Autumn Statement Resolutions

Nigel Mills Excerpts

Monday 27th November 2023 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

It is real pleasure to welcome a much more optimistic and extensive statement than I had thought. A few weeks ago, we heard stories that inflation was higher and stickier than we thought, interest rates were forecast to be higher for longer, and it could be a miserable statement to sit through. Then, we heard stories that we may not be able to increase pensions by the triple lock and benefits by inflation. Then, we heard the rumours that our priority was inheritance tax, and I thought I would be here opposing the autumn statement, but fortunately I can wholeheartedly welcome it.

My constituents will be particularly pleased by the support to pay their bills: the national living wage is up by nearly 10%, the state pension by 8.5% and benefits by the full rate of the consumer prices index from September. More unexpected was the increase in local housing allowance back to the 30th percentile, which is much needed. The system has been creaking, and we need to maintain it at that level. The Government should be commended for all those measures. On a local note, I welcome the investment zone announced for Derby, Derbyshire and Nottinghamshire. We look forward to seeing the full detail, but it looks to be positive for local growth. Businesses in my high streets and the hospitality sector will welcome the business rate reliefs that were announced.

I want to touch on three topics: the corporation tax changes, the pension changes and the various measures to make work pay. To give some certainty, we should have a long-term, predictable plan for what our tax system should look like, so I welcome the 2% reduction in national insurance down to a nice, round, easy-to-calculate 10p in the pound. That fits quite well with the 20p income tax rate, so we have a nice, neat 30p in the pound and people understand what they are paying. They know that if they earn more than £50,000, that goes up to 40p, and they have to add the 2p national insurance, or a bit less. That is a clear and predictable way of taxing people’s earnings.

Now, we need to work out where the starting points in the bands should be, because that has gone a bit out of control. We were trying to get to the stage where someone could earn the minimum wage and not pay any income tax, but that is now thousands of pounds away. I urge the Government, having made this welcome step, to set out a plan for setting a much higher starting point for paying income tax and national insurance. It should be heading back towards a point where someone working full time on the minimum wage does not pay much tax.

Equally, on corporation tax, the plan we had 13 years ago for a stable business tax system appears to have drifted away. I support the full expensing, but that is a pretty radical and permanent change to our corporation tax system. There is a huge compliance need for businesses to track all their fixed assets and split them between the general pool, the long-life asset pool, the short-life asset pool, the vehicles and the structures rules, working out what is a non-allowable structure and what is not. All those things are hugely complex. We are now allowing full expensing for the vast majority of spend. We should think about whether we need all those rules, or whether we could sweep them away and just have some anti-avoidance restrictions. What should we do with the legacy situation? It will be a bit bizarre to have full tax relief for the capital I have spent this year, but still having to work out and claim relief for what I spent 15 years ago, which is still working its way through the pool. That looks to be a long and unwieldy system. Could we find a way of running off those legacy balances a bit more quickly, so we can lose that complexity?

On the pensions changes, I support the pot for life approach that the Government are consulting on. The counter argument is that it takes away the link between employers and their employees’ pension, but the simple fact that we had to auto-enrol 10 million people into a workplace pension suggests that those employers were not bothered about the pension they gave their staff, because they were not giving them one at all. Trying to boost the individual’s engagement with their pension savings is a prize worth having. If someone moves job to an employer with a good pension scheme, they can choose to stay there—they do not have to stay in their pot for life. I think that we will need a clearing house to avoid costs on employers, because otherwise small employers with 12 employees will be left trying to work out how to pay 12 different pension schemes a month. That sounds a bit too complex.

I have been banging on for years that auto-enrolment has got stuck being cheap and easy for employers, but does not produce the best returning pension for savers, so I welcome the references in the Green Book to a new duty on employers to think about the quality of their pension scheme for their scheme members. That will help move auto-enrolment in the right direction to the best staff pension.

I largely welcome the various welfare changes. Clearly, it is right that a welfare system be conditional. People who can work and look after themselves and their families should do so, and to those who cannot we should give as much support as we possibly can. That is an undisputable foundation of the welfare system. However, it has gone a little out of kilter. Far too many people are successful at being out of work for life. We need to find a way of changing that. However, I would warn the Secretary of State to be cautious about the message that people get, because they tend to hear the bad news, not the good news. All the good news about extra support and the chance to work guarantee are drowned out by noise about stricter assessments. People still do not trust the system as they should. We should be careful not to lose the good messages in the necessary bad ones. The evidence shows that if people feel supported, trust the work coach they are working with and feel they have a predictable journey that supports them, they will engage with it. If they are worried that if they make a step and it does not work, and they are reassessed and tell the work coach, that will be used against them next time, they will not engage. We must tread carefully.

I accept the need to ensure that the work capability assessment is getting people in the right place. Only people who are never fit for work should be declared not ever fit for work. That has to be right, but I urge some caution in that language. I note the rather strange thing at the end, quite rightly reinstating the rule that if someone does not comply with the terms of the benefit, they lose the benefit. That rule was there pre-universal credit, and it is right, so I am not sure how it will cost £10 million a year to reintroduce it. Perhaps we have not scored that yet, and we will see that detail in future.