Budget Statement

Lord Wakeham Excerpts

Thursday 27th March 2014 Lords Chamber

[Lord Wakeham (Con)]

My Lords, it is always a pleasure to hear the right reverend Prelate making his remarks in the House. Indeed, it is always a pleasure when there is more than one Bishop on the Benches. Of course, the original purpose of the Bishops being in the House of Lords was not for their spiritual qualities at all but because they were some of the great landowners in the country. Those days have gone but they still make a very useful contribution.

When I was Leader of the House, I had a meeting with the then Archbishop of Canterbury and said I thought that the Bishops ought to speak more often in the House; just coming here and saying prayers and doing nothing else was not good enough and they ought to be able to make more of it. These days they do and it is very welcome indeed, and what the right reverend Prelate said was absolutely right.

Of course, ever since I started to take an interest in Budgets and such matters, there has always been a debate as to whether Budgets themselves are useful and whether the debates that follow them are useful. The view was, and it is still held, that it is better that changes in taxation and so on are made separately when they are ready than for there to be the great anticipation of the Budget and then letdown. That has been so as far as I can remember: some people think that they are useful and some do not. The very first Budget that I ever heard was that of the noble Lord, Lord Healey, in 1974—it was lovely to see him here in the House the other day. I was then a new Member of Parliament and on a committee in the House of Commons chaired by, as some people will remember, Ian Mikardo. He called a meeting of the committee to coincide with the Budget Statement. I went to him and I said, “I want to listen to the Budget and I actually want to make my maiden speech later on that day if I can”. He said, “Well, you’ll learn better as you’ve been around a bit longer, but I understand. If that’s what you want, I’ll change the meeting of the committee so that you can listen to the Budget”. Ian Mikardo said—as he used to say to everybody: “I’m not nearly as nasty a man as I look”. So he agreed to that and we got on extremely well.

The second moment in all these 40 years that I remember is that Budgets can occasionally be used for demonstrations. I remember the 1988 Budget, the first Budget of my noble friend Lord Lawson. At the crucial time in the Budget when he was announcing very substantial tax reductions, the honourable Member for Banff and Buchan, one Alex Salmond, rose up in absolute fury at these proposals, shouting, “Outrageous! Outrageous! Outrageous!” and the Speaker had no option but to name him. I was then the Leader of the House and had to move the Motion that the honourable Member be excluded. He was thrown out in the middle of the Budget debate for not being able to accept the fact that we were reducing taxation. That was Alex Salmond in those days. Mind you, I was an expert at that, because I happen to have thrown more people out of the House of Commons on Motions than any other Leader of the House since the war, which I think is a really obscure record.

However, I do not think that this Budget, whether you approve it or not, is likely to be forgotten, because it contains some substantial and important points, in particular the long overdue changes to the savings and pensions regime. I was very pleased that that was done and, what is more, that it seems to have been universally accepted across the nation. That is also a very good sign in a Budget. I am not sure that I agree with the noble Lords, Lord Hollick and Lord Myners, on this. In my view, the savings ratio will improve as people realise that they have a much better arrangement for dealing with their savings than they had. I think that the measure will be a great encouragement. I guess that those who sell annuities will be busy mopping up the last of the defined-benefit schemes from companies that still have them.

I do not think that we could have expected there to be any greater changes in the tax regime in this country, but, much as I would like tax rates to be reduced, I would like Chancellors not necessarily to reduce taxes but to get them on to a better basis. Nearly all our taxes have some serious flaws in them at whatever rate they are. For example, I have nothing against capital gains tax—it is an essential part of the process—but very much of our capital gains tax is taxing inflation. We should be able to find a better way of taxing real capital gains than taxing inflation. Let us look at stamp duty. I was in the Treasury 30 years ago, probably in the same office as the Minister—it might have had a coat of paint on it since I was there. I am told that it has not; it used to have terrible lino on the floor in my day. I tried to persuade the officials in the Treasury that stamp duty was a bad tax. It is a tax on change, and we want to encourage change, but the Treasury looks at it another way and says that it is a jolly good, easy tax to collect. That is why it is very difficult to get a rational discussion about stamp duty, but somebody has to face up to the fact that it is not a good, helpful tax.

I am delighted that the Prime Minister said that he hoped to have a look at inheritance tax in the near future, because, again, there are illogicalities in that which need in this day and age to be looked at. Of course, I would like all the taxes to be down—most people would—but there are exemptions and all sorts of things which should not be in a modern tax system.

The view I take is that we have had a good Budget Statement. I am not convinced that we can do away with Budgets—I fear that we are going to have them for much longer and they are often constructive—but I hope that my right honourable friend the Chancellor will continue to tackle the anomalies that are in the tax system to get them on a more logical and reasonable basis.