Autumn Budget 2024

Lord Sherbourne of Didsbury Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Sherbourne of Didsbury (Con)]

My Lords, Ministers, in trying to defend the Budget, keep saying in a rather pained way that they have had to take some very difficult decisions; the Minister said that today. Of course, that is what government is all about, and they should not be surprised by that.

However, I do accept that the Chancellor had a particular challenge which all Chancellors face when presenting their Budgets: the voracious demand of the public for ever more public spending. Yet every Government know that these expectations are unrealistic. So why is it? How does this happen? The reason is that Governments, of all parties, hide from the public basic information. The 362 pages of this Budget do not contain the information the public need to have; it is deliberately hidden. That is the problem Chancellors have to face.

Let us take taxation. Nobody has the faintest idea how much VAT they pay. People know the cost of their BBC licence fee because they pay it directly; it is visible. They know the price of their council tax bill. The things they pay for directly, they know. However, they do not know that, when they go to John Lewis and buy a washing machine for £350, £60 of that goes to the taxman. They do not know that, when they get a £25 takeaway, £4 of that goes to the taxman. Every time those prices go up, the Government are taking more—a bigger amount of tax. Of course, the Chancellor does not go to the House of Commons to say that taxes are going up, but they are.

And how the Treasury loves it. It likes nothing more than stealth taxes, which make it much easier to raise tax without protest. How much more honest it would be if, as in the United States, all goods and services showed their net price and, separately and just as clearly, the tax being levied on them. When people go to the States, they are often amazed that they have to pay tax on the goods there, while they do not have to pay it here—they think. How wrong they are. When you do see the VAT—when, for example, you are having building work done and your builder is in the VAT system and charges you £1,000—you then realise that you are paying a whopping £200 on top. What an eye-opener that is.

Let us take income tax. Freezing tax thresholds will, as people earn more, push them unwittingly into a higher tax bracket and paying more tax than they should. If you are on PAYE, the only figure you really see is your take-home pay. Why are gross pay, net pay and tax not shown deliberately and separately—all equally clear? Again, the Treasury would hate that, because its job is so much easier if people do not know how much they are paying.

The same is true about public services. Soon after I came into the House, I heard a speech made by the noble Lord, Lord Desai, who was then speaking from the Labour Benches. He said that it would be a good idea if, when people went for medical treatment, they were shown how much that would cost—not to charge them, but simply to inform them. I remember seeing on television some years ago a young man who thought he was having a heart attack. The NHS treated him brilliantly with an ECG and other tests. He was okay, and he asked the consultant afterwards how much that would have cost. The consultant said £25,000 and he was amazed. I just think that if people were aware of how much such things cost, they would be aware not to expect too much from endless public services. The Government may say, “It is very difficult to provide this information”, but surely, if an organisation is well run, and if the NHS is well run, that information should be available.

If Governments are not more honest and open with the public about the cost of public services and the total amount of tax the public are really paying, I am afraid that the public will go on making unrealistic demands on the public purse. That will go on being a problem for all Chancellors, and it will be a problem partly of their own making.