Finance Bill

Baroness Kramer Excerpts

2nd reading & 3rd reading & Committee negatived
Tuesday 20th December 2022 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I begin by picking up a point made by the noble Lord, Lord Rogan. I was so shocked to learn earlier that energy payments had not been received by people in Northern Ireland. Following that debate, I called a number of friends to discuss the matter. Can the Minister take on that issue personally by going back to his colleagues, putting his shoulder to the wheel and doing everything to get those payments released? I have been talking to people who have been putting on the heating for one hour a day during the bitter cold, because they are simply terrified of not being able to meet the energy bills when they arrive—that is no good for anyone’s health, including their mental health. If the payments are genuinely coming, they need to come in a timely fashion. Anything that the Minister can do will be exceedingly important; it will probably take personal intervention and some championing of the issue, and I hope that he will feel able to do that.

On the more general issues, I have the sense that we have covered this territory on a quite a number of occasions before, which is why there are not many speakers here today. Indeed, for a moment, I was tempted to pray in aid my previous speeches—I did not quite have the courage—but I will try to be fairly brief.

For many years, some people have opined that the financial markets are irrelevant and have argued for huge surges in borrowing. That argument is now dead, at least for the time being, and the need for fiscal responsibility has been recognised. However, the chaotic performance of the Government has stripped away the flexibility we could have expected, and ordinary people are paying for that in interest rates which feed into mortgages, rents and business costs.

Today, we are debating the Finance Bill; it is a bill about taxation. In a sense, I will pick up the point made by the noble Lord, Lord Davies of Brixton. The Bill lays out starkly the freezing of thresholds, but not in a way that most people will understand well enough to recognise the impact it will have on their personal finances. The noble Lord suggested that it would be far better to increase the rate rather than play with the threshold—he has a good point—but, at the very least, the Government should restore some faith in politics by informing the 6 million people who will be significantly impacted as to what is about to happen to their tax bill. For a large number, their tax bill will be pushed up by approximately £2,000. If they are informed, at least they can plan ahead and will be aware of that increase. Indeed, because of the Autumn Statement, people are also facing a 5% increase in council tax, £500 more in energy bills and the soaring cost of living which we all know about. That all adds up to a situation of misery.

I was also stunned to hear the commentators, when we got the last inflation figure, explain that it was rising by only 10.7%. That is extraordinary. Of course, the basics are rising far faster and by a figure much closer to 15%. It is an extraordinarily difficult time for a huge range of people, but especially for those on the lowest incomes.

The windfall tax on oil and gas companies in the Bill still leaves those companies with an unforgiveable loophole. Shell and BP have almost entirely avoided paying the windfall tax this year, despite absolutely record profits running between $6 billion and $8 billion for most of the recent quarters, thanks to the offsets for investment in oil and gas exploration. We are talking about a doubly wrong policy: even the banks are now starting to recognise that the game is up for investments in new oil and gas exploration. HSBC, the largest global bank, has announced that it will no longer finance such projects and will redirect its lending to achieve net zero.

The UK public are losing out on tax that should be paid now; then, in a few years’ time, they will have to rescue the stranded assets of oil and gas companies because their value will have disappeared under the pressures to get to net zero. This is complete madness. Can the Government go away and completely rethink the strategy that they have embedded in the Bill?

The banks also do well from this Bill. The cuts to their levy and surcharge amount to a staggering £18 billion over the next five years. At the same time, I do not see the banks seriously sharing the revenue from the higher interest rates that come on the loans that they make with any of their savers. There might be a slight increase of a few basis points, but nothing significant, while these banks are now recording their best profits for years. I refer the Minister to quotes in the Financial Times from senior bankers talking about their third-quarter profits. “An embarrassment of riches” was one of the phrases—or, much more honestly, “a cha-ching moment”. That was another phrase quoted from one of those bankers. When we start looking for money to deal, for example, with the condition of the nurses, £18 billion would frankly go a fairly long way to getting a lot of that done.

I am not sure that anyone understands why the Government have cancelled the R&D additional tax relief for SMEs, although the Minister spoke at length. It is driving so many small firms away from innovation. I saw today a piece from Coadec, the Coalition for a Digital Economy. That is the group made up of those driving small start-up innovators which are absolutely critical to growth in the British economy. It says:

“Based on conversations we’ve had with startups so far, we are concerned that the R&D tax credit startups will receive after the changes kick in in April 2023 will drop by between 30-40%. This is a significant and damaging impact”.


If those firms are not achieving the innovation that they are designed to achieve and which the R&D tax credit was instrumental in driving forward, we will not achieve the kind of growth that the Government talk about very casually. Talk about an erroneous decision; I hope that the Government will look at it again rapidly.

Even with all the pain embedded in the Bill, the outlook is still very bleak. Despite the tax increases, we are still looking at savage cuts to unprotected public services beginning in 2025. Despite all the talk about money for infrastructure, public capital expenditure, including infrastructure investment, absolutely plummets from 2025. Even with all that plummeting, the borrowing situation improves only marginally in five years’ time.

The Government claim that they have a plan for growth but what they have is really just a list of bitty policies, most of which have already been announced. We have nothing on the scale necessary to deal with our productivity, which has flat-lined for a decade; we have no industrial strategy, never mind a meaningful green industrial strategy. We have nothing to revive our 15% collapse in trade or reverse our sharp drop in exports to the EU in manufacturing and services. We have no strategy to restore business investment, which has hit the lowest level in living memory, and we have absolutely no measures to deal with our workforce shortage. This Bill should have been part of a coherent and holistic plan for targeted growth. Instead, we have a gathering of fairly disparate policies, none of which pull together to achieve what this country must achieve.

I conclude by referring for a moment to the public service strikes, an issue raised by the noble Baroness, Lady Bennett of Manor Castle. It is, frankly, completely beyond me and, I think, beyond most ordinary people that this Government refuse to negotiate with all matters in dispute on the table, including nurses’ pay. There are always compromises available and they will, in the end, have to be made. I do not think the public should be made to suffer through this already cruel winter while the inevitable compromises are delayed. I say to this Government that they will not break the nurses, the ambulance paramedics or anyone else in the public sector, and on the whole the public are behind them. It is this Victorian attitude of hostility to their workforce that risks breaking a good share of the British people as they go through this experience of the most dire winter they have been through in years.