Budget Statement

Lord Bellingham Excerpts

Thursday 16th March 2023 Lords Chamber

[Lord Bellingham (Con)]

My Lords, first, I declare my interest as a paid non-exec director of four companies and two public companies. We have heard some exceptional contributions today, and I endorse all the remarks about and all that praise for my noble friend Lady Moyo on her superb maiden speech. It is always a pleasure to follow my noble friend Lady Lea and my old and good friend the noble Lord, Lord Bilimoria, who talks so much good sense.

As tail-end Charlie in this debate, I understand that I am all that stands between noble Lords and what are going to be three superb wind-ups and a very good dinner. I can see the Whip looking at me, because this debate has gone on quite a while and a lot has been said. I want to start by mentioning something about the Silicon Valley Bank crisis, which was referred to by my noble friend Lord Tugendhat and the noble Lord, Lord O’Neill. If this had not been handled in the way that it was, we would have been staring down the barrel of a full-blown tech crisis that would have completely transformed the start of Budget week. What was required was calm, competent government, and that is exactly what we got. I was impressed by a letter to the Chancellor which was signed by 340 founders and chief executives of tech companies employing nearly 20,000 people. It said:

“Thank you to you and your team for understanding the urgency, for appreciating the risk to the UK tech sector and its importance to the UK economy and for working around the clock to find a timely solution”.


That is praise indeed. Ben Marlow, the chief City correspondent on the Telegraph, is an outstanding journalist. He put it this way:

“To pull off something that complex in the space of a weekend is hugely impressive and a reminder that Britain’s most important national institutions still possess the proficiency to rise to the occasion when needed most”.


So we must pay credit to the Prime Minister, the Chancellor, the brilliant City Minister Andrew Griffith, the Bank of England and all those civil servants who worked incredibly hard that weekend to find a solution that will not cost the taxpayer one single penny.

The background to the Budget has been discussed at some length. I always listen very carefully to the noble Lord, Lord Eatwell. He said that we had been through a period of low growth, with GDP expanding by an average of 0.9% per year between 2008 and last year, which was down from a 2.7% average between 1949 and 2007. As he and other noble Lords pointed out, we have seen a period of very weak business investment and poor productivity, and frankly a gradualist decline and what I would call almost a lost decade of growth.

So the exam question is very simple. Will this Budget put in place the building blocks to reverse that? Will it welcome the start of a coherent and credible medium-term growth strategy? At a time when the tax burden will rise to 37.7% of GDP, the highest level since World War II, will the Budget really move the dial? Obviously, there is a huge onus on the Chancellor to maintain stability and above all to go on retaining the confidence of the markets—an agenda that he has worked on tirelessly since his appointment last autumn. So, in addition to his priority for growth, he has rightly made reducing inflation and bringing down debt as a percentage of GDP the other two key priorities.

How does this Budget measure up? There is a lot to like in it. I welcome a number of supply-side reforms that were announced yesterday. I like the childcare package. The 12 investment zones, which the noble Lords, Lord O’Neill and Lord Bilimoria, touched on, will be really important for generating growth and investment for wealth creation. I was very pleased with the announcement on nuclear policy and on carbon capture and storage, which was mentioned in some detail by my noble friend Lord Howell in a typically erudite and impressive speech. I also welcome the announcement of the pension lifetime allowance, which will create incentives for people of my sort of age to go back to work and to stay in work, which must be good for the wider economy.

All that is very positive, and I welcome it enormously. I also welcome the £25 billion business relief package for business investment and, as my noble friend Lady Lea pointed out, the full-expensing arrangements. This will ensure that we have the most generous capital allowance regime in the OECD. Add to this the R&D support package for SMEs, and the extended credit scheme, and that is good news. However, I am still very concerned about the increase in the corporation tax headline rate. I absolutely 100% endorse what the noble Lord, Lord Bilimoria, said a moment ago. Would it not have been better if the £25 billion had been used to prevent this increase from 19% to 25%? The headline rate sends a strong signal. It is about the mood music and whether Britain really is the best place in the world to do business.

Another point that I picked up on yesterday was that, as a result of this, the ratio of corporation tax receipts to GDP will rise to the highest level since its inception in 1965. Bearing in mind that Nigel Lawson reduced corporation tax from 65% to 40%, that shows the impact that this will have on business. As Andrew Neil pointed out today in his article, if as an SME or a business of any size you invest £100 today, you can claim back £130 under the super-deductions before paying 90% corporation tax on profits. From April, if you invest £100 you will be able to deduct £100—which is welcome but not as good as it was before—but you then pay 25% on your profits.

I urge the Minister to recognise the concern about this. Even if the Chancellor cannot change his stance on this immediately, I hope very much that he will revisit it at the earliest possible opportunity. I see the Whip looking at me anxiously, very concerned that I will go on too long. So I will just say that, with that one exception, it was an imaginative and well-crafted Budget. It deserves to succeed, and I have no doubt that it will.