Income Tax (Charge)

Alex Davies-Jones Excerpts

Thursday 28th October 2021 Commons Chamber

[Edward Miliband]

My hon. Friend puts it incredibly well. That is why the boosterism of the Chancellor saying that it is an age of optimism will ring so hollow for so many people in our country.

You cannot build a new economy when you are hitting working families with a triple whammy of higher national insurance, higher prices and cuts to universal credit. That is more of the same. It is the Conservative economic model—year upon year upon year of stagnation for the British people.

Let me next come to the question of support for business in the Budget—the direct responsibility of the Business Secretary. Our businesses have been heroic during the covid crisis, closing their doors when asked and stepping up when they needed to. But while the economy may have reopened, the crisis is not over for so many of them. They face debts incurred during covid. They face the costs of the supply chain crisis. The Office for Budget Responsibility is very interesting on that, because of course there is a global dimension to it but there is definitely a British dimension too. They face the failure to plan for the changes arising as a result of Brexit—the OBR is very informative on this—and they face the energy price crisis.

Against this backdrop, I say gently to the Business Secretary that, as he will know, many of our businesses feel that the Government are engaged in finger pointing rather than finding solutions, with haulage firms told it is all their fault, when they warned the Government for months about the impending HGV crisis; those in the manufacturing industry—briefed against, not, to be fair, by him but by the Treasury—told that they are running their businesses badly because energy costs are soaring; and exporters tearing their hair out about the red tape of the trade agreement with the EU but told they just need to get their act together. What businesses want most of all, as he will know, is not to have a war with the Government but for their voice to be heard.

To be fair to the Business Secretary, a few weeks ago he did try to act to hear the voice of those facing the most acute short-term challenge—energy-intensive industries facing the energy price crisis. He knows that this is no ordinary situation. Our industries are facing not just the normal differential of price with our competitors but differentials far, far higher. I have met the Steel Council; he has met the Steel Council. He knows how tough it is. We know that he knows how tough it is because, to be fair, he told us two weeks ago how bad things were and said that he was talking to the Treasury. The Treasury was not very polite in return. He is chuckling from a sedentary position; I am on his side on this one. The next day, having obviously decided that he did not like being briefed against, he announced—I had my dealings with the Treasury when I was in government but I do not remember ever quite doing this—that he had made a formal request to the Treasury for support for energy-intensive industries. He was taking a stand.

That was on Monday 12 October, more than two weeks ago. On that day, a source told the BBC, rather encouragingly, that

“everyone in government understands the importance of this situation. We need to solve this quickly.”

It might have been the Prime Minister, who was on holiday at the time, or somebody else. That created a real expectation that this Budget would take action on this pressing issue that the Business Secretary has been publicly championing. So where is the help for our glass industry, our steel industry, our chemicals industry and our ceramics industry? These are some of the most important jobs in our country, valued in communities across all regions and nations of the UK. Does this not speak volumes about the Treasury’s—and, I am afraid, the Government’s—wanton disregard for some of the most foundational industries in our country?

[Alex Davies-Jones (Pontypridd) (Lab)]

It is also important that the House remembers that 3 million people have still been completely excluded and forgotten by this Government since March last year. There was nothing for them in yesterday’s Budget. They have been neglected yet again.

[Edward Miliband]

That is a very important point. The championing of ExcludedUK is a very important issue, and my hon. Friend is right to point it out.

This is about choices. Amazon gets help from the super-deduction, but our energy intensives are left out in the cold. I hope that in his reply, the Business Secretary will tell us where things stand for the energy-intensive industries, because they have been in touch with me saying, “What is going on? What is happening?” There is just complete silence from the Chancellor.

Let me talk about our high street businesses, because they face higher national insurance and business rates. I welcome some of the short-term measures in yesterday’s Budget, but it is not unfair to say that fundamental reform has been ducked yet again. The CBI said this in its Budget response yesterday:

“But the hard truth is that wholesale reform to unlock investment was rejected today. The Government missed the opportunity to truly reform a business rates system that diminishes Britain’s high streets and factories.”

I was quite mystified yesterday, because the Chancellor attacked the idea of fundamental reform of business rates, a system with a genuinely level playing field between traditional high streets and internet businesses. Four successive Tory manifestos have promised precisely that reform: 2010, 2015, 2017 and 2019.

When the Business Secretary was a humble Back Bencher—I think he was writing “Britannia Unchained” at this point—he was pamphleteering. I am not against pamphleteering; I have done some of it myself. He was a Back Bencher with his ideas, and he said we need

“a system that is fair for both traditional and internet companies.”

