion of new grant funding between 2022-23 and 2024-25 to meet pressures in social care and other services. We also recognised in the Autumn Statement last year that the position on inflation had changed the position for councils, and set out additional funding to respond to that.

[Lord Lexden (Con)]

My Lords, is it not tragic that Birmingham—once the jewel of local government, thanks to Joseph Chamberlain and his son Neville, the reforming lord mayor in the early 20th century—should have been reduced to its present pass? What is to be done about this great council? Should it be split up? Its present position is truly tragic.

[Baroness Penn (Con)]

My Lords, as we speak, my right honourable friend the Secretary of State for Levelling Up is giving a Statement to the House of Commons on action to be taken on Birmingham City Council. It is the Government’s intention to appoint commissioners in that instance, but there will be a period of consultation, I believe, before that is brought forth.

Inheritance Tax: Cohabiting Siblings

Lord Lexden Excerpts

Tuesday 20th June 2023 Lords Chamber

Asked by

[Lord Lexden]

To ask His Majesty’s Government what plans they have, if any, to make transfers of property between long-term cohabiting siblings exempt from inheritance tax.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, the long-standing inheritance tax assumption for wealth transfers between spouses and civil partners reflects the formal legal obligations that marriages and civil partnerships necessarily entail. While the Government understand the issue, there are no plans to exempt transfers of property between long-term cohabiting siblings.

[Lord Lexden (Con)]

My Lords, the Government say that two people who have shared a jointly owned home for years must be in a legal relationship if inheritance tax is to be deferred when they are parted by death. I remind the Government that they blocked my Private Member’s Bill to open up civil partnerships to siblings after its Second Reading, where it gained wide support across the House. This would have enabled siblings to establish legal relationships and solve the problem. Why on earth should the postponement of tax on the death of the first of two people united in a loving association for years require sexual activity between them? Why should the survivor of a chaste relationship have to face the agony of selling the family home on the death of a loved partner to pay an inheritance tax bill? Have this Government no compassion?

[Baroness Penn (Con)]

My Lords, it is important to set this Question in context. Each individual has a nil rate band of £325,000. Two cohabiting siblings who jointly own a house may have an inheritance tax liability only when the value of the house exceeds £650,000—well in excess of both the average UK house price and the average London house price. There are also circumstances in which inheritance tax can be paid over a period of time, giving the beneficiaries time to adjust to changed circumstances. That facility would enable people in those circumstances to remain in their home, which I believe is the concern at the heart of my noble friend’s Question.

Devolved Budget for Wales: Inflation

Lord Lexden Excerpts

Wednesday 15th March 2023 Lords Chamber

[Lord Lexden (Con)]

My Lords, is it not extremely difficult to secure throughout our country the high level of prosperity that we would all like to see? My noble colleagues from Northern Ireland will testify to that.

[Baroness Penn (Con)]

It is a difficult thing, but one that this Government are committed to. That is why I am so pleased to see that as a result of the measures announced in this Budget today, we have seen the OBR adjust its growth forecasts upwards by the largest amount based on supply-side reforms since its establishment in 2010.

Taxation: Income Tax Threshold

Lord Lexden Excerpts

Wednesday 16th March 2016 Lords Chamber

[Lord O’Neill of Gatley]

My Lords, I plan to make some longer comments specifically about this sensitive issue next week when I open the debate on the Budget. There are some very important complexities behind the policies which, frankly, were misunderstood in the way they were reported at the weekend.

[Lord Lexden (Con)]

My Lords, the second part of my noble friend’s original Question asked,

“how many people have been affected”,

by raising these tax thresholds. Can my noble friend give us the figures to show the extent to which people have benefited from the changes?

[Lord O’Neill of Gatley]

My Lords, as a result of the changes announced in the Budget today and in the summer Budget 2015, 31 million individuals will see their income tax bill reduced in 2017-18. This is close to an additional 1 million whose income tax has been reduced as a result of the previously announced measures. A typical base-rate taxpayer is going to pay notably less—just over £1,000 less tax in 2017-18 than back in 2010-11—while a typical high-rate taxpayer will pay more than £1,100 less than would otherwise have been the case. Let me add that this is the first time that there has not been an even stronger benefit for the lowest-income earners over the whole of that period.

