Budget Resolutions

John Baron Excerpts

Monday 11th March 2024 Commons Chamber

[Wes Streeting (Ilford North) (Lab)]

I would have raised this as a point of order, Madam Deputy Speaker, but, given that we are here, before I get right to the heart of the debate, I want to place on the record the revulsion that Opposition Members feel at Frank Hester, a Conservative party donor who has given more than £10 million to the party in the last year, saying of the right hon. Member for Hackney North and Stoke Newington (Ms Abbott) that she makes him

“want to hate all black women”

and that she

“should be shot”.

That is utterly revolting, racist and inciteful language, which has no place in our politics and public life. Given the vast sums that he has given not just to the Conservative party but to the Prime Minister, if they have any integrity whatsoever, they will give every single penny piece back and apologise to the right hon. Member for those appalling comments. I am sure that, at some point in the debate, those on the Treasury Bench will want to confirm both those things.

Turning to the Budget, the Government have summed up what is obvious to everyone in Britain: 14 years of Conservative incompetence has broken Britain’s economy. It is all there in black and white. The economy is back in recession. We have the highest tax burden in 70 years, a record tax-raising Parliament, wages lower today than in 2010 and households worse off than at the last election. We have a fall in living standards over an entire Parliament for the first time in history. From next month, we have a real-terms cut per person in NHS funding, when the NHS is going through the worst crisis in its history. What did this Budget contribute to that appalling record? We have

“millions of low and middle-income workers being dragged into paying higher tax. And unprecedented levels of low-wage, low-skilled migration are damaging the economy. The government could have fixed both problems today but did not.”

That is not my conclusion, but the words of the former Home Secretary and next leader of the Conservative party, the right hon. and learned Member for Fareham (Suella Braverman).

[Mr John Baron (Basildon and Billericay) (Con)]

Will the hon. Member give way?

[Wes Streeting]

I am sure the hon. Member would like to leap to defend the current leader or his future leader—which is it?

[Mr Baron]

The shadow Secretary of State underplays the strength of the British economy, with record employment and an unemployment rate one third below the EU average. I put this to him: the tax take is higher than we on the Conservative Benches would like, but the key reason is that in the pandemic, it cost a lot to make sure we left nobody behind. We had one of the most generous furlough schemes in the western world, for example. Would he have done anything differently?

[Wes Streeting]

We have never doubted the challenges that the pandemic has placed on the public finances or our public services, but that does not explain the fundamental weakness of the British economy going into the pandemic or the fact that NHS waiting lists were at record levels before the pandemic. Nevertheless, it is good to see the Conservative party at least acknowledge that major crises do have an impact on public finances.

--- Later in debate ---

[Mr John Baron (Basildon and Billericay) (Con)]

I commend the Government for this Budget, which I think is more radical than first meets the eye. I say that as someone who is probably making their last Budget speech. As some of my right hon. and hon. Friends know, after 23 years I shall be stepping down at the next general election. However, I am pleased that the Budget incorporates a number of ideas that many Conservative Members and, to be fair, a few Opposition Members have been campaigning on for a number of years.

Individual measures that were confirmed are welcome, including the state pension going up by 8.5% this year, the minimum wage going up by 9.8% and national insurance contributions coming down by another 2%, which—together with January’s cut—will add £900 to the average salary. Those are all good measures, particularly the minimum wage going up as much as it has. Helping the lower paid is not only the right thing to do but the fair thing to do, and over the long term, it might also encourage businesses to invest more. If we want a high-tech, high-wage, high-growth economy, that is one of the measures that has to be core to the policy.

Let us be clear: there is no doubt that taxes are higher than we would like. I raised that issue with the Prime Minister at Prime Minister’s questions only last month, but I commended him for the support that he oversaw during the pandemic. We were responding to a once-in-a-generation pandemic, and making sure that we had one of the most generous furlough schemes and covid support packages anywhere in the world was the right thing to do. As my hon. Friend the Member for North Herefordshire (Sir Bill Wiggin) said, it protected over 11 million jobs. I do not think any Government in their right mind would have walked away from that commitment, and it enabled us to bounce back quicker when it came to the economic recovery.

