Autumn Statement 2023

Lord Balfe Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord Balfe (Con)]

My Lords, I also welcome the Minister to the Treasury bit of the Front Bench, having dealt with her extensively in her previous job as Aviation Minister.

I look at the Autumn Statement and I think it is fair enough, but there is no inspiration in it. Next year we are going to be going to the country and asking people to vote for our party to continue in government. A random selection of my friends yielded no one who was particularly happy with this Statement; they think it is a Statement for other people. Within this House we are always hearing about the poor, but we never hear about the people who make the money that keeps this country going. They are people who go to work every morning, have qualifications and work hard. In a democracy there is no such thing as gratitude; people look to Governments to improve their standard of living. That has not happened recently and, indeed, there is a feeling abroad that the British state has been captured by the Civil Service and the woke brigade. The biggest example of that is the National Health Service. It has never had more money or more staff, and it has never had more problems, which it appears incapable of solving. All we get are calls for more and more money when, quite clearly, the system itself is not working.

I will give the Minister three things that I would like her to take back to the department and look at. First is the reform of death duties—inheritance tax. No one will believe you if you put it into the next manifesto. They will say that George Osborne promised this in 2007 and it was never delivered. Do we, on this side of the House, honestly believe that an incoming Labour Government will reform inheritance tax? I think it will be well down their list of priorities. But many people in Britain, particularly in the middle classes who keep this country running, hope to inherit part of a house, and about 30% of them believe that they will end up paying inheritance tax. The Minister has not only to reform it but to get it into law before the election. If it is in the manifesto, no one will believe we will carry it out because we have not done so in the past.

Secondly, I will mention the freeze on tax thresholds. Every year, the Britons who are just managing may get an increase in their income, and then they are pulled into higher-rate taxation. There is virtually no incentive to do anything. To say it is frozen until 2028 because of various government things is marvellous for the Government, but that is not going to incentivise anyone to vote for the Government. No one is going to get up and say, “Oh goody, by the time this Government come to an end, they may or may not have delivered on some promises that they have made and, frankly, do not have much of a record in carrying out”.

The third thing is child benefit. Its withdrawal rate has been frozen at £50,000 for 10 years, which means that more and more families are losing out. If the Minister thinks that a family with two children and an income of £50,000 a year is a rich family, she needs to think again. They are not; they are struggling. Even paying nursery fees is difficult. I ask the Government to look at this, please—look at increasing the threshold, changing the taper or doing something to help the hard-working middle class, which is losing its benefits all the time. I declare an interest here, because this affects two of my three children. My third child does not have any children, so this affects both of those who do.

My daughter was a convinced Conservative long before I was. At nine years old, she stood as the Conservative candidate in her school election in 1997. Note that it was 1997, and she was a Conservative candidate. She actually came second and was beaten by the Green—you can tell it was a private school. She said to me on the weekend, “Dad, what are they actually offering families like ours at the end of the Statement?” The Minister will have to go back to the Treasury team meetings—I know it is not within her gift to change these things—to ram home that we need changes in these areas for the hard-working, middle-income, middle class.

My final point might please the noble Lord, Lord Sikka, although he is not in his place. We somehow need to find a way to tax the billionaires who jet in from Monte Carlo and keep their savings in the British Virgin Islands and all over the place. We seem to put no effort into taxing them. This is not just for Britain—it needs an international move—but there is no sign of anything happening. Can we please get together? If people thought that the Government were trying to get some money out of these tax dodgers, they might feel warm towards them. At the moment, the feeling—and this applies equally to the Labour Party—is that they are not bothered. Could the Minister please remember that you have to win an election, as well as have a nice and very sound economic statement? We need to win an election, please.

King’s Speech

Lord Balfe Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Balfe (Con)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Hendy. I think he is misplacing his hope if he thinks the Labour Party is going to do much—but we will let him live in hope. From time to time, I do a bit of lecturing. One of the subjects I lecture on is British politics, and occasionally I point out that the Conservative Party is the most successful party in the world. From time to time it loses elections and then reinvents itself. In the past, of course, everybody has sat there feeling rather smug and thinking, “Yes, we are in government”, but I say to my good and noble friends on the Front Bench, if they still are my friends, that we are soon going to have do a bit of reinvention by the look of things, because the state we are in is somewhat dire.

Part of the problem is quite simply this: there is no longer room for incentive and aspiration among the group of people who create the wealth of Britain. I see my noble friend Lord Callanan sitting there and he knows who I will mention: the huge army of trade unionists who run middle Britain. They are people with degrees who work hard, go to work every day and create the wealth of this country. I am afraid my party still does not seem to have come to terms with the fact that the average trade unionist today is a middle-aged woman with a professional qualification—the days of the old working-class TUC are gone—and these people are leaving the Conservative Party behind because they do not feel that incentive and aspiration are being looked to.

I shall just point out one or two things. If the higher rate tax threshold, 40% at £50,271, had increased with inflation, it would be £55,340. Every year, roughly 1.6 million people move from the lower rate into the 40% rate, and they do not see that as an incentive. Also, people who get to £50,000 find they lose their child benefit. They find they have a tax rate of around 60% between £50,000 and £60,000—but the children still need feeding. I know much is said in this Chamber, rightly, about the plight of the poor; but there is a middle group, which Theresa May characterised as “just managing”. They are just managing, but they are not managing to feel very happy with a Government who do not appear to want to help them earn a bit more money.