He is now the Business Secretary. Why does he not deliver it? He knows, because he talks to the business community a lot, that this is a massive issue for our high street businesses. They rightly say, “Look at the burden on us and look at the burden on tech businesses. Look at the unfairness.” That is why my hon. Friend the Member for Leeds West is so right to champion this issue.

The longer-term issue we face is how to create the growing economy that we need. Not for the first time, the Government talk a good game. We have the branding of the Budget. We know that the Chancellor is incredibly keen on branding, and his own personal branding more than anything. The Government are a bit of a sideline. It is more Rishi branding than Government branding, I think it is fair to say. There are some knowing looks from Members on the Government Benches. The Rishi branding of the Budget is the “plan for growth”. I have to say that a plan for growth that has growth of 1.3% at the end of the Parliament is not much of a plan. Growth will be just 1.7% when the economy returns to trend. That is woeful by historical standards. It is the biggest challenge we face as a country. This is an important point, because when people wonder how the Government manage to combine the highest taxes for 60 years and public services that are creaking, the terrible growth performance of our economy is a significant part of the answer.

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[Alex Davies-Jones (Pontypridd) (Lab)]

It is a pleasure to follow my right hon. Friend the Member for East Ham (Stephen Timms). I agreed with much of what he said, particularly with regard to state pensions. It was disappointing yesterday not to hear anything in support of our 1950s women who have been betrayed by this Government, as have our miners whose pensions have been completely neglected for many, many years. As always, it is a privilege to speak in the debate today, and I am grateful to be able to raise the concerns on behalf of residents and businesses across Pontypridd and Taff Ely.

We truly are in a cost of living crisis. The long-term problems caused by this Government’s inaction on our crumbling economy are severely impacting working people. Fundamentally, it is working people and our businesses up and down the country who are paying the price. Along with so many colleagues on the Opposition Benches, I have spoken passionately and at length about the need to support people through what will inevitably be a difficult winter. And how do the Government respond? By piling costs on working people and businesses at the worst possible time, hitting them with tax rises and a cut in universal credit while of course giving breaks to bankers and big companies such as Amazon. This is an absolute car crash of an attempt at economic recovery, all at a time when our taxes are at the highest they have been since the war, but with even less than ever in return.

The sheer irony of the Chancellor standing in this place announcing billions of pounds of investment at a time when his Government voted for the devastating cut to universal credit only a few weeks ago certainly is not lost on me or on the residents in my area. Indeed, I had hoped that, in the previous Budget, the Chancellor was at last understanding the fundamental impact that a broken welfare system is having on people, when he finally admitted that the previous levels of universal credit simply were not enough for people to live on. Once again, though, I am disappointed, but ultimately not surprised, by the Chancellor’s actions in recent weeks.

With that in mind, it would of course be remiss of me not to make reference to the devastating knock-on impact that this Government are having on people living in Wales. Put simply, this Budget simply does not deliver for Wales or the United Kingdom. It does not deliver on vital funding priorities, such as the long-term funding required for urgent work to repair Wales’s coal tips. Indeed, only earlier this week the Welsh Government published data showing the true extent of Wales’s challenge in increasing safety around coal tip sites. The Welsh Government have identified 2,456 tips across Wales. Although I welcome the joint approach by the UK Government and Welsh Government to set up a coal tip safety taskforce, it is clear that we still have some way to go on long-term investment. Despite a cross-party joint letter endorsed by all 22 council leaders in Wales, requesting funding from the UK Government, we see no commitment to an ongoing programme of funding, even though the issues with coal tips predate devolution in Wales.

This Budget, along with pleas for help and support, finally provided an opportunity for the Government to give some much-needed reassurance to communities such as mine in Pontypridd, and across Taff Ely and Rhondda Cynon Taf, that remain in the shadow of their industrial legacy. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), who is a good friend, reminded Members that only last week we commemorated the 55th anniversary of the Aberfan disaster. That catastrophic collapse of a colliery spoil tip, even years down the line, serves as a poignant reminder of how dangerous coal tips can be. Although I recognise that safety measures have vastly improved since that horrendous disaster, it is only with long-term, sustainable financial support that the issue can truly be tackled at its root. With that in mind, it is extremely disappointing that despite having the opportunity to make a positive change, the Chancellor has once again failed people in our coalfield communities, with no money for the coal tips and no justice for miners’ pensions.

