Budget Resolutions

Debate between Rushanara Ali and Mel Stride

Thursday 7th March 2024 Commons Chamber

[The Secretary of State for Work and Pensions (Mel Stride)]

Thank you, Madam Deputy Speaker. The right hon. Lady commenced her remarks by saying much about where Labour is on tax. She criticised the aspiration that the Government rightly have to abolish national insurance at some point in the future. She rather disingenuously repositioned that as a firm commitment, rather than an aspiration, but let us set that to one side.

The right hon. Lady knows all about firm commitments, because we had a firm commitment from her to £28 billion- worth of spending every year over the forecast period. That did not survive contact with reality. Indeed, she has little to say that is original. When she writes about economics, she has to cut and paste from Wikipedia. When she trumpeted her ruinous £28 billion spending plan, she ultimately had to U-turn and run for the hills. For this shadow Chancellor, when it is not cut and paste, it is cut and run. [Interruption.] I thought the right hon. Lady would like that.

The right hon. Lady has also accepted our tax measures as set out in yesterday’s Budget, including the abolition of non-dom status and the windfall tax on oil and gas. She has hypothecated the money raised from those two measures many times over—for the NHS, dentistry, breakfast clubs and so on. Now that she has accepted all the tax measures in the Budget, I invite her to come back to the Dispatch Box; I will give way to her if she will let us know whether she will U-turn again on her spending commitments on the NHS and dentistry, or whether she will put up taxes and borrowing. I would be very happy to hear from her—all right, perhaps not.

[Rushanara Ali]

When the Secretary of State was Chair of the Treasury Committee, he was keen on Office for Budget Responsibility assessments and forecasts. Indeed, he argued for them, but his then Prime Minister and Chancellor failed to listen to him and crashed the economy. He and his Government want to pursue the aspiration, as he now calls it, of scrapping national insurance contributions altogether, which would cost £48 billion a year. Will he commit to seeking an OBR forecast and assessment of that, and showing how the Government would pay for that?

[Mel Stride]

Let me talk about the general point that the right hon. Member for Leeds West (Rachel Reeves) made about the tax burden. It is as if history has been erased from her mind. The fact is that the covid pandemic shrank the economy overnight by 10%, and this Government stepped in, supported jobs, and saved 10 million jobs as a result of the intervention that we came forward with. It is as if it has been erased from her memory that a war is going on between Russia and Ukraine, and that that has led to an increase in energy prices and inflation. This Government have stepped in to support the most vulnerable in society, including families, pensioners, and the disabled up and down this country. The Government provided £400 billion of support across that period, and in all candour, I do not believe that there was a single occasion on which she opposed any of our interventions. She was up for spending the money to support people, but not up for recognising that it has to be repaid. That is why the tax burden is indeed increasing.

To go back to the point about the OBR’s economic and fiscal outlook raised by the hon. Member for Bethnal Green and Bow (Rushanara Ali), the OBR makes it clear that the measures taken yesterday in the Budget mean that the tax burden will be lower than was forecast in the autumn, as a result of the management of the economy and the reduction in taxes that my right hon. Friend the Chancellor brought forward.

--- Later in debate ---

[Rushanara Ali]

I am incredibly grateful to the Minister for giving way a second time. I remind him that the tax burden has gone up by £27 billion in the last year, and it will go up by £19 billion after the election because of decisions his party made. People who earn less than £19,000 will be worse off because of the Budget. Two decades of lost pay growth—that is the record of his Government over the last 14 years.

[Mel Stride]

I thought I had already covered this point, but the reality is that the tax burden has had to go up to pay for all the support we provided around covid, and because of the inflationary pressures created by a war on European soil. The hon. Lady cannot get away from the fact that through this fiscal event, and the previous one, 27 million hard-working people, employed in businesses up and down the country, will be better off to the extent of £900 per year. Some 2 million self-employed people will be £650 per year better off. She talks about those earning less than £19,000, but those many millions of people who earn above £19,000 will have a lower tax burden than before, when we take into account the interplay of the freezing of thresholds and the cuts in national insurance.

