Economy: Spring Statement

Lord Whitty Excerpts

Thursday 31st March 2022 Grand Committee

[Lord Whitty (Lab)]

My Lords, I thank the Minister for that exposition on the Budget, although I did not entirely recognise aspects of it. It is a Statement rather than a Budget; I need to watch my terminology.

One of my problems is that, normally, I would have been much further down the speaking order and would have therefore focused on a single point. Given that I am in a privileged position, I still want to make this point right up front: in the whole Statement, why is there no mention of the Government’s path to net zero? I ask that for a wider reason. Just before the Statement came out, there were rumours in the Conservative-supporting press that there was a serious change in tone on the Government’s approach to climate change. Despite the dramatic and impressive road to net zero Statement in the context of Glasgow, there was a pretty concerted view in the press that there had been a downplaying of commitments to net zero in government circles. I would like to know the truth of that.

I am fortified in that view by my experience the other night when the noble Lord, Lord Callanan, rejected a seemingly innocuous cross-party amendment that required the Subsidy Control Bill to take some notice of climate change policy. There was no reason for rejecting it, yet that seems to have been repeated in other parts of government through statements in the House of Commons and here. Has there been a change in the degree of emphasis on climate change? If not, why does the Government’s major Statement on economic strategy not make at least a brief reference to the need for economic and fiscal policy to take account of it? For example, there is no indication of any move towards a carbon tax. In some ways, we have short-term changes in the opposite direction. Whatever the benefit to motorists, even as a one-year wonder, the move to cut petrol and diesel tax—

--- Later in debate ---

[Lord Whitty (Lab)]

My Lords, the move on fuel duty is not in the right direction as far as the climate change agenda is concerned. Even where the Chancellor generally moved in the right direction, he did so in a very limited way—for example, exempting in his post-Brexit freedom VAT on certain energy efficiency products, of which I thoroughly approve. However, he should have gone much further; the anomaly in the construction industry is that construction and demolition do not attract VAT whereas refurbishment and retrofit do. It is no use restricting the lifting of VAT to just some areas; it puts the whole balance for developers and planners in favour of demolition and rebuild and against refitting in a climate-resilient way. Demolition and rebuild have a considerable impact on emissions, both through the disposal of construction material and through rebuild using vast amounts of material such as glass and steel, which are highly fossil fuel-intensive.

I will say a few other words about the Statement which do not relate to the Government’s agenda. The Chancellor had rather more room for manoeuvre than he expected a few months earlier. He could have used that money to tackle effectively the immediate cost of living crisis, in which the lowest quantile is most likely to suffer the most. For example, he could have restored to universal credit the £30 he had just taken away or replaced it in some other way in the social security and taxation system. In view of escalating energy bills, he could have provided additional support to low-income groups to deal with them. He could have extended help to households to meet the costs of insulation and energy. He could have reduced the initial rate of taxation, which would primarily benefit the lowest paid, instead of fiddling with the national insurance threshold—I do not object to its equalisation principle, but the move benefits everybody, and actually those in the higher tax rates more than others.

The Chancellor could have provided direct support for public transport instead of cuts in fuel duty. In addition to their environmental effects, larger cars with larger mileages tend to be driven by the more affluent groups, and many in the lower quintile do not have cars at all. The Chancellor could have spent more money on the care service or the NHS. He could have spent the money on enhancing the NHS.

We expect Chancellors to use the last few minutes of their speech for the thing they think is most important. Despite the cost of living being so high, it was very odd that this Chancellor used it to announce a future cut in income tax, which will come into play just before the next general election. He may have thought that was clever, but even his most rabid supporters in the press have not seen it that way. They have seen this as a political move which discredits him and takes some of the gloss off him. The ploy has not worked. Neither the public nor the press has thought this was a brilliant move, and reserving most of his headroom for that announcement has taken away from what he ought to be doing both in the immediate cost of living crisis and the longer-term climate challenge.