Amendment of the Law

Jeremy Lefroy Excerpts

Monday 26th March 2012 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

For me, the most significant figures in the Budget are in tables D.3 and D.4 in the Red Book, which set out receipts and expenditure over the next five years. Total tax receipts are increasing by £153 billion, from £550 billion to £703 billion. At the same time, cash expenditure will rise from £696 billion to £756 billion—a rise of £60 billion. However, of that increase, £17 billion alone will be down to the increase in debt interest. The cost of public pensions is rising by £7 billion, to £15.4 billion, net of contributions, while net expenditure on social security and the state pension will rise by £25 billion. In broad terms, over the next five years we have to raise an extra £150 billion a year in taxes to eliminate the deficit and pay for the increases in interest, social security, pensions and, of course, health.

The only way to raise such additional revenue—which will be an extremely difficult task—and tackle the curse of unemployment is by being completely open for business. The Budget, as this week’s cover of The Economist says, gives that clear sign. We have a reduction in the corporation tax rate, the patent box, above-the-line research and development tax credit reliefs for the creative sector, deregulation and, indeed, better regulation. Is that enough? No, it is not enough. The loan guarantee fund will also be extremely important, but, again, we will have to watch that carefully—not every six months in statements, but every month—to find out whether our businesses are getting the credit they will need for growth. My hon. Friend the Member for Stourbridge (Margot James) mentioned exports, which are vital. The improvement in the export credit guarantee scheme is important, but it is still a fraction of the help that the Germans give their exporters. There need not be a cost to the Treasury; rather, the money can be recouped through the premiums on the scheme.

I have a number of brief suggestions to make in the last couple of minutes available to me. First, there has been concern about the effect of the reliefs on charities. At present, the tax relief fund for the excess above the standard rate is returned to the taxpayer—in the form of a tax refund—who can then keep it. It should surely be possible to require that this tax refund be paid to a charity; indeed, if it were paid in that way, it could be taken outside the suggested cap. As for the age-related allowance, it is important that fair notice be given—as it is with anything to do with retirement, whether changing the retirement age or changing tax arrangements. Although I understand the argument for bringing tax allowances into line over a period, the Government might consider letting personal allowances catch up with the age-related allowance. The additional cost of doing so could be paid for—I believe we must always pay for the things we suggest—by further restrictions on tax relief for higher rate pension contributions.

That brings me to a further suggestion. In the summary of Government receipts, income tax receipts are shown as net of everything except tax credits, yet the reliefs given on income tax are, in effect, a major item of expenditure. We should be explicit in the Government accounts about the cost of such reliefs—whether they are against pension or charitable contributions, or are enterprise reliefs—and not just net them off against income tax.

Finally, I have a couple of caveats. The first is about regional pay, which I suggest should be considered carefully. I am sceptical about its value, but I am willing to listen to the arguments. However, I am extremely sceptical about the value of relaxing Sunday trading rules during the Olympics, and I am firmly opposed to any permanent relaxation. This is not simply a question of keeping Sunday special as a time for families, friends or worship, although I for one consider that to be important; it is also about protecting the interests of those who work in the retail trade. However, in general, I welcome what this Government are doing to make Britain open for business.