I welcome the announcement of funding for our community arts centre in Pontypridd and the dualling of the A4119 at Coedely in my constituency. I commend the outstanding RCT County Borough Council and our leader, Andrew Morgan, for all the incredible hard work they have put in to ensure that our levelling-up bids were successful. But let us not forget that although this money is welcome—and we are grateful—the £120 million for Wales is actually a £255 million cut on the promise to replace the EU funding. The failure to accept the responsibility for coal tips will cost Wales £600 million. Wales will get no consequentials for transport infrastructure, and the universal credit cut will do nothing to tackle poverty, including in-work poverty. This is Wales not levelling up, but being short-changed by the Budget.

If the Business Secretary were in his place, I would take the opportunity to congratulate him on becoming a father and on the birth of his child. I am extremely passionate about an affordable and flexible childcare system that works for us all. Time and again, I have raised the injustice of the paltry parental leave allowances currently on offer from this Government, and that extends to neonatal leave. Although I was pleased to see the Government announce plans to introduce neonatal leave that will cover up to 12 weeks when a baby is receiving neonatal care, the policy simply does not go far enough. The changes announced are unlikely to come into force until 2023 at the earliest, leaving around 300,000 families with babies who will be spending time in neonatal care in the next three years forgotten and left behind once again. Once again, I find myself urging the Chancellor to be bolder in his commitments to parents who are going through what can only be described as absolute hell on earth.

Ultimately, I fear that this is a half-baked Budget, with hundreds of thousands of people being left behind once again. At the last Budget, I urged the Chancellor to learn from previous mistakes and rapidly to learn some lessons from the pandemic. Instead, we are seeing the same age-old policies, which will have a huge impact on working people. I urge him and the Financial Secretary to take these concerns seriously, and to act reasonably and responsibly. Diolch.

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[Lucy Frazer]

I will press on at the moment.

Just as the Budget seeks to help working families, so it supports businesses as they continue to recover from the pandemic, with a particular focus on encouraging them to invest. Small businesses are the lifeblood of the British economy. Their contribution to this country, day in, day out, is extraordinary, and we want to support businesses to grow, so the Budget introduces changes such as the new 50% relief for eligible retail, hospitality and leisure properties—a tax cut worth almost £1.7 billion. The Budget also cancels next year’s planned increase in the business rates multiplier—a tax cut worth £4.6 billion for businesses. Taken together, the Budget cuts to business rates amount to support of £7 billion over the next five years. I am really pleased that that was welcomed by my hon. Friend the Member for Newton Abbot. The right hon. Member for East Ham (Stephen Timms) suggested that this was not significant support, but in fact it is the largest support by way of business rates over a period of time, save for the coronavirus measures.

I would like to address one point that was raised by the hon. Member for North Tyneside (Mary Glindon). There was a suggestion that freeports—one of our measures that significantly support business—were not generating economic activity. Let me say that we are already seeing evidence of new investments at freeports. DP World, for example, is investing £300 million at the Thames freeport.

Let me turn now to investment. We are boosting innovation by investing in our world-leading research and development sector, maintaining our target to increase annual public R&D investment to £22 billion, and spending £20 billion every year by 2024-25. On top of initiatives such as Help to Grow and the Future Fund, we are increasing regional financing to help businesses innovate and grow, and providing £1.6 billion for the British Business Bank to expand the UK-wide regional angels programme and establish new regional funds. As my hon. Friend the Member for Sedgefield (Paul Howell) recognised, it is extremely important to improve our science education and investment, and that is exactly what we are doing. We want this country to be the most exciting and dynamic country in the world for business, and it will be.

The position in relation to the devolved Administrations was mentioned by several Members, including the hon. Members for Merthyr Tydfil and Rhymney (Gerald Jones) and for Pontypridd (Alex Davies-Jones), and my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell). Some of them mentioned funding for the coal tips in Wales. I point out that in this Budget the devolved Administrations have had the biggest funding settlement ever, with the biggest annual block grants in real terms of any spending review settlement since devolution in 1998. I do hope, as the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said, that that money is spent well.

[Alex Davies-Jones]

The Minister mentions the block grant that is given to the devolved nations, but surely she and the Government recognise that the £600 million needed for the coal tips legacy cannot be paid for by the Welsh Government alone. It was the UK that benefited from those coal tips, so it cannot be for the Welsh Government to pay for the legacy on their own, especially when it predates devolution.