Budget Resolutions

Debate between Adam Afriyie and Robert Jenrick

Wednesday 27th October 2021 Commons Chamber

[Robert Jenrick (Newark) (Con)]

It is a pleasure to follow the hon. Member for Wallasey (Dame Angela Eagle). Unlike her, having recently left the Cabinet, I am grateful to the Treasury for all the effort that it has made to keep us informed of what will be in the Budget—I have never approached a Budget knowing quite as much in advance. However, I would still like to speak about a couple of elements that I think are quite significant.

One of those elements is the change in the universal credit taper rate, which will help millions of people throughout the country. It underlines a fundamental Conservative objective, which is to make work pay, and I strongly welcome it. I also think it important that we have announced an increase in the national living wage, which, again, will help us to build that higher-wage, higher-productivity economy that is so fundamental to our economic plan.

I also want to put on the record my praise for the Chancellor, which is contrary to some of the remarks we have heard today. I think that his stewardship of the economy over an extraordinary year and a half is enormously to his credit, and I think that that is reflected in the public confidence that he has built up for himself and for the Government over that period. We are seeing the economy bouncing back better—still scarred, but in a significantly better position than many people would have imagined. We are seeing employment in an immeasurably stronger position than we would have imagined just a few months ago, along with a commensurate surge in tax revenues that contrasts with the gloomy forecasts from the Office for Budget Responsibility the last time we heard from the Chancellor. I share the view of my right hon. Friend the Member for Wokingham (John Redwood): we have to question how useful the OBR is when its forecasts are so far out, and have to hope that it can raise its game in the future.

Let me make a few brief points. First, I think the Chancellor was right to continue to highlight the cost of living as a major issue. I do not think we should assume that inflation will be fleeting and transitory; I think it could be with us for a long time, which is why it is important that we take action. The action on the universal credit taper rate will help, as will the national living wage, and the changes in fuel duty and other items will be useful as well, but we must prepare ourselves—steel ourselves—for the likelihood that this year and most of next year will be marked by a significant pressure on people on low and medium incomes.

Secondly, I am very concerned about the current level of public spending, and the size of the state. We must be honest with ourselves, and acknowledge that on top of the £400 billion of unplanned outlay that was required to get us through the covid response, we are now seeing the size of the state increase to the largest that it has been in peacetime. The amount of public expenditure today is higher than it was during the financial crisis; it is about the same as it was under Denis Healey in 1976, when he had to go cap in hand to the International Monetary Fund. The size of the state is large, and we have heard from the Chancellor today that it is going to grow even further, beyond 41% of national income. History suggests that that is not a sensible long-term level for public expenditure, because it starts to crowd out the private sector, and makes it hard to build and sustain the free-market, free-enterprise economy that we all want to see.

That leads me to two points. One is that we have to ensure that this public money is well spent. I think particularly of the NHS, which is soon to account for 40% of total current expenditure. That is a significant amount. Many of us, and our constituents, want to see the NHS properly funded, but a heavy burden of responsibility now falls on the Department of Health and Social Care to ensure that the money is well spent and is accompanied by reform. I remember previous settlements, including the one referred to by my right hon. Friend the Member for Maidenhead (Mrs May). Just a couple of years ago, money was given to the NHS without a proper plan for reform and was not well spent, so I hope that this money will be spent differently.

The second point is the difference between funding for day-to-day purposes and funding that will genuinely increase productivity in the economy. At the end of the day, as many Members have already said, it is all about productivity growth. The forecasts that the Chancellor set out earlier today were for one or two years, if we are to believe the OBR, of very significant growth in the economy, and then a return to low levels of growth— 1% or 1.3%—with perhaps a decade of low growth ahead of us.

We have to improve productivity, and in that respect there was much to commend in the Budget and the spending review: significant increases in infrastructure, particularly the sorts of infrastructure, such as roads, railways and broadband, that will genuinely improve productivity and boost the economy, and the work on skills—in particular lifelong learning, which for too long has been a weakness in our country.

[Adam Afriyie (Windsor) (Con)]

My right hon. Friend is making a powerful speech about productivity. Does he share my delight that the Chancellor announced tax relief for investment—certainly in the short term and hopefully in the longer term? Hopefully, that will enable businesses to do the heavy lifting rather than the Government trying to do it for them.