Corporation Tax (Northern Ireland) Bill

Lord Lexden Excerpts

Tuesday 17th March 2015 Lords Chamber

[Lord Lexden (Con)]

My Lords, the noble Lord, Lord Bew, is an old friend from academic life and it is good to follow him. It is good, too, to have an opportunity to congratulate the noble Lord, Lord Hay of Ballyore, on his maiden speech. It is clear that he was a faithful and dedicated servant of the Northern Ireland Assembly, just like his predecessor, my noble friend Lord Alderdice.

I share the hope that has been widely expressed in this debate that the Bill before us will assist the progress of Northern Ireland and help secure its longer-term prosperity. The important measure of devolution for which the Bill makes provision has not, like some other measures of devolution, been conceived in undue haste or brought forward with insufficient preliminary work. The case for devolving the rate of corporation tax in Northern Ireland was advocated powerfully in Ulster Unionist circles in the 1980s, as my noble friend Lord Empey has told us. It was taken up enthusiastically by my right honourable friend Owen Paterson when he was Conservative shadow Secretary of State for Northern Ireland before the last election. A commitment to action was included in the Conservative Party’s 2010 manifesto and in the manifesto of the Ulster Unionist Party then led by my noble friend Lord Empey. Indeed, it was the subject of discussion between the two parties as part of the work that was done with the aim of creating an enduring partnership between them. I regret that that aim was not in the end successfully accomplished. Ulster’s position in the United Kingdom would have been strengthened by such a partnership.

After the election, the coalition made clear in its Programme for Government that it would,

“work to bring Northern Ireland back into the mainstream of UK politics”—

a commitment to lift all true unionist hearts. In the course of doing so, it would examine,

“potential mechanisms for changing the corporation tax rate in Northern Ireland”.

That examination began exactly four years ago with the publication of a government consultation document stressing the overwhelming need to rebalance the Northern Ireland economy by increasing the size of its private sector, which over several generations had shrunk so alarmingly.

From 2011 onwards, I inquired about the progress of the Government’s work through a number of Oral and Written Questions. There is little doubt, I think, that the announcement of the Government’s decision was delayed to avoid discussion of it during the Scottish referendum campaign of last year. The decision was finally made known in the Chancellor’s Autumn Statement last December, and I welcomed it in the debate on the Statement which took place in this House. It is important to remember that the Bill implements clear commitments that have been given to the people of Northern Ireland. It would have been extremely regrettable if a measure so long in gestation and enjoying such widespread support in Northern Ireland had not been carried into law before the election.

We are all extremely conscious of the acute difficulties that have arisen within the Northern Ireland Executive. It is obvious that they must be resolved if the scene is to be set successfully for the transfer of power over the main corporation tax rate to the Executive in 2017, the target date. I express my admiration for the tenacity and determination with which my right honourable friend the Secretary of State for Northern Ireland continues to work with the political parties in the Province to try and overcome the severe problems. Her predecessor, my right honourable friend Owen Paterson, pressed the case for the devolution of corporation tax with immense fervour. The arguments which he and many others made have been accepted widely, if not universally, in Northern Ireland. In these circumstances, it would be tragic if political instability in Northern Ireland should, at the final hour, deprive the Province of the prospect of benefits which so many economic experts predict and which so many business men and women hope to deliver.

When the Chancellor announced the Government’s decision in favour of devolution, in his last Autumn Statement, the Northern Ireland Chamber of Commerce and Industry declared that,

“our politicians must grasp this opportunity”.

There is no doubt that that is exactly what Northern Ireland politicians, as a whole, wish to do. I hope that, with the assistance of my right honourable friend the Secretary of State for Northern Ireland, they will be able to make that wish a reality and then go on to deal successfully with the challenges that will at once arise, most notably through the reduction of Northern Ireland’s block grant, which has rightly featured prominently in this debate.

