Economy: Spring Statement

Lord Balfe Excerpts

Thursday 31st March 2022 Grand Committee

[Lord Balfe (Con)]

My Lords, this is a very interesting debate. Virtually every speech from this side of the Room has been somewhat critical, so my noble friend Lord Northbrook has quite something to live up to as the last speaker from this side. It is always a pleasure to follow the noble Lord, Lord Bird, because he always says things that are different, interesting and relevant.

The truth of the matter is that, when I left the LSE in the late 1960s, my first job was at the Department of Health and Social Security as research officer for the Committee on One Parent Families. We were looking at poverty. Sadly, many of the problems we looked at are still there today. Although society is much richer, I sometimes despair when I am told that children cannot be fed by their families and about other distressing signs of poverty which were there literally 50-odd years ago. I wonder where our social policies are taking us.

I am afraid that I will disappoint the noble Lord, Lord Bird, because I have a more benevolent view of the Treasury. Many civil servants there ask the questions which should be asked by civil servants in the departments putting forward bids for money, because some of them are, frankly, lamentably thought out. The Treasury plays a useful role, but it is the place where the money is found. Politics is where the policies are found. That is what we have clearly got wrong—the basic policies.

One of the consequences of Covid is that we have spent vast, unimaginable sums of money. Think what would have happened if we had not had Covid, but had had a Labour Government under Mr Corbyn, and they decided to spend half as much as has been spent on Covid; we would probably have had a revolution by now. We are locked into a straitjacket of expenditure. We probably need to spend quite a bit more, but I wonder if, even then, we would lift people out of poverty.

I have spent a lot of my life concentrating on the Nordic countries. A country such as Sweden has exemplary levels of welfare statism, but suffers from many of the problems that we do today. We have to find a way of tackling them.

Several years ago, I was at a meeting with my now noble friend Lord Hammond of Runnymede, when he was Chancellor. This was an internal Conservative Party meeting and we were all invited to make a point. I think I was the 11th to speak and, when he replied, he said, “You are speaker number 11 but the first who has suggested any way to save money, as opposed to spending it.” People are often struck that everybody wants to spend, particularly in our House, but nobody seems to have any idea where the money is going to come from.

Let me make a few suggestions. There are many things in our society that are unequal. I will start with a couple of very small ones. Why do we not tax the heating allowance? It would be quite easy. Why do we not abolish the heating allowance? Why should we not add £4 to everybody’s weekly pension and tax it, so that you would get 40p in the pound back from people like me and save a lot of civil servants, a lot of letters and things going out?

There is another even more ridiculous payment: why do we have a bureaucracy that, in a very short time, will pay me an extra 25p a week for achieving the age of 80? We do not need it. It would be easy to legislate for a differential pension. There is a very strong case for that, but I will not go into it. If you look at pensioner poverty, one of the things that strikes you is that much of it comes flooding in around the age of 75, when the capital equipment that people have built up during their lives to have on retirement starts to wear out. The real poverty is often among the very aged rather than those who I think of as new aged. This 25p is a farce.

Moving on from that, there are lots of vacancies for jobs. If there is still poverty, the main way we should be tackling it is by looking at the minimum wage, at whether it is a living wage and whether it needs to go up. I firmly believe that work is good and we should do everything we can to encourage people to work. There is something in the old trade union saying about the dignity of work. There is something about the discipline of getting up and doing something, and being part of an institution where you have a role and are needed. I would look first at how we can get more people into work.

As I do every weekend, I took my dog for a walk last weekend. We went around the usual places and, because I envisaged being here today, I had a look and no fewer than five premises, in a walk of half an hour, had signs in their windows saying, “Hiring—staff wanted”. This was in Cambridge. There are lots of jobs around and this is one of the things we have to tackle: how we get people into jobs and how we then make the jobs pay at a level that will then lift them out of poverty.

I welcome the change in the threshold for national insurance because it has always struck me as inexplicable that there should be different thresholds for income tax and national insurance. It is surely common sense that they should start at the same level. However, if we are really serious then I would like to suggest one or two other things that we could do, and I am sure the noble Lord, Lord Sikka, will agree with these. First, we have a huge number of properties standing effectively empty, as investments, disfiguring our capital city in particular. When I was young, which is a long time ago, we had Schedule A, which was a tax on property. Is there any reason why we should not do that now?

I once had tea with a tribal chieftain in north Yemen. As things do, we got round to talking about how you finance yourself. He said, “Oh, a hut tax.” I said, “Really?” This was around the time when Thatcher was introducing her council tax reforms. He said, “Yes. No one can move their hut. We can go round and collect the money on it. We can have a look at it, see how big it is and judge how much wealth they’ve probably got.” I suggest that maybe for the most expensive properties we should have an annual tax based on their value. I live in a house that I am told by my council tax bill could be worth up to £320,000. I assume the local authority cannot count because the one next door recently sold for £1.9 million. We could also look at the American system of linking the tax to a rise in the value determined by house price inflation in an area. We constantly get ourselves in a mess with revaluation—the last one was in 1991—but you could find a way of tying it in and you could have a wider differential, and that would bring in some money.

I only have a couple more points. The next is that we need the transparency register that is often talked about. How we are going to chase Russians, goodness only knows. So many things are hidden. Look at the Questions asked by the noble Lord, Lord Sikka—I am not acting as his PR agent—about Companies House and the laughable way it works; I cannot remember exactly but I think there is someone registered as a director, one of whose names is Hitler. The fact is that we are almost totally non-transparent when it comes to these matters. If we try to sanction any Russians, we are going to find out that we cannot even work out who they are.

Right at the top of this Government, we need a tendency and a commitment to open up the state so that we know who owns what and the people who own a lot pay what is, after all, only a reasonable amount of their income towards keeping the state going. I am afraid that for far too long the system has been completely the other way around: to those of us who have some more shall be given, and those who have not shall go without. That is not the best way of running a society.