Surplus Target: Corporation Tax

Debate between Lord Newby and Lord O'Neill of Gatley

Monday 4th July 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, in the interests of time, I shall try to be brief. In the framework that has existed over the past six years there has been a well-identified escape clause in the event that GDP is foreseen to go below 1% for four consecutive quarters. That is the circumstance in which our decision within the country last week has left us, hence the Chancellor’s Statement. On corporation tax, it is intended and recommended that that is an appropriate response to show to the world at large that Britain remains open for business.

[Lord Newby (LD)]

My Lords, I will pursue the response the noble Lord just gave. First, the week before the referendum result the Chancellor talked about an emergency Budget; now he is talking about a tax giveaway. Are any fiscal rules still in place? Secondly, the aim is to reduce corporation tax to at least 15%. Current government plans are to reduce it to 17% by 2020. By what year does the Chancellor intend that a 15% rate might be introduced? Finally, does the Minister accept that there will now be immediate problems for many small and medium-sized businesses, which will see many of their purchasers’ decisions put on hold while we have this tremendous uncertainty in the economy? Will he therefore ask the Chancellor to provide a line of funding to the British Business Bank to provide lending, overdraft facilities and other support to small and medium-sized businesses, particularly innovative companies, which, frankly, simply will not be around to receive any corporation tax benefits in years to come unless they are given support now?

[Lord O'Neill of Gatley]

My Lords, in repeating the Chancellor’s Statement I clearly said that tomorrow the Financial Policy Committee will report on its recommendations and the Treasury remains in a position to act on whatever advice is given with respect to support for whatever area of business—small, large or otherwise—that may or may not require additional help. On corporation tax, as I also said, that is a recommendation of an appropriate policy response in the event of the decision we have made to send a message to the world that Britain remains open for business. I imagine that a specific policy will be put in place in line with the Autumn Statement plan as envisaged previously, once we have a new Prime Minister in place.

Taxation: Income Tax Threshold

Debate between Lord Newby and Lord O'Neill of Gatley

Wednesday 16th March 2016 Lords Chamber

[Lord O'Neill of Gatley]

I anticipated that a number of things might be asked at this session so shortly after the Budget had been announced, and I encourage many noble Lords, if they have the chance before next week’s debate, to read the Red Book. They will then be more aware of the real details of what has been announced, including, I think, something in this area.

[Lord Newby (LD)]

I thank the noble Baroness for reminding the House of an extremely successful Liberal Democrat policy. Given that the Chancellor has already broken two of his three fiscal targets, will the Minister now agree that they should be abandoned along with the cuts in spending and benefits, which particularly affect the poor and the disabled and which the Chancellor claimed were necessary just to meet those failed targets?

[Lord O'Neill of Gatley]

My Lords, of course I am not going to rise to that bait, but I would like to point out—and it is another reason why I encourage people to study the Red Book in close detail—that, in contrast to the mood among many observers and certainly in the media, the target for this year’s nominal budget deficit has come in lower than forecast at the Autumn Statement. The only reason that it is at the same level as a share of GDP and that the overall current debt level to GDP is higher than desired is the evident other news that the level of nominal GDP was significantly lower than before. In terms of policy, and on the contrary to what was said in that question, the plan is very much in place and on target.

Income Inequality

Debate between Lord Newby and Lord O'Neill of Gatley

Thursday 21st January 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, one of the widely regarded measures shows that inequality may have widened, which is the one that would include the broadest measures of wealth to account for house prices. That is the only one that shows that; all the others, as I have said, show the exact opposite of the tone of most of these questions. That is why we are also focused, as part of the productivity plan and otherwise, on trying to do something about broadening the supply of houses and to discourage the degree to which landlords have been influencing the housing market. These policies, along with the others I mentioned, will continue to attract the justifiable prime focus of our economic policies.

[Lord Newby (LD)]

My Lords, will the Minister confirm that yesterday’s employment figures showed a further fall in productivity? Why do the Government think that happened and what are they doing about it?

[Lord O'Neill of Gatley]

My Lords, of course one can infer some tentative implications about productivity from yesterday’s data on employment, but it would be very premature to do so. We know from the very latest productivity statistics that, if one uses a magnifying glass, there has been a modest increase in productivity in the last two quarters for which data have been reported. It is an ongoing observation that, in what are generally currently regarded as some of the most successful economies in the world, cyclically, the US included, they have, if anything, an even bigger apparent conundrum on this than we do here in the UK, because of the evidence of the past 12 months.