Energy (oil and gas) profits levy

Jonathan Edwards Excerpts

Tuesday 22nd November 2022 Commons Chamber

[James Cartlidge]

The hon. Gentleman asks a perfectly good question. He will be aware that we have made huge progress on closing the tax gap, which effectively means that we are making huge progress on cracking down on tax avoidance. There is always further to go, but we have scored significant savings from those measures over the forecast period.

The upshot is what the Chancellor rightly called a “balanced path to stability”. We are tackling inflation to help all our constituents with the cost of living, while at the same time providing the stability that business needs to be able to invest and grow. We want low taxes and sound money, but sound money has to come first.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

What worries me about the Budget is the lack of focus on how the economy will grow in subsequent years. If we have an austerity Budget, public investment is falling; exports are falling because of Brexit; and consumer spending is going to fall because household budgets are being crushed by the cost of living crisis. That leaves business investment. Are businesses seriously going to invest when all other areas of growth are collapsing?

[James Cartlidge]

I am grateful to the hon. Gentleman. The key issue for growth at the moment is inflation. What on earth do we think is causing consumers to rein back spending? The answer is that this year, this country will have to find an additional £150 billion to pay for the higher cost of energy—that is the equivalent of an entire NHS. Yes, we are taking difficult decisions, but that is the best way to ensure that we get inflation down, in partnership with the independent Bank of England, and build the platform of stability that businesses need to grow and invest. On the point about Brexit, if it was causing the problems, why do the Netherlands and Germany have higher inflation? He should think about that.

On tax, the House will have heard the Chancellor say that we will be fair by asking those who have more to contribute more, and by avoiding tax rises that most damage growth. That means, for example, that while some taxes are rising, we have not raised headline rates of taxation. Tax as a percentage of GDP, meanwhile, will increase by just 1% over the next five years.

On personal taxes, we are reducing the threshold at which the 45p rate becomes payable from £150,000 to £125,140, which means that those earning £150,000 or more will pay just over £1,200 more a year. At the same time, we are maintaining at current levels the income tax personal allowance, the higher rate threshold, the main national insurance thresholds and the inheritance tax thresholds for a further two years until April 2028.