Autumn Budget 2024

Lord Razzall Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Razzall (LD)]

My Lords, to follow on from that remark, Budgets normally have a pattern. On the day they come out there is one reaction and then, after a while and some reflection, there is a different reaction. In this case, the reaction was the same: disappointment and criticism.

I do not want to go into the issue of the £22 billion black hole, not only because there are not enough Tories to boo if I do but because it seems entirely irrelevant. I do not think anyone can doubt that taxes had to rise as a result of what had happened in the past. To maintain even our existing level of public services, taxes clearly had to go up.

As we know, the major tax increase was the increase in national insurance contributions for employers; from these Benches we think that was a mistake. As a number of speakers said earlier, we think it was a mistake because of the damage done to charities. We think it was a mistake because of the damage done to care homes. As Warwick University said, many care homes will go bankrupt faced with the slightest mild economic shock. We think it was a mistake because of the damage done to the catering industry. Pubs and restaurants are faced with a triple whammy of the national insurance contribution increase, the minimum wage and living wage increases and the possibility of an end to effective zero-hours contracts, which they rely on for their employees. It raised £25 billion but it was a mistake.

Unlike the Tory party, we are prepared to say what we would have done as an alternative. We would have ensured that large corporations bore that burden. We would have reversed the bank levy. We would have had a proper windfall tax on the oil and gas companies. We would have increased the tax on online gambling companies. We would have had a better reform of capital gains tax. We would have had an attack on the social media companies, which have huge revenues in the UK but do not pay their fair proportion of tax.

As people have said, the one thing missing from this Budget debate was the issue of growth. The Chancellor realised that and gave interviews after the event, saying that she was relying on other factors to produce growth, such as the reform of planning controls and the promise of private investment. The elephant in the room that she did not mention, and that noble Lords will not be surprised to hear me raise from these Benches, is Europe.

The Office for Budget Responsibility has confirmed the ongoing damaging effect of Brexit, so what should we do now? We are not demanding an immediate return to the European Union, but we must do a number of things. We must develop closer links with Europe. We must develop a better relationship with the EU agencies, on issues from the restriction of Erasmus to help with the asylum process. We must deepen our trade discussions, giving access for food and animal products. We must negotiate work visas, particularly for the creative industries, and we must obtain a mutual recognition of professional standards. When all that has been done, in due course, we must apply to rejoin the single market.

I turn for a moment to the Tories. They have attacked this Budget but have not said in any way what they would have done instead. Indeed, the noble Lord, Lord Johnson, who I have always rather respected, but who unfortunately is not in his place, said the Budget was unkind, dishonest and incompetent. I find that extraordinarily hypocritical from that former Government. Let us take unkindness. Was ignoring care for the elderly during their years in government kind or unkind? They say the Budget was dishonest. Was saying there were no parties in Downing Street honest or dishonest? They say it was incompetent. Was the behaviour of the noble Baroness, Lady Truss—no, sorry, not a Baroness yet—and Kwasi Kwarteng incompetent? On the basis of their unkindness, dishonesty and incompetence, the Tories deserved to lose the last election, and if they do not provide better opposition they will lose the next one.

Employment: Tax Policy

Lord Razzall Excerpts

Thursday 31st October 2024 Grand Committee

[Lord Razzall (LD)]

My Lords, the noble Lord, Lord Petitgas, suggested that this QSD would make a good exam question. I have often thought of it as a possible topic for PhD study; perhaps somebody has done it already.

Before I get on to the detail of the Budget, let us look at the positive use of tax policy in this country’s economy. I can think of three good examples. Let us take the agriculture industry: without the use of tax subsidies since the Second World War, we would not have the farming industry we currently have. Secondly, let us take the use of tax relief for microbreweries, which the Government want to encourage—I think that is somewhere in these documents. The tax relief given to microbreweries has created a lot of employment in the sector for people creating small breweries. Thirdly, the obvious example is the use of tax relief for the film and television industry, which provided a massive subsidy. If you make a film that qualifies in the UK with a budget of £100 million, you get back £25 million to £30 million in cash the moment you deliver the product. This has meant a huge increase in the number of films made in the UK; almost every Hollywood studio no longer makes its films in Hollywood but in the UK, entirely as a result of the positive use of the tax system to benefit our economy.

Inevitably, as the noble Lord, Lord Leigh, said, we must touch on what happened in the Budget. I do not think that I have so far heard anybody defend what happened in terms of the use of NI to raise £25 billion. Actually, it is not just the use of NI that is potentially damaging to small businesses, care homes, pubs and restaurants. It is also the triple whammy of the possibility of an NI increase, the increase in the minimum wage and the changes to zero-hours contracts. Nobody quite knows how those will impact on small businesses, particularly in the entertainment sector. The OBR says—this is common ground, I think—that, as a result of these policies, at least 50,000 jobs that would not have been lost otherwise will be lost and that our growth rate will be a lot lower than it would have been otherwise.

I am slightly disappointed that I have not yet heard a speaker in this debate say what they would have done as an alternative. We have heard all the arguments as to why this is a lot of rubbish; the noble Lords, Lord Bilimoria, Lord Leigh and Lord Petitgas, all suggest that it is what they would not have done, but we have not heard what they would have done. There seems to be some common ground; although the noble Lord, Lord Leigh, denied the existence of the £22 billion black hole, which I do not want to get into, I do not believe anyone thinks we do not need to raise more revenue to improve our public services. In that case, how do we do it? Bearing in mind that the Labour Government boxed themselves in by saying they were not going to increase income tax, VAT or NI, they had to do something.

Personally, I would not have done this. Our policy would have been to look to raise tax revenues elsewhere. We would have looked again at a better windfall tax on the oil and gas companies. We might have reversed the tax cuts that the Tories gave to the banks, and we might have looked at the obvious group that can provide more revenue for us: the large social media companies. We could have found creative ways to raise the money without doing this, which in a lot of ways is a tax on jobs.

We are all very pessimistic at the moment, but I have always been a bit optimistic. I remember standing in the Chamber in about 1998 or 1999 when the Labour Government introduced the minimum wage, and every speaker on this side said, “This is going to be a complete disaster; the minimum wage will destroy jobs and destroy our country as we know it”. It did not, and I hope this does not either.

Tax Reliefs: Theatre, Orchestra and Museums and Galleries Exhibition

Lord Razzall Excerpts

Tuesday 15th October 2024 Lords Chamber

[Lord Livermore (Lab)]

Clearly, the Government recognise the importance of the arts to our public life and support the funding of the arts at the appropriate level. Unfortunately, I will have to say that the Government will set out their plans for supporting the arts in the coming spending review.

[Lord Razzall (LD)]

My Lords, I am absolutely delighted to join in a Question from the noble Lord, Lord Parkinson, because it gives me the opportunity to thank him from our Benches for the collegiate way in which he conducted himself as a DCMS Minister.

Bearing in mind the Minister’s commitment earlier, will he give any indication as to whether at yesterday’s investment conference there were any more commitments to put money into the film industry, or indeed the arts, apart from M&G’s investment in a new film project? Does he recognise that there remains an issue around the visual effects tax relief, which was announced in 2023 but for which implementation was stalled by the election? What is the status of this important tax relief? It is obviously vital to ensure that as much post-production work as possible stays in the United Kingdom.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for mentioning the investment summit yesterday, when the Government were able to announce a total of £64 billion of investment into the UK economy. That was a vote of confidence in this Government’s handling of the economy and the fact that our economy is now open for business. On the specific tax relief that the noble Lord mentioned, I am afraid that I cannot comment on speculation about any specific taxes ahead of the Budget.