Budget Statement

Lord Rooker Excerpts

Wednesday 3rd November 2021 Grand Committee

[Lord Rooker (Lab)]

I, too, congratulate the right reverend Prelate the Bishop of Newcastle, but I have no plans to retire.

At all times we need to remind ourselves that the Tories have been in power for 11 years, since 2010. To start, I shall say a few words about the worrying trend for the Chancellor not to bother with the detail. He sent a very silly tweet to his Labour shadow Rachel Reeves seeking to embarrass her about extra money going to Leeds West. She politely pointed out that the money was going to Tory Pudsey and, according to the Observer, the people of Pudsey are not happy. He had a photo op on his beer-barrel concession and used the wrong sized barrels, which did not qualify for the concession, and while he was in Bury market he claimed that he was in the world-famous Burnley market. There is a big lack of attention to detail.

There is a brief plus: if I have read the papers correctly, getting the Chinese out of financing our nuclear programme is a real plus. If the reports that the Foreign Secretary openly stated that the Chinese are guilty of genocide are correct, it gets better. I am not really clear why Labour is so quiet on the Chinese financing new power plants.

Boasting about getting education spending back to 2010 is weird. This is only consistent with the narrative that the Tories were not in power before December 2019. That is the tale. However, I would be remiss to the memory of my late Commons colleague Audrey Wise if I did not refer to the long-term freeze on personal tax allowances. A freeze for one year with low inflation, as happened in the past, did not cause any backlash and there was no reason why it should. However, a five-year freeze with inflation on the increase is a different matter.

The noble Lord, Lord Lawson, made a major contribution to the Rooker-Wise enterprise in 1977. His part of the statutory indexation amendment was that, if the tax allowances were not raised in line with inflation, the Chancellor should seek the approval of Parliament. Of course, Geoffrey Howe and others have done that. Is the Chancellor still required to do that or will he get a five-year deal in one go?

I have news for Tory MPs: the Government’s plan will cause monumental pain for the low paid and those on very small occupational pensions. Millions who are non-taxpayers due to low income will get sucked into income tax without any announcement of a tax increase. Millions more, with just above average earnings, will become 40% taxpayers over the five-year period. The amounts will be eye-watering to the low paid.

In fact, the extra tax take from freezing allowances is larger than the national insurance surcharge. Once you get to the eighth vingtile, according to the excellent Resolution Foundation briefing, the extra tax from the freeze of allowances and the national insurance surcharge wipes out all the universal credit taper reduction. People notice change, whether they are a non-taxpayer starting to pay tax or a basic rate taxpayer starting to pay 40%. People notice these things—believe you me— which was of course the catalyst for our amendments in 1977. People were complaining like hell about the taxes that they were paying when it was said that there would be no tax increase. It is true that inflation was a lot higher, but the point of principle is exactly the same: no announcement, but more tax paid. It is tax by stealth—we had put an end to that.

Money off beer, fizzy wines and low-cost air flights will not compensate for the anger, bitterness and betrayal that people will feel over the long-term freeze on tax allowances. On top of that, of course, will be large increases in council tax and social care not fixed either. Also, there was not one word in the Budget about the stall in life expectancy since 2010—that year again. It is the first time that life expectancy has stalled since 1900; the first time in 120 years. There are fewer older people to vote Tory due to life expectancy stalling and fewer older people to vote Tory due to the high Covid killing rate. Those who survive will be paying a lot more tax. It is not a confident time to be a Tory MP in red wall or marginal seats.