Budget: Economic and Fiscal Outlook

Lord Purvis of Tweed Excerpts

Tuesday 5th May 2020 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, the Minister referred to the OBR report, as will I. He was keen to show the areas of progress. I understand that, and indeed that is all welcome, but he glossed over the areas where the OBR has flagged concerns, on debt in particular. We know that debt is likely to increase considerably and there will be consequences that we will have to manage well into the future. The Chancellor has already said that the self-employed will need to pay more tax in future to pay for the support package, and that will be unfair if done disproportionately.

Setting aside the Minister’s slightly tone-deaf rhetoric at the start of his speech about sovereignty at a time of global pandemic, the reality is that our economic life, our trade and our people will continue to be inextricably linked with our closest geographic and trading economic partners in Europe. The Minister celebrated what he described as being able to act free from the constraints of EU rules, as he put it, but the Government themselves chose to take part in the PPE procurement scheme and to operate under the customs system, and they themselves operated under the EU repatriation scheme. Why? Because it is now, as it has been, good sense for the British economy and our people to work seamlessly with our closest partners and neighbours—although of course the words “seamless” and “frictionless” are no longer used.

The Minister also neglected to reference the report on the future levels of GDP and the impact of other trade agreements and our EU relationship on productivity. Taking the fact that the UK has left the EU and will have its own migration policy, in March the OBR said:

“In broad terms, these imply that potential productivity will eventually be around 4 per cent lower than it otherwise would have been, mainly due to extra costs resulting from higher trade barriers and greater impediments to the exploitation of comparative advantage.”


The Government try to suggest that this fall will be offset by new trade with the USA. The Government themselves stated in their negotiation briefing earlier this year that a good deal with the USA would represent about £1 billion extra a year for our economy over 15 years—that is, 0.07% to 0.16% of positive GDP. Not many in this debate, other than perhaps the Minister or the noble Baroness, Lady Deech, believe that a 0.16% increase will offset a 4% fall. So what is the Government’s assessment of the net impact on future trade of all possible EU and other-country arrangements?

We remain unsure about the imminence of a comprehensive deal with Japan and Canada—and that is simply to prevent massive disruption, not to grow. This is not about fighting old battles, but we need the Government to be open now and tell us what they estimate the net impact on all productivity and trade will be. We simply will not be able to enter the battles of the future wearing an armour of self-deception, which has been too prevalent in this debate so far.

Tax Avoidance

Lord Purvis of Tweed Excerpts

Wednesday 29th April 2020 Lords Chamber

[Lord Agnew of Oulton]

I think that most of us share the noble Baroness’s views on abusive tax measures by companies. Apart from all the measures that we have introduced over the past seven or eight years, we announced that we will legislate this year in a Finance Bill for 2021 to strengthen HMRC’s existing anti-avoidance powers to make it more difficult for promoters, in this case, to sidestep their obligations. We will continue to bear down wherever we can.

[Lord Purvis of Tweed (LD)]

One measure highlighted by the Minister was the new tax evasion offence for corporations and partnerships that do not act properly in their operations. Will the Minister consider expanding that offence to include enterprises that aggressively pursue individuals—mainly those who are potentially vulnerable or re-entering the workforce, such as NHS workers. Tax evasion is an act that morally subverts the law, especially for self-employed people who will have to pay extra tax at the end of this crisis.

[Lord Agnew of Oulton]

I am sure that the noble Lord will contribute to the legislation when it comes through. I support his ideas. I assure noble Lords that we have closed the tax gap quite dramatically over the past 10 years. In 2005-06, it was £4.9 billion; in 2017-18, it was £1.8 billion. HMRC has won 90% of the avoidance cases that it has litigated on since 2018.

Covid-19: Self-employed

Lord Purvis of Tweed Excerpts

Thursday 23rd April 2020 Lords Chamber

[Lord Agnew of Oulton]

My Lords, we estimate that 95% of small businesses will benefit from the structure of the schemes we have been discussing. Beyond that, we have made enhancements to the universal credit system that will benefit small business proprietors who are caught and do not benefit from the broader measures. I can put into Hansard a detailed explanation of how those changes work, because they are quite complicated and I am conscious of the need for brevity.

[Lord Purvis of Tweed (LD)]

The self-employed will have to wait another month before they can start applying for support, and it will be six weeks from now until the first payments. The Canadian Government announced support packages for the self-employed and the employed on 15 March, and payments started to be processed last week for Canadian businesses. What is preventing the Government fast-tracking support for self-employed people, who have this huge uncertainty, especially women and mothers who have to look after children and on whose income this will have a real impact now?

[Lord Agnew of Oulton]

My Lords, as I mentioned earlier, we have pushed out some £6 billion of grant payments already, and when HMRC opened its Coronavirus Job Retention Scheme on 20 April some 185,000 claims had already been made. So the money is going out, but I accept that it needs to go out more quickly.