I will also give another challenge to the Government: in 2006, George Osborne promised an overhaul of inheritance tax. Our Government—and the Labour Party, for that matter—think, “Oh, not many people pay it; it doesn’t matter”. But there are millions of people in middle-class housing, in middle age, who are looking forward in a grim sort of way to inheriting the wealth of their parents, and we are doing nothing about it. If you want to do something, I say to the Government, “Do it now”—because I do not think Labour will do much.

My final point is that we need a strategy for the public schools. If Labour imposes VAT on public schools, they will not go bankrupt; they will be full of foreign children, as they increasingly are at the moment. We will have another large increase in migration as the children—with their mummies—come over and fill the places, and that will be a cause, again, of great resentment. So I say to both sides of this House, “Think of middle Britain and the people we need to innovate. Think of Harold Wilson and the way that he stirred middle Britain into action. For goodness’ sake, we all love the poor, but let’s start doing something for the wealth creators”.

Income Tax Threshold

Lord Balfe Excerpts

Tuesday 4th July 2023 Lords Chamber

Asked by

[Lord Balfe]

To ask His Majesty’s Government what plans they have, if any, to adjust the threshold for the higher rate income tax of 40 per cent to account for inflation.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

The income tax higher rate threshold is still high enough to protect the vast majority of people from paying the higher rate of income tax. Around 80% of all income tax payers pay at the basic rate. The Government must ensure that the tax system supports strong public finances, and it is right that those who earn more contribute more.

--- Later in debate ---

[Lord Balfe (Con)]

I thank the Minister for her reply, but I remind her that paying tax at 40% used to be a sign of achievement in this world and the middle classes—the middle earners on whom the prosperity of this country depends—are getting gradually poorer, with 1 million more of them paying higher rate tax in the last two years. With the withdrawal of child benefit, the effective rate of tax between £50,000 and £60,000 is around 61%. I know the Labour Party is not standing for lower taxes either, but does the Minister really believe that the country is going to be incentivised to perform well if it is crippled by this level of taxation?

[Baroness Penn (Con)]

My Lords, of course, the Government want to bring taxes down. It is worth reminding noble Lords that since 2010 we have nearly doubled the personal allowance and, this year, around 30% of those with income are projected to pay no income tax at all. In our current circumstances, we need to be fiscally responsible, and the best tax cut we can give people is to cut inflation.

Financial Services and Markets Bill

Lord Balfe Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Lord Balfe (Con)]

My Lords, I draw attention to my entry in the register and I begin by welcoming my noble friend Lady Lawlor. I was one of her sponsors. I am delighted to see her here; she will add huge intellectual firepower to our Benches. I hope not too much of it will be turned on me, as I do not think we agree very much on the European Union. I also thank my noble friends Lord Remnant and Lord Ashcombe, who will also add considerably to these Benches.

This is an interesting Bill. It is a good basis for a debate, and it follows a good deal of consultation. I am afraid that I disagree with my noble friend Lord Holmes, who is not in his place, on the subject of cash. Things move ahead. In 2020, I went to our local Turkish shop just after Covid started. I offered the shopkeeper some money and he said, “We’ve stopped accepting money, sir. We might get Covid.” I thought, “This is interesting.” Believe it or not, I stopped using money. Of course, the difficulty for poorer people is that they do not have access to credit or debit cards that they can just hand over all the time, so we need to retain the ability to pay in cash. But shops will maintain that for us, because they will want to continue to sell their goods, which is a pretty good thing.

As I see it, the growth of cryptocurrency, which I regret, is the next big scandal on the horizon—I thank the most reverend Primate for giving me a drink of water; it is jolly good to be given one by the Archbishop of Canterbury.

I warn us against cryptocurrency. We need to look at regulating it, because it is totally out of control, and it is meaningless. I discovered the principles of Warren Buffett before they were popular; if you want an investment, you should be able to see it, understand it and answer the question, “Does it do anything useful?” If you cannot get positive answers to all those points, you are likely to be investing in a dud. All these bubbles over the last umpteen years have been about things that do not exist. They did not have any benefits and most of them did not pay any dividends. You need to be very careful. I predict that anyone investing in cryptocurrency will come to regret it pretty shortly.

I welcome Clause 69 of this Bill, in particular the ability to develop credit unions further. We often forget the role that they play, particularly in providing secure finance for poorer people and in the trade union and working people’s movement. Anything we can do to strengthen credit union regulation, while making them dependable, is something to be gained. Enabling them to extend cautiously into hire-purchase agreements and insurance, and to lend to and borrow from each other, is extremely good. I hope that, as we pass this Bill, we can look carefully at how to support credit unions.

Finally, we need to look at the dangerous “buy now, pay later” phenomenon. Problems are already beginning to arise with the idea that you can go into a shop and say, “I’ll pay in three months.” This sector needs bringing under some sort of financial regulation. I hope that we can get some sort of outline during the course of this Bill of how we can get a regulatory framework.