Autumn Budget 2024

Baroness Kramer Excerpts

Monday 11th November 2024 Lords Chamber

[Baroness Kramer (LD)]

My Lords, let me begin by congratulating the noble Lord, Lord Booth-Smith, on his maiden speech in which I think he warned us to be alert for the unknown unknowns. We should take note of that, and I hope to pick it up later in my speech. I also have to apologise to the House: this has been a brilliant, incredibly varied debate, so this will be a very limited summation on my part.

I do not dispute the tough situation faced by the new Labour Government. Noble Lords heard that same tone and concern from these Benches, and it was very much picked up on the Labour Benches. I noted that the noble Lords, Lord Hannett and Lord Bach, and many others raised that issue. Public services are, frankly, in a dire state, both through the lack of funding and the lack of meaningful reform, as we heard from the noble Lord, Lord Murphy of Torfaen, and quite a variety of speakers on both sides of the House. We also heard discussion of an economy that has been, at best, stagnant for years. I too, like the noble Baroness, Lady Wheatcroft, commend the speech of the noble Baroness, Lady Moyo, who grasped a very difficult nettle and expressed it well for the House as a whole. There have been dismal levels of investment, persistently low productivity, as the noble Baroness, Lady Neville-Rolfe picked up and elaborated on, and workforce and skill shortages, as the noble Lords, Lord Fox, Lord Liddle, Lord Monks, and others addressed.

I noticed that, when speakers on the Conservative Benches talked about economic hard times, they were keen to focus on the impact of Covid and the consequences of the Russian invasion of Ukraine, but they were remarkably silent on the impact of Brexit—the hardest blow, the deepest scar and the most persistent to our economy. I say that to the noble Lord, Lord Johnson, and the noble Baroness, Lady Lea, who both addressed those issues and carefully ignored the B-word. This House will not be fooled by that omission.

I recognise that we have to move on from the past. My party recognised in its manifesto—I am picking up the words of my noble friend Lord Razzall—that taxes would have to be raised in the circumstances that we face, but we chose a different taxation approach to that chosen by the Government. I think the noble Lord, Lord Young, also proposed a different range of taxes. Let me repeat that we were looking at the oil and gas companies, the banks, social media companies, online banking companies, share buybacks and reform of capital gains. Let me suggest to the Government that they look very closely at the package that we proposed. It comes to some £7 billion to £10 billion per year. I suggest they might want to use it not to increase the overall tax take but to allow them to remove elements of the tax rises they have announced that, on reflection, they find are perverse or are hitting groups unable to cope. I will elaborate a little.

We have become, in many ways, the voice of the social care sector. I know others have long been engaged, but that is the way it is breaking today. We welcome in the Budget the increase in the earnings threshold for those on carer’s allowance, as did many others throughout the debate, but we, like many others, are utterly dismayed that the Budget had so little to offer—some £600 million—for social care services, some of which are very precarious. I join others—I think this was mentioned by the noble Lord, Lord Empey, by my noble friends Lord Fox, Lady Tyler and Lord Shipley, and on the Labour Benches by the noble Lord, Lord Whitty, and the noble Baroness, Lady Lister—who called for the Government at the very least to give this sector an exemption from the increase in employers’ NICs to remove the precarious situation in which it sits and to recognise that GPs need the same exemption just to meet the need for appointments. That group should be treated like the public part of the public sector of the NHS. We in this House widely recognise that without a major step change in social care and primary care, much of the money going into the NHS will simply be swallowed up.

My party has also found itself, in the most extraordinary way, becoming the voice of small business. Micro businesses receive some protection from tax increases through the higher employment allowance, but the increase in employers’ NICs and especially the lower starting threshold directly worsen one of the UK’s major economic problems: the failure of firms to scale up from micro. We are very good at starting businesses, but they fail to scale up to small and medium. This new tax burden is simply going to make that problem worse. Will the Government look again? Upscaling is vital to achieve growth.

I want to put in a particular plea for the 700,000 working people who are contractors working through umbrella companies and who pay their own employers’ NICs. Very few will be in a position to renegotiate their contracts to cover the increased cost. The noble Earl, Lord Clancarty, talked about the creative industries in this context. The noble Lords, Lord Bilimoria, Lord Londesborough and Lord Howell, addressed the issues of small firms, and we ask the Government to look again.

I think more people in this debate spoke on the future of family farms than on any other issue. We join in those deep concerns that many families will be forced to sell. Those families are the backbone of our rural communities and our agriculture industry. The noble Earl, Lord Devon, made a tour de force speech in describing the issue, and he was joined by many others including the noble Lords, Lord de Clifford, Lord Berkeley of Knighton, Lord Shinkwin and Lord Empey, the noble Duke, the Duke of Wellington, my noble friend Lady Humphreys, who spoke clearly from these Benches about the problem in Wales, and the right reverend Prelate the Bishop of Newcastle. They were the kind of speeches that we have to ask the Government to take notice of. Again, let us remember that our party has offered a different tax route that could enable the Government to have the flexibility to make a change.

Only the noble Lord, Lord Oates, mentioned the 50% rise in the cap on bus fares for many young and minimum-wage workers. This could be extraordinary; it could cost them £500 a year. I will not have another discussion on the winter fuel allowance. It was a mistake; I have said it before and I will not go through it again. But my party also believes very strongly that independent schools should not face VAT; education is an investment in our future. I join the noble Lord, Lord Lexden, in the comments that he made.

Somebody talked extensively about business rate reform, but I forgot to note whom. It should have gone much further than just the sticking plasters in this Budget, and even the sticking plasters exclude many types of small businesses.

On our Benches, my noble friend Lord Fox expressed great support for the industrial strategy, except to say that the question is: how do you deliver it? We will be watching that.

Many people also addressed the change in the fiscal rules. I want to say something to the noble Lord, Lord Lamont. He is possibly one of the most literate in economics and finance in our House, but he did not seem to grasp that the new fiscal rule deals with net financial liabilities. A new hospital building, or a new school, does not fall into that set of definitions; it is investments that yield a financial return. I feel that I am coming to the rescue of the Government on this one. We seem to have extraordinary confusion.

I will say to the Government, as I have said it before, that it will be important to see how those guardrails work. There is an extraordinary capacity for additional borrowing that I suspect the Government will not take advantage of if they use their guardrails properly, but we will have to observe those guardrails and make sure. This is not an issue raised just by my party. It was raised also by the noble Lords, Lord Burns, Lord O’Neill, Lord Young, Lord Altrincham, Lord Monks and Lord Empey—my apologies, some of those remarks were on skills, but a whole range of people discussed that set of issues.

The Government have tied their colours to the mast and will be judged on improvements in public services, especially the NHS, and growing the economy. I want to finish by going back to the point raised by the noble Lord, Lord Booth-Smith, about the unknown unknowns. We are in very turbulent times, and global events matter. If we find ourselves facing a protectionist trade war, the shock will hit UK growth by more than 0.5% each year. If the US abandons Ukraine, leaving the Baltics and Poland exposed to Putin, or if Taiwan is seized by China, the consequences will more than reverberate here. They will affect everything in our lives, including the economy.

US disengagement from countering climate change would destabilise the world, not only immediately in the economy but in driving many new waves of migration. I join the noble Lord, Lord Razzall, and others in saying that this is the time to build alliances with those with whom we have common cause. That means getting closer to Europe far more rapidly than the Government have previously anticipated. We need to rebuild our economic ties to the EU and remove the trade barriers raised by the Tories; it is an obvious route. It was an issue raised by others, but I want to stress it from these Benches: this is an issue that has gone from a nice-to-have to urgent.