Budget Statement

Lord McKenzie of Luton Excerpts

Friday 12th March 2021 Lords Chamber

[Lord McKenzie of Luton (Lab) [V]]

My Lords, I start by offering my congratulations to all those who have made maiden speeches today. The pandemic has caused the most comprehensive and sustained economic shock that we have had to endure, and Brexit has of course added to that challenge. Witness the devastation on our high streets, the impoverishment of our councils and the continuing housing crisis.

The Chancellor’s chosen method of introducing a range of tax increases was to freeze a whole bundle of tax thresholds and allowances at 2021-22 levels —a rather weasel way of circumventing manifesto commitments, but not novel; we have all been at it. It leaves the determination of the rates of real increases in tax to a range of market economic factors not necessarily under the direct control of the Chancellor.

Perhaps the time has come to get more from capital taxes—inheritance tax and capital gains tax—and one further tax. Noble Lords may be aware that the Wealth Tax Commission, chaired by the noble Lord, Lord O’Donnell, recently delivered its final report. As the report sets out, it is half a century since a wealth tax was seriously considered in the UK. Given the scale of the public finance crisis, there is an imperative, I suggest, to think big on tax. Why should we not at least develop our thinking on a wealth tax—a broad-base tax on the ownership of net wealth—to help pay the bills, as some have suggested? Public attitudes, according to the report, show a clear desire for wealth to be taxed more relative to income. I live in hope.