Tax: Church Action for Tax Justice Reports

Lord Field of Birkenhead Excerpts

Thursday 21st January 2021 Grand Committee

[Lord Field of Birkenhead (CB)]

My Lords, I am immensely grateful to the right reverend Prelate for securing this debate—it could not be better timed—and for the work that Church Action for Tax Justice has done and for the way it is establishing a new agenda here. However, to be reminded that we have three minutes rather puts me in mind of Dr Johnson—I mean Dr Johnson and not our current Prime Minister—saying that to be hung in the morning concentrates the mind wonderfully.

I have three points to make, besides endorsing all the comments, bar one, of the right reverend Prelate. Might I please caution not to easily roll up national insurance with income tax? National insurance needs to be reformed. It needs to be made progressive, along the lines that the right reverend Prelate spoke of, but it is a means by which people can feel that they contribute to their welfare state. It gives them a sense of ownership, which crediting people does not.

I turn to the three issues that I would like to raise. One reinforces the point that I have already made: it could not be a better time for this debate. At the last election, where I fought to be returned again in Birkenhead, I quietly said to myself—and rejoiced—that the Government’s main driving force would be the levelling-up programme. But that cannot be taken seriously unless we look at all, or practically all, of the Government’s domestic programme. I think that the job of the Government—and if not them, then us—is to bring together a comprehensive programme of reform for levelling up, but that cannot be done without considering taxation, both direct and indirect.

Secondly, I make a plea for gaining flexibility to vary tax rates. When I was part of the Blair Government —for that short but happy period of time—the Government took powers to allow them to experiment with welfare reforms. They did not have to be national; they could be regional or local. I say that merely to remind the Government that that might well be an approach that they would wish to see in the areas that they are most anxious to level up.

In doing that, immediate things come to mind. Would variations in various tax rates encourage employers to take on more people? The question should be: how do we gain that? Thirdly, what are the general tax principles we might bring to bear on this subject matter? I suggest two. One is to ask: is it proper, fair and just to levy direct taxation on incomes below the level that the Government believe is the minimum necessary to keep body and soul together? The second is to ask, as the right reverend Prelate did: how do we make sure that indirect taxation does not wipe out any other good that Governments try to do?

I am grateful to be able to contribute to this debate, but I hope very much that it is the first of a whole series.