[Robert Jenrick]

I agree entirely with my hon. Friend. At the end of the day, the way we boost productivity is by backing the private sector in the economy. The way we grow the economy is to make the UK a more competitive place to do business. That will mean ensuring that we attract investment from overseas. It will also mean correcting the poor levels of trade that we have seen in recent years, as has been mentioned. That needs to change. It also means ensuring that we as a Government bring forward some of the supply-side reforms that we will have to implement if we are going to make ourselves more innovative and competitive.

Tax Avoidance

Debate between Adam Afriyie and Robert Jenrick

Wednesday 11th February 2015 Commons Chamber

[Robert Jenrick (Newark) (Con)]

I want to say a few words about the international dimension of what we have been discussing today, because I think that Opposition Members have been, at the very least, unkind about the Government’s record of tackling the issue internationally.

A real problem confronts most developed countries. Corporate tax receipts remain largely flat, and they face the challenge of raising tax in a global economy in which technology and the internet are upending old industries and old tax-raising methods. There is also the complexity of modern businesses and, indeed, modern lives, with mobile entrepreneurs and people who live in, and marry, those from other jurisdictions. That is the reality of the modern tax landscape.

The issues we have discussed today are inevitably international, therefore, and the solutions will come from working with international partners and some of the processes and projects like the BEPS project we have heard about today. The question is how one could increase tax receipts, harnessing some moral and Government pressure to encourage businesses without damaging the perception of this country and other developed economies in the world as good places to do business—how, essentially, we can shrink the grey areas of tax, particularly for sophisticated businesses and entrepreneurs, without seriously compromising certainty for businesses and entrepreneurs of all sizes and incomes as they do business around the world. That is exactly what this Government have set out to do, and with a level of priority that we have not seen in any previous Government—certainly not in the previous 13 years of the Labour Administration.

All the international comparisons are extremely favourable. My old law school read, the Tax Journal, in its special report on tax avoidance, talked about the measures being taken by the OECD countries to tackle base erosion and profit sharing—the BEPS project. It said:

“The UK government is widely regarded as one of the more enthusiastic proponents of reform.”

That is a fair assessment of what the Minister and my right hon. Friend the Chancellor have set out to do. We only have to look at the position paper published by the Treasury with the Budget last year to see the Government setting out aggressively to tackle tax evasion and avoidance, alongside moves to make the UK a most competitive tax environment.

[Adam Afriyie (Windsor) (Con)]

My hon. Friend is making a clear and powerful speech. Does he agree that, with £24 billion collected from large corporates in corporation tax over the last year—a record for the country—the measures for tackling anti-avoidance while encouraging businesses to operate here are clearly working very well?

[Robert Jenrick]

I agree entirely with my hon. Friend’s comments.

The Tax Journal sets out its analysis of all the countries in the world that are taking this seriously. It lists all the major, modern, 21st century challenges—whether the digital economy, the hybrid mismatch arrangements, treaty abuse, re-examining transfer pricing, CFC rules, harmful tax practices, artificial avoidance of private equity status. The Government have a strong record of tackling each and every one of those areas and taking them forward in the international community. Indeed, this survey concluded that the Government are not only taking this seriously, but are in the vanguard of each and every one of those and 15 other areas, which will be the major issues facing tax policy in the years to come. These areas sound dry and technical, but this is the reality of tax reform. It is not about soundbites and playing to the gallery; it is about methodical research and reform to improve the situation and taking it forward with our partners around the world.

As we have heard, we are already seeing the fruits of this work. The idea that this Government are in the pocket of tax advisers and lawyers on these issues is fanciful, and anyone who says that clearly has not met them recently. I was sitting on the back row of a meeting at which the Financial Secretary was speaking to Accountancy Age, I think, some time ago, and he was being given a difficult time because the Government have pursued some of the most aggressive tax reforms, which many feel have fundamentally changed the relationship between companies and individuals and HMRC and the state. I and many others have some concerns about those—such as the risk to privacy and the workability of requiring a beneficial register to be published for all companies in England and Wales—but we cannot consider these to be anything other than radical approaches. Allowing HMRC to claw back from individuals’ bank accounts and arguably looking retrospectively at tax schemes do not have much sympathy from many Members of the House. They are undoubtedly radical attempts to take this issue forward.

The Government have a very strong record in this area of which they should be proud. We must take this forward.