Finance (No. 2) Bill

Lord Desai Excerpts

Monday 22nd November 2010 Lords Chamber

[Lord Desai]

My Lords, the Minister has done very well in presenting to us what is a non-controversial Bill. My remarks will be about not the technical aspects of the Bill as such but about the slightly broader context.

I recall that when I first came to your Lordships’ House and the Conservative Party was in power, I managed to wangle a day of general debate on the Budget as soon as it was presented in the House of Commons. Since we cannot amend the Budget anyway, we just discussed the Budget while it was still fresh and in the newspapers. I urge the coalition Government to follow that good practice by ensuring that, when the Budget is presented in March next year, we can perhaps have a day of general discussion on it.

Although I welcome the provisions on zero-carbon emissions vehicles and some of the Bill’s other provisions, I want to make two general comments on other measures that, while not strictly related to the Budget, are part of government policy. First, the well publicised proposal to withdraw child benefits from households that pay the higher rate of income tax is, I think, a bad move. Child benefit is currently paid to the mother rather than the income earner, and neither the mother’s income nor her partner’s income has ever been relevant to the mother’s entitlement to child benefit. I think that the Government’s proposal is a bad move, but if the Government are bent on taxing child benefit, they would be much better to include the benefit in the general income tax category so that everyone, whether they pay tax at the 20 per cent rate or at the 40 per cent rate, was taxed on child benefit. If the Government made it clear that the child benefit goes not to the mother but to the household—although that might require primary legislation—and if they were to tax child benefit across the board, people who do not pay income tax would still get the full child benefit and taxpayers would have either 20 per cent or 40 per cent of the benefit taken off them. That is the first thing that I wanted to say.

Secondly, I want to ask the Minister, in light of what has happened since the Budget and since the comprehensive spending review, what his estimates are for the growth prospects of the British economy. For the third quarter, the provisional growth rate figure of 0.8 per cent was better than expected, but it was lower than the growth rate in the second quarter. However, the figure for the second quarter has been revised downwards, to 1 per cent rather than 1.2 per cent. Does the Minister think that those successive three quarters of positive output growth give any assurance that growth will continue and, if so, at what rate? What does the Office for Budget Responsibility advise in that respect? Furthermore, in light of what has happened over the past three to four months, what does the government borrowing requirement look like? Are the Government’s borrowing predictions on track, or will borrowing be better or worse? I would be grateful if the Minister could advise us on that.