Budget Resolutions and Economic Situation

Kit Malthouse Excerpts

Tuesday 21st March 2023 Commons Chamber

[Kit Malthouse (North West Hampshire) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests.

It was a good Budget, a fine Budget, filled with lots of delights, with something in there for everybody. In deference to the Opposition Front Bench, it had Osbornian overtones, filled with smart, clever tactical manoeuvres to fan the flicker of growth that there is in the economy, hopefully into a flame.

There are three areas that I want to raise with the Minister in my five minutes. While we have made some progress, we need to go further and do some thinking before the autumn, and indeed the Budget next year.

First, on childcare, in my brief time at the Department for Education, I was pleased to put together some options that were going to form what we were calling “a childcare big bang”. I was happy to see a number of those appear in the Budget, not least the expansion of the provision of free hours of care for under twos. However, I am sure the Chief Secretary to the Treasury, my right hon. Friend the Member for Salisbury (John Glen), recognises that the system is still very complicated and still has a number of anomalies in it, not least the £100,000 threshold, which keeps a lot of highly productive women out of the workforce who are punished for going back by having their free hours withdrawn.

In addition, there are seven different ways for childminders to receive payment for the care they give. Given that the Government are putting lots of money in at the front-end of the equation, they need to think carefully about supply. I urge my right hon. Friend to look at what more we can do to expand childminder agencies in particular across the country as they are the only proactive tool we have for recruiting childminders. I also urge him to think more flexibly about what we can do to allow families to choose for themselves what kind of care they want to give.

I urge my right hon. Friend to consider conflating the childminding budget, which now rises to about £9 billion, with the child benefit budget, which is now £12 billion although that is falling, and other ancillary budgets, into one huge budget that would allow us to think carefully about what reform we could put in place to support families, not just in looking after children but encouraging them to have more children. As my right hon. Friend will know, we are not replacing ourselves in this country. We have a demographic problem and we have to encourage those who want to have children to do so. More thinking in that area would be great.

The second area that I wish to raise is corporation tax. I concur with my hon. Friend the Member for Stockton South (Matt Vickers) in wanting corporation tax to be lower, not least because I believe in the Laffer curve; I do not believe that we will necessarily raise that much more by raising corporation tax rates. It raises a question in my mind about how we tax companies and why we continue to chase them for corporation tax when we know that the international and online nature of business makes it very difficult to tax such organisations.

When he was the Chancellor, the Prime Minister put us into an international cabal of minimum corporation tax chargers across the world in an attempt to track all these companies down and tax all their profits, but if we went for a sales tax—if we focused on consumption and on those businesses’ sales—their domicile would be irrelevant, because the tax would relate to where their transactions had taken place. The huge international businesses that operate online and that we are currently chasing around the world would come into our taxation envelope, and we would find it easier to collect tax from them.

The third big area is, in many ways, the missed strategic move in the Budget. It did not address one of the fundamental problems with the operation of our economy, which is the nature, spread and dynamism of capital within it. Happily, the Government have talked expansively about science, technology and innovation; they obviously recognise that we are on the threshold of the fourth great advance in human understanding and ingenuity. Our country caught the first two advances—the industrial revolution and the industrialisation at the turn of the 20th century—but we broadly missed the advance that took place in the 1960s and ’70s. That was largely because our economy was sclerotic, but, critically, it was also because we had forgotten a basic tenet of capitalism: if we want the private sector to weigh in behind science, technology and advancement, we have to let capital rip. We have to deregulate it. We have to make sure that profit can be made from taking risk.

Critically, we also have to allow capital to spread into as many hands as possible. We talk a lot about housing in this country, and about putting houses in the hands of young people, but we never talk about putting shares in the hands of young people and encouraging them to own shares in the businesses for which they work and to participate in a capitalist economy.

[Several hon. Members rose—]