Budget Resolutions

Debate between Rushanara Ali and Mel Stride

Wednesday 11th March 2020 Commons Chamber

[Mel Stride]

I am afraid I have to completely disagree. To give them credit, the Government were in the vanguard of making the commitment to net zero by 2050. Indeed, the Chancellor made a very important announcement just now about a huge investment in carbon capture and storage, which could be a part of further revolutionising the production of power and energy in our country, and making sure it is greener.

Turing briefly to the remarks the Chancellor made in respect of the Green Book and how investments are analysed, it is very important that we get that right, not least in encouraging green investment. The Chancellor might want to look at the kind of discount rates we apply to green investment propositions to make sure that the Government are encouraged to invest upfront rather than further back in time. On levelling up, the Green Book needs to accommodate the fact that we need to get away from the natural returns we get in London and the south-east, and get investment out into the regions, particularly the south-west of England. [Interruption.] I see the Chancellor nodding again. That all helps to meet our net zero quest.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I am very grateful to the right hon. Gentleman, a fellow member and Chair of the Treasury Committee, for giving way. Does he agree that while there should be a rebalancing, it is important to recognise that inequality has to be tackled in cities like London as well as in towns and across the country? For instance, my constituency has the highest rate of child poverty in the country. We need a much more nuanced and granular response to inequality. Will he say something about the fact that the Chancellor has left out much-needed investment in local government? The investment in housing is welcome, but it needs to go a lot further to tackle the housing crisis.

[Mel Stride]

On where the investment is going, I have yet to pore over the granular detail, as the hon. Lady suggests, in the Red Book. What I do know, with regard to looking after the less advantaged and the lowest paid in our society, is that important reference was made by the Chancellor to the increase in the national living wage, worth £1,000 a year. Of course, this is a Government who increased the personal allowance, taking millions of people, particularly the lowest paid, out of tax altogether. The changes to the threshold of national insurance contributions to £9,500 will also serve that particular purpose.

Turning to the support that the Chancellor has identified for small and medium-sized enterprises, this is absolutely vital and lies at the core of how we will cope, or otherwise, with what is to follow over the coming weeks and months. We face both a supply and demand-side effect for SMEs. The Bank of England dropped the base rate by 0.5% today, which was clearly co-ordinated with the Budget, and made changes to the counter-cyclical buffers that banks have to hold. That is all well and good and will help banks to put more money into those businesses, but the real issue will be around the fiscal measures that the Chancellor has announced, particularly relating to business rates, time-to-pay arrangements and the deferral of taxation.

I will just say to the Chancellor that the Committee will look at three particular aspects, the first of which is how quickly help can be got out there and whether HMRC is spring-loaded to ensure that businesses are aware of what is available and how to take advantage of it as quickly as possible. I am encouraged by his comments about the helpline. Secondly, is it enough support? That needs to be monitored very carefully. Finally, there is the targeting aspect. Businesses in particular sectors are hurting more than others. We need to make sure that additional help is provided for them, just as we did in similar circumstances in the 2001 foot and mouth crisis, when the agricultural sector needed support. We need to recognise that there are particular types of businesses in that situation.

I am conscious of the time that I have taken and the fact that other Members will want to come in, so I will end by touching on a specific measure that the Chancellor raised: entrepreneurs’ relief. He has taken a brave step, and the right step, in that respect. He is absolutely right that making the changes that he suggested—a reduction from £10 million to £1 million—is not about beating up on the self-employed or entrepreneurs; it is about making sure that tax reliefs are fit for purpose. The changes that he has made, including the increase in R&D tax credits, the more generous treatment in the structures and building allowance and the changes in the employment allowance, will be much more meaningful and powerful in supporting small businesses than entrepreneurs’ relief ever was.