I was also pleased to hear about the British ISA, alongside other measures to encourage greater domestic investment in British equities. We should remember that the UK stock market is the gateway to financial services in this country, which contribute something like 10% of gross domestic product—that should not be underestimated. Some of us wrote to the Chancellor about this in advance of the Budget, and I was pleased to see that measures were forthcoming, in particular the emphasis on pension funds to examine their support of UK equities. In recent decades, our pension funds have divested themselves of UK equities by almost 90%. It has now got to a point at which we need to encourage greater investment in the great British companies of the future. Not only will this boost growth and employment, but it should encourage these firms to remain in the UK, rather than going abroad. It should also slow down the worryingly large number of British firms being bought by foreign investors at knock-down prices, especially when these firms contribute directly to our strategic industries, including those essential for our security and defence.

I would briefly suggest that the Budget is radical in that I think it represents a shift in thinking, possibly on both sides of the House. In itself, the national insurance contributions cut is welcome. I have always believed that national insurance is a tax on jobs, and that is why I defied my own party’s Whip to vote against our previous attempts—not attempts, but policy—to increase national insurance contributions. However, there has been a marked shift in the tax burden in not just this Budget, but the previous Budget, away from workers to most other forms of income, including savings and pensions, and that is where its radicalism lies.

Previously, Governments of both sides have used national insurance increases to help fund public services, including the NHS. I personally very much welcome this shift. Unemployment is a social evil that corrodes society, and we should remember that, although we have record employment and an unemployment rate one third below the EU average, there should be no complacency. National insurance cuts will further make work pay, and could be self-funding if something like a couple of hundred thousand more people come into work.

I would briefly like to raise the ongoing issue of the cost disclosure regime for investment companies, otherwise known as investment trusts, which is hindering investment in key sectors. I draw the House’s attention to my entry in the Register of Members’ Financial Interests. For those who do not know, investment companies, otherwise known as investment trusts, are like a Shell or a Glaxo, but instead of running oil or selling clothes and food, they actually manage investments. They are quite important to the UK economy: nearly 40% of all FTSE 250 companies are investment trusts and four of the FTSE 100 companies are investment trusts. However, because of a quirk in EU retained law, UK investment trusts are having to roll up their corporate and investment management costs when disclosing a cost figure on the European MiFID—markets in financial instruments directive—template feed used by the industry. This double accounting makes investment trusts look very expensive. It does not happen in other countries, and the cost that other companies in other jurisdictions put on the EMT feed, or their equivalent, is zero.

Investors are shying away from investment companies, discounts are widening and no new money is going into sectors such as renewable energy and infrastructure. Previously, sector investment trusts raised tens of billions of pounds for these valuable sectors. Even worse, companies are having to buy back their own shares, withdrawing investment from those industries. This is nonsense. Investment companies have a long and proud track record of helping investors to channel money into much-needed sectors. Being close-ended—and, because their shares are traded, not the assets, the share price already reflects the company’s cost, in my view—there should be no costings at all. The Financial Conduct Authority has gone as far as it believes it can without a change in the law. We have had conversations with the Government—with the Chancellor and the Economic Secretary—and a draft statutory instrument is before us. The consultation response has seen over 300 industry stakeholders and investment houses calling for investment trusts to be excluded as a constituent composite investment, which would solve the problem. Another SI is on the way, and discussions are ongoing.

Finally, in the other place, Baroness Altmann, Baroness Bowles and others are supporting a private Member’s Bill called the Alternative Investment Fund Designation Bill, which received good cross-party support on Second Reading on 1 March. I hope the Government will support it. Readers of The Times this morning will have seen the letter that Baroness Altmann, Baroness Bowles, me, and a large number of investment company professionals have written, setting out our continued concern at this situation. I recommend a visit to the website costdisclosure.co.uk, which sets out the issue in greater detail. I hope the Government are listening. There are ongoing conversations, and I know there are those on the Front Bench, such as my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), who have also participated in trying to resolve this issue. It needs to be resolved quickly, but as I say, these discussions are ongoing, and I am looking forward to hearing some positive news.