Budget Statement

Lord Bilimoria Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Bilimoria (CB) [V]]

My Lords, the Chancellor’s spring Budget has succeeded in protecting the economy with a vital suite of measures: taking Covid-19 support spending to more than £400 billion; extending the job retention scheme to September and tapering government contributions from July; extending the 5% VAT cut for hospitality and tourism, which have suffered so much over the past year; extending the business rates holiday for hospitality, leisure and tourism for six months and then on a reduced basis until March 2022; and the business recovery loan scheme. However, there is disappointment for the aviation sector, where the support is unlikely to be enough, and for the 3 million excluded individuals who have received no support whatever over the past year.

In the build-up to the Budget, I said time and again to the Chancellor that the Government of India, who had their Budget a month ago, said they deliberately did not increase taxes because they did not want put more pressure on businesses which have suffered so much, and because they did not want to stifle the recovery. Against this backdrop, the Chancellor set out plans to increase corporation tax from 19% to 25% in two years’ time. This increase sends a worrying signal to those planning to invest in the UK, and Northern Ireland must compete with the Republic of Ireland next door, which has a rate of 12.5%. The leap of 6% in one go has caused a sharp intake of breath for firms. Britain is the second or third-largest recipient of inward investment in the world. We must not jeopardise that in any way.

In the meantime, the Chancellor’s super-deduction tax initiative over the next two years to bring forward business investment is a bold and positive move for the UK. Super-deduction will allow companies to cut their taxes by up to 25p in every £1 that they invest. The CBI, of which I am president, called for a focus on incentives to increase investment, and this is just the sort of thing we need to be doing in the UK. We were disappointed not to see fundamental reform of the unfair business rates system, or significant reform to the apprenticeship levy. On the other hand, the help-to-grow package is fantastic, offering free MBA-style management training for SMEs, and the new review of the R&D tax credit could make a big difference. The new infrastructure bank is fantastic, and the free ports idea could help with levelling up.

To conclude, with the phenomenally impressive performance of the UK in developing and delivering vaccines and the Chancellor’s priorities of protecting businesses and jobs and incentivising investment to help create growth, our economy is like a crouching lion, poised to spring and roar.