Autumn Statement 2023

Lord Weir of Ballyholme Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord Weir of Ballyholme (DUP)]

My Lords, I join others in welcoming the Minister to her new role. Also, in the spirit of trying to have a balanced approach to the Autumn Statement, there are a number of aspects which I welcome. It is a relatively small intervention, but the additional finance announced by the Chancellor to combat anti-Semitism is particularly pertinent at this time, and I think the House can unite around it. Similarly, the Government’s commitment to maintain the triple lock on pensions is important. When my party entered into a confidence and supply arrangement in 2017 with the Government, we insisted that it was a key part of the agreement. It is good to see the Government honouring that.

I also welcome the increases in the national living wage and in the benefits uplift. While there is a bit of a mixed bag on personal taxation, at least the reduction in the national insurance contributions will offset some of the pressures that are there from the failure of the Government to alter the rates at which personal taxation is paid. Similarly, from a business point of view, some of the interventions around incentivising capital investment are also to be welcomed. To that extent, I do not take great issue with a lot of the things announced in the Autumn Statement; I have a greater problem with its missed opportunities.

The Government have rightly said—the Minister raised it today—that they place at the heart of the Autumn Statement economic growth, productivity and trying to ensure that the private sector grows at a much faster rate than the public sector. Those aspirations are all to be welcomed, but I do not necessarily see corresponding measures in the Autumn Statement that will help facilitate them. It is a great disappointment that the headline rate of corporation tax remains at 25%. Although there have been some small adjustments, and even the slightly lower rate of 19% for some businesses, it leaves the United Kingdom in a less competitive position than it should be when it comes to attracting international investment.

When one talks about corporation tax, it is easy to get drawn into the cliché of seeing this as some sort of device for global corporatism to benefit, but that is quite a short-sighted approach. Similarly, there has been a myopic approach taken that does not realise that a reduction in corporation tax can lead to a much greater tax yield. One looks to our near neighbour, the Republic of Ireland, which for many years has maintained a corporation tax rate of 12.5%. Look at the impact of that rate on its economy: a country less than 1/10th the size of the United Kingdom is projected to have a budget surplus of around £56 billion or £57 billion in 2027. It is noticeable that at the low point for the Republic of Ireland in the economic crisis of 2008-09, when in effect it had to be bailed out by Europe, with contributions from United Kingdom, and faced a range of austerity measures, the one thing it held on to as an economic tool was maintaining that low level of corporation tax. We are being short-sighted in our approach to corporation tax in this nation, and the opportunities for it to be a major driver for economic growth have been abandoned for the moment.

Secondly, on attracting people back into the workforce, we know that the Government’s own statistics in the last quarter identified job vacancies at around 957,000. That was slightly down on the previous quarter, but the failure to fill vacancies quickly is still a major drag on our economy. Although there were very welcome announcements on childcare in the Spring Budget, this Autumn Statement not only fails to follow up on those measures but probably provides additional barriers to their implementation. For example, from the point of view of parents choosing and being able to afford childcare, the tax-free childcare allowance has remained unaltered. Similarly, it has been highlighted by early years organisations that, although they welcome the increase in the national living wage, creating a situation in which a large number of their workers are getting a considerable boost to their incomes comes with a severe cost to those organisations. Without corresponding government support for those childcare organisations, the sector’s capacity to deliver what are ambitious targets for the expansion of childcare is, in effect, meaningless. It has been estimated by the National Day Nurseries Association that the number of nurseries closing in this country increased by 50% in the last financial year. If we are to deliver on childcare, which has such a major impact on our economy and children’s life chances, we need to ensure we have a joined-up approach to ensure that we can deliver that.

Finally, I will mention a more parochial issue: the Government’s failure in the Autumn Statement to look at the fiscal floor for regions of the United Kingdom. Although there is a Barnett consequential in the Autumn Statement of £185 million for Northern Ireland, £75 million is immediately absorbed through paying back overspend for the previous year, leaving £110 million for this year. Yet the Northern Ireland Fiscal Council indicates that if Northern Ireland was on the same needs-based analysis as Wales and other regions, our budget should have been £300 million higher last year, £450 million higher this year and more than £0.5 billion higher next year. There has been an absence of any commitment by the Government to deal with that.

In conclusion, this Autumn Statement produces some short-term benefits—perhaps that is what we should expect in what is likely to be an election year—but the ability to grasp long-term economic solutions for the whole United Kingdom has been missed on this occasion, and that is a severe disappointment.