This is a money Bill but, as a number of noble Lords have stressed, it has significant constitutional implications. It adds a new element to the unbalanced and asymmetrical arrangements that characterise the United Kingdom’s three devolved settlements and create resentment in undevolved England. The justification, as we all know and has been stressed often in this debate, is the existence of a low rate of corporation tax in Northern Ireland’s neighbour, the Republic of Ireland, with which it competes for international investment. Will the greater imbalance that this measure will introduce within the devolved settlements be accepted on all sides in Wales and Scotland? As we have heard, it is clear that it will not. Nationalist politicians in Scotland and Wales have said that what Northern Ireland has, they must have too. How will the main British parties react? That is the question to which we now need to know the answer.

This Bill has been conceived in the best interests of Northern Ireland and could serve those very well indeed. However, at the same time, it could add to the United Kingdom’s constitutional instability which, sadly, is so marked a feature of life in our country today.

Autumn Statement

Lord Lexden Excerpts

Thursday 4th December 2014 Lords Chamber

[Lord Lexden (Con)]

My Lords, I shall confine my remarks to the part of our country that matters most to me—Northern Ireland. The responsibility for setting corporation tax rates there could now be devolved to its power-sharing Executive and Assembly as a result of an extremely important announcement in the Autumn Statement. The announcement has been long awaited. Widespread consultations were initiated more than three and a half years ago when the Treasury published a paper to pave the way for a detailed examination of, in its words,

“the extent to which a phased reduction in the rate of corporation tax could support a rebalancing of the economy”.

The rebalancing of the economy is, of course, one of the principal objectives of this Government’s policy. Nowhere is a significant rebalancing needed more than in the Province, which has for so long been overwhelmingly and dangerously dependent on the public sector. The Treasury’s work on the issue of corporation tax devolution was completed some time ago. I pressed for an announcement as soon as possible. I am glad that it has at last been made.

Many of the Province’s politicians and economic experts believe that Northern Ireland needs rates of corporation tax significantly lower than the rest of our country, welcome though the Chancellor’s steady reductions in the tax over years have been. That is because Ulster faces severe competition for the inward investment that it needs so badly from its neighbour across its border, the Republic of Ireland, which has a 12.5% rate of corporation tax. Substantial inward investment and the new private sector jobs that it could create are vital if the rebalancing of the Northern Ireland economy is to be achieved. The Government estimate that low rates of corporation tax in the Province could lead to the creation of some 50,000 new jobs in the years ahead.

The devolution of corporation tax does not command universal assent in Ulster, but the majority of the Province’s political parties and large numbers of its business leaders favour this immensely important proposal. The Northern Ireland Chamber of Commerce said yesterday that,

“our politicians must grasp this opportunity”.

With the opportunity comes a severe challenge. The immediate consequence of special low rates of corporation tax would be the reduction in the revenue generated by them, which would lead in turn to the reduction in the block grant which the Northern Ireland Executive receive. So, as my noble friend Lord Empey, chairman of the Ulster Unionist Party, who cannot be in his place today, has often reminded me, careful consideration would need to be given to the manner in which low rates of corporation tax were phased in if they were devolved. A gradual introduction over several years would seem to be the right course.

The Government will be aware that yesterday’s announcement in respect of Northern Ireland will stir keen interest in Scotland and Wales. The Smith commission ruled out the devolution of corporation tax to the Scottish Parliament. Nicola Sturgeon, however, is unlikely to let the matter rest there. In Wales the Silk commission recommended that the tax should be devolved to the Welsh Assembly if Northern Ireland was given it. The Government will need to consider these repercussions, remembering always their overriding duty to preserve the unity of our country. Unfortunately, and through no fault of the Government, the corporation tax announcement does not come at a propitious moment in the political fortunes of the Province. Its power-sharing Executive are in turmoil. One consequence of that turmoil has been a £100 million loan from the Treasury to cover the current deficit. The Chancellor was right to say that the Executive must demonstrate that they are,

“able to manage the financial implications”,—[Official Report, Commons, 3/12/14; col. 314.]

of corporation tax devolution. That is a fair and proper condition to stipulate.

