Income Tax (Charge)

Ben Lake Excerpts

Thursday 28th October 2021 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

Diolch, Mr Deputy Speaker. It is a pleasure to follow the hon. Member for Crewe and Nantwich (Dr Mullan). To start on a point of consensus, I agree that these are very difficult times and I, for one, do not envy the Chancellor for having to navigate some of the large events on the horizon.

In the course of the debate so far, a couple of themes have emerged as ones that we all want to highlight, but on which we perhaps have different points of view: climate, the cost of living crisis and levelling up. I hope to be able to comment on each in turn in the time that I have.

On the climate theme, I echo and share the bemusement of the right hon. Member for Doncaster North (Edward Miliband). In his opening remarks, he called into question the Chancellor’s commitment to net zero and the decarbonisation of the economy. In response, the Secretary of State referred the House to the net zero strategy that the Government announced last week as evidence of the Chancellor’s credentials. However, questions remain unanswered. The Institute for Government has suggested that the net zero strategy lacked detail on who will pay and offered only vague hints about a tax strategy to support the transition to net zero. In advance of COP26, we had hoped to see a bit more of that detail in yesterday’s Budget, but we did not receive it.

My hon. Friend the Member for Glasgow Central (Alison Thewliss) spoke eloquently on another theme that hon. Members have touched on: the cost of living crisis. She made a very good argument about how rising costs of living on the one hand and relatively low wage growth on the other have produced a situation where households are struggling. Government Members will perhaps accuse me of being negative or pessimistic, but we might agree that some of the OBR’s analysis is quite staggering. Real household disposable incomes across the UK are expected to grow by only some 0.8% over the next five years, and if we look at next year, we see that the OBR suggests that net inflation will peak sooner than expected and that growth will be only about 0.3%.

I do not think that I am being too negative and pessimistic, but if I am guilty of that, it may well be because—unless my accent has not already betrayed me—I represent a constituency in Wales. In Wales, gross disposable household income in 2019 was already only 80.5% of the UK average—the second lowest in the UK—so households in Wales, in particular, have experienced a longer-term cost of living crisis, which hon. Members from across the nation were very keen to see some action on in yesterday’s Budget.

I cannot deny that the announcements on the minimum wage and improvements to universal credit were welcome steps in the right direction, but welcome though the change in the taper rate and the working allowance were, they come on the back of about £6 million being taken from families in Ceredigion through the removal of the uplift.

The Chancellor and the Government were correct to remove the cap on public sector pay. Plaid Cymru has championed that for several years so we were very glad to see it included in yesterday’s Budget statement. However, questions need to be answered that will determine how much of a difference it will make to people in the public sector. Ceredigion has a high number of public sector employees, so an important question for us is: how much will public sector wages increase and how will that compare with inflation? That is not my being pessimistic; we just need to bear that concern in mind when we talk about whether some of these policies will be transformational and make a real difference to people’s pockets.

Let me focus on the rising costs of living. Energy bills have been mentioned and I agree with some of those concerns. Something that particularly affects rural areas such as Ceredigion is the price of fuel, and several hon. Members have spoken very effectively about that topic. The hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones), the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) and the hon. Member for Newton Abbot (Anne Marie Morris) mentioned how the fuel duty freeze helps somewhat to insulate rural households against the rising cost.

We all acknowledge that the freezing of duel duty—I might even get plaudits for this from those on the Treasury Bench—is an incredibly expensive policy. We cannot deny that and it is reasonable to suggest that, in the not-too-distant future, we may need to reconsider whether the fuel duty policy is sustainable, not least for financial reasons, but also given our decarbonisation commitments. Should we come to that politically prickly and technical discussion, we should perhaps look to extend schemes such as the rural duty relief scheme so that those living in rural areas, who, at the moment, do not have the benefit of a sophisticated public transport infrastructure, should not have to shoulder the burden of unrealistic costs. That would also perhaps introduce an incentive, for areas that have the luxury of fantastic public transport, to choose to use public transport more often than cars. In rural areas, however, as I think hon. Members would acknowledge, there is not that level of choice at the moment, and, sadly, using a car is still a necessity. Whether they are nurses working in hospitals or teachers going to school, people need to use cars. In approaching the big questions of decarbonisation, we need to think about how to ensure that there is investment in public transport in rural areas so that abandoning cars is an option, but for the time being, 80% of commutes in Wales are still by car.

Another pressure that I hoped would be addressed yesterday is the added burden on small businesses from next year’s increase in national insurance contributions. When I speak to businesses in Ceredigion, they are grateful to the Treasury for VAT reductions; they have told me, especially in the hospitality sector, that they have been able not only to invest savings in their business to improve productivity and improve their offer, but to increase wages for staff. If we are serious about moving to a higher-wage economy, perhaps we could return to that point. It could be considered a missed opportunity in yesterday’s Budget, so I encourage Members on the Treasury Bench to think about it for the future.

The Federation of Small Businesses has asked for an increase in the employment allowance for small businesses and simplification of the process of making tax digital, both of which are concerns that businesses in Ceredigion have raised with me. Any movement on those fronts would be welcome: they would not only support employment and reduce the risk of higher taxes being passed on as higher prices, but offer much-needed support to our high streets.

I would like us to return to the discussion about retrofitting homes. It was a missed opportunity yesterday not to look at improving the energy efficiency of our housing stock. A report by the Future Generations Commissioner for Wales suggests that a commitment from the UK Government of some £360 million a year would go a long way towards bringing the quality of housing stock in Wales up to, I think, energy performance certificate rating C. The benefits are evident: it would not only create much-needed skilled jobs, but improve the efficiency of homes and reduce household bills by some £418 per year once the work was completed. It would also be good for the environment, of course.

I will leave it there, because I have run out of time. Thank you, Mr Deputy Speaker, for calling me so soon in the debate.