Income Tax (Charge)

Andrew Jones Excerpts

Thursday 28th October 2021 Commons Chamber

[Andrew Jones (Harrogate and Knaresborough) (Con)]

It is always a great pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss), the right hon. Member for Doncaster North (Edward Miliband) and the Secretary of State for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng).

I have to say that only one of those speeches was remotely optimistic and captured the positive nature of yesterday’s Budget. If we think back to the data we were given at the start of the Chancellor’s Budget speech, it is clearly excellent news that we are recovering from the pandemic faster than expected. We return to pre-pandemic levels in the economy by the end of this year. Considering the decline 300 years ago after the Great Frost, that is a remarkable achievement. Unemployment was predicted to be 12%. It is now 5.2%, which is a huge difference—that is 2 million more people in work. On the impact of the Budget on Harrogate and Knaresborough, I think it will be very helpful and very well received. I will focus on just a few areas, if I may—I am conscious of your point about time, Madam Deputy Speaker—the first of which is low-paid work.

The change to the universal credit taper is extremely positive and very significant. Not everybody knows what it is, but we in this Chamber do because we discuss it regularly. Moving from 63% to 55% simply means that people will be able to keep more of their money by not losing benefits if they earn more. That directly incentivises work and is a tax cut, and if we combine it with the increase in the work allowance, it represents a tax cut of £2.2 billion. It is easy to bandy around very big numbers, but I am more conscious about what that means to individual households: basically, it makes people £1,000 a year better off in their pockets. That is a significant figure.

Universal credit has been part of Harrogate for a considerable period. We were one of its development locations and we are the location for the managed migration pilot. I have been following it very closely during that period. I have met those implementing it at the jobcentre, those receiving it and employers, and I have absolutely no doubt that it has helped more people into work.

On the national living wage, it is very positive that we have moved to £9.50 an hour. That is a 6.6% increase and a big pay rise for 2 million people. Some sectors of the economy will be more exposed to this than others. Harrogate and Knaresborough has a large hospitality, retail and care sector, which will benefit disproportionately from the increase in the national living wage, and I welcome that.

Cutting business rates by 50% for 90% of the businesses in hospitality, retail and leisure is also significant for Harrogate and Knaresborough. We are one of the top 50 constituencies in the country for the hospitality sector. North Yorkshire will be particularly affected by this measure; in the top 10%, we also have Thirsk and Malton, Scarborough and Whitby and York Central. To use figures from UKHospitality from the 2019 general election—in other words, before the pandemic—nearly 9,500 people in Harrogate and Knaresborough worked in the hospitality sector. They have had a very tough time. This measure will help those businesses continue to invest and stay strong and will therefore be very welcome in the sectors affected. We have a strong, high-quality retail offer—not just in Harrogate and Knaresborough, but in much of the north—with a large number of independents across a number of different sectors, so I welcome these measures, as it has been a tough time.

On business rates more broadly, I welcome the points made about the frequency of revaluations, but business rates need reform in the longer term. This is an analogue tax in a digital economy. It is still clumsy and it does not reflect how the economy works, but the measures that are being taken are positive and I welcome them.

Turning to alcohol duty, in Harrogate and Knaresborough we have one vineyard, two distilleries and five breweries—we are obviously very thirsty—and just outside the area we have many more. The number of businesses involved is therefore high, as is the number of workers in those companies as a result. We have quality producers. Yorkshire beer is famous, and rightly so. It is positive that we are seeing the 3p cut in duty for draft beers. Pubs have also had a grim time over the past few years. They have a social function in our communities that is not easy to quantify, but we all know that pubs are at the heart of village and town life. The cut is therefore helpful for the on-trade.

The small brewers relief, which has been a feature of the industry for a while, is being extended to cider. Let me give a slight hint of a warning: the small brewers relief has had a disincentivising effect on investment and growth in the beer industry. I discovered that early on in my time in the Treasury. I clearly saw businesses that had stopped growing—in fact, they directly told me that—because they had reached the top of the tax breaks. That is clearly disincentivising. When we have a tax structure that disincentivises growth, it needs to be reformed. The Treasury has been doing that. I started the review—I have been followed by many others since—but we now need to press on with that. I am absolutely sure that we have the correct policy, with a tapered effect, but we need to implement it. We need to make sure that as the relief is extended to cider, we do not delay implementation or make the mistakes that we have seen with beer.

I am conscious of the time, Madam Deputy Speaker, but let me say a few words on levelling up. Communities have been left behind in our country for far too long. We in this House have often talked about things such as the north-south divide or the northern powerhouse, but this issue is far broader in scale than just north-south. There are communities all over the UK that have been left behind, even in the most affluent areas. I like the focus on levelling up, but we must also recognise that this is a long-term issue and that the situation is hard to change. Governments of all colours over many years have tried to make progress on that and not succeeded sufficiently. There are a number of different elements that can make a real difference, such as infrastructure, skills and devolution.

The Budget is strong on investment in infrastructure, with £35 billion for rail infrastructure, which includes opening some of the closed lines, and £31 billion for roads, to remove bottlenecks. We can add to that the investment in broadband, so infrastructure will clearly get a significant benefit. One issue that does not get quite so much coverage is bus networks, to which we are seeing big changes around the UK. In implementing the Bus Services Act 2017, we are seeing people move towards enhanced partnerships or possibly franchising. We have seen Budget funding go towards zero-emission buses. These are very positive developments. They are about connecting people to jobs, making it much easier for larger cities in particular to develop sustainable transport plans, which we all know is the right thing to do, and making it easier overall to move people and goods around the UK.

The infrastructure provisions are positive. However, having spent much of my time here talking about infrastructure and being at the Department for Transport, I actually think that skills policy is the most significant thing that we can use to improve the levelling up around this country. That is how we will improve the productivity of our nation. Big changes will be required in the skills environment. Our economy is going digital, and that trend has been compounded by the pandemic. We are transforming our economy as we go to net zero. The number of jobs required in new industries will be fantastic, so this is a transforming moment. It is also clear that the Secretary of State for Business, Energy and Industrial Strategy, the Chief Secretary to the Treasury and the Chancellor clearly recognise that, which is why we are seeing a 26% overall increase in the skills budget across this Parliament. Other areas matter for levelling up—we have discussed the levelling-up funds—but all these measures add up to a strong performance on a difficult issue.

There are other areas of interest in the Budget, but let me highlight what I consider to be a risk: we are very exposed to changes in interest rates on our public borrowing. Yesterday, the Chancellor quantified that by saying that a 1% increase would lead to a £23 billion cost, so we are exposed, and we are greatly sensitised to change. That means two things: the pressure must be kept up to keep inflation down, and we must make every effort to reduce our borrowing. I thought the positive words from the Chancellor about fiscal conservatism at the end of his speech yesterday did that very well. The good management of our economy has meant that we will also meet the criteria for returning to spending 0.7% of gross national income on overseas aid in 2024. I was very pleased to see that.

Overall, this Budget is positive. It is optimistic. It is a direct contrast to the messages from the Opposition parties, giving us their customary mixture of unfunded spending promises and, “Vote for us—the future’s gloomy”. That strategy has not worked for them, but they have not learned. This is about making our country better. The prospects are brighter. The Budget showed that in the data that the Chancellor highlighted, and it will only make the situation even better.