Cross-party talks are now taking place under the chairmanship of my right honourable friend the Secretary of State for Northern Ireland. I hope that the financial and other issues that are now seriously jeopardising the work of the Northern Ireland Executive will be diminished to the point where the Chancellor’s welcome announcement can be the subject of serious cross-party discussion in the Province. Those who seek to impede Northern Ireland’s search for economic progress will not be readily forgiven.

Pre-emption of Parliament: Constitution Committee Report

Lord Lexden Excerpts

Thursday 6th February 2014 Grand Committee

[Lord Lexden (Con)]

My Lords, my little contribution to this debate is almost entirely in an historical vein, but I have one or two preliminary observations. For the best part of two years, I have had the good fortune to be a member of the Constitution Committee. I am extremely grateful to my chairman, the noble Baroness, Lady Jay, and all my colleagues. I am also very conscious of the large debt that is owed to the committee staff, its clerk, policy analyst, administrative assistant and legal advisers. They all serve us quite superbly.

During this inquiry, we learnt about the strict enforcement of unchanging rules laid down long ago under which the Treasury will authorise spending before a Bill becomes law. For me as a historian, the most memorable aspect of that absorbing inquiry was the touching faith in the internal validity and force of the rules displayed in the Treasury’s evidence to us on the grounds of their longevity. The Treasury’s written note to us in January 2013 referred to,

“an ancient convention that the Treasury should strive to look after Parliament’s interest in Whitehall”.

The note went on to refer to the Ram doctrine, adumbrated in November 1945, with which we became extremely familiar during the course of our inquiry as the reformulation in more modern form of “an ancient convention”.

“Ancient” is of course a relative term, but I was struck by the extent to which, in the Treasury’s view, it covers all but the most recent times and provides an apparent justification for a lack of precise answers to historical questions. In the committee’s oral evidence session with Treasury representatives, which took place exactly a year ago on 6 February 2013, it emerged that one of the conventions on which the Treasury has been relying,

“dates back a long way. We have traced something that may be of help. It is from a fat book that is very ancient and yellow, and calls itself the Public Accounts Committee Epitome of Reports”.

The date of that very ancient yellow work? 1884, the year that Gladstone passed the third Reform Act and, as it happened, my grandfather was born. Neither Gladstone’s feet nor my grandfather’s would normally be thought of as having walked in ancient times.

I was left feeling very puzzled by all that. Questions about the origins of ancient conventions that go back no further than the 19th century ought surely to be taken straight to the Treasury’s archives for full, detailed answers. Gladstone, perhaps the greatest of all 19th-century Chancellors, would have insisted on proper record-keeping. It is highly likely that the Treasury’s self-appointed role as the guardian of “Parliament interest in Whitehall” stems from Gladstone’s years as Chancellor in the 1850s and the 1860s—years when, in his own words, he gloried in the name of skinflint, saving the nation’s candle ends. By establishing the Treasury’s firm control over Westminster’s costs at this time he brought down public spending in this country as a proportion of GNP from 10% to 6.4%. The people’s William did not believe in spending the people’s money to create public services for the people.

This rather lengthy historical detour leads to an obvious request of my noble friend the Minister. Could he please check on the state of the Treasury’s archives and, assuming that no misfortune has befallen it, consider issuing a departmental directive that it should be consulted to provide answers to historical points of the kind that were not insignificant in the committee’s inquiry into the pre-emption of Parliament? What emerged clearly from the committee’s consideration of the historical background to the Treasury’s central role since the 19th century is that working habits and practices, which have come to be venerated and hallowed on the grounds of their ancient character have, over the years, mutated into conventions. The committee’s report called for redefinition. It states:

“We accept that the Treasury was not seeking to elevate its internal practices to the status of constitutional conventions. However, clarity in this area is important. We recommend that the Treasury's practices should not be described as ‘conventions’”.

In their very succinct reply to the report the Government stated that they would

“no longer use the term convention to describe these matters”.

That is very satisfactory and other aspects of the Government’s response are also welcomed by us. Not one of the committee’s recommendations has been rejected, although, as has already been pointed out, the acceptance of some was extremely terse. There are reasons for regarding the Government’s response as resembling a heartening outcome for the members of the committee and its excellent staff.