Budget Statement

Lord Palmer of Childs Hill Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Palmer of Childs Hill (LD) [V]]

My Lords, first I congratulate the noble Lord, Lord Khan.

This is surely a Budget of unintended consequences. For two years, investment in plants and machinery will qualify for a 130% capital allowances relief, which means an extra £25 tax reduction for a spend of £100. I am sure the creative tax avoidance industry is already working on a redefinition of what is “plants and machinery”. It has been suggested that fixtures such as fire alarms, swimming pools and jacuzzis could qualify. I suppose that we could see a claim for an industrial duck house. Let us be clear: the tax relief is not only for the cost of the duck house but for more than the cost. At the same time, this Budget will drag more people into the tax net by freezing personal allowances. Then there is the increase in corporation tax—but not until 2023, so as to give enough time for business to relocate overseas.

The Government have failed to appreciate the administration burden they create, such as the implementation of the VAT reverse charge, which is a severe burden on the construction industry. I hope that the Minister can announce, at least, a suspension of the charge, reducing administration and thus rectifying the restriction to cash flow in the supply chain.

I compliment my noble friend Lord Fox on raising the lack of strategy in this Budget and the lack of noticing the problems with social care. These are the overall faults of this Budget—a Budget of unintended consequences with nice-sounding words.