Autumn Statement Resolutions

Priti Patel Excerpts

Wednesday 22nd November 2023 Commons Chamber

[Priti Patel (Witham) (Con)]

I am pleased to follow the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier). She has made some important points, some of which I will come on to shortly. I am grateful to my right hon. Friend the Chancellor of the Exchequer for his statement. As we go through the details of the announcements and the delights of the OBR forecast, there will be much discussion in the forthcoming debates. I always take the view that Budgets and fiscal events, some of which I have been part of in the past, need to address three crucial challenges: whether they support the economic freedom of our constituents; whether they empower businesses and enterprise to create economic growth, as it is the private sector, not the state, that grows the economy—I will come on to state spending shortly; and whether they manage the public finances in a sound and sustainable way.

I suspect that you, Mr Deputy Speaker, like me are old enough to remember the great Conservative Budgets from the 1980s delivered by Geoffrey Howe and Nigel Lawson—you do not need to agree with me on that right now. They set the benchmarks that any Chancellor, especially a Conservative one, should look to and follow to get the right balance of creating economic growth and sustaining the public finances in a suitable, sustainable and measured way. It should always be the mission of a Conservative Government to ensure that people can keep more of what they earn; it is right that the Chancellor used that statement a number of times and spoke about the fiscal measures he is introducing to ensure that that happens.

Of course, businesses and people spend their money far more effectively, efficiently and productively than the state, which is why low-tax economies are also naturally the fastest growing ones. A lower tax burden would mean more money in the pockets of our constituents to provide for themselves and their families. Having listened to speeches made by those on the Opposition Benches, it is fair to say that we would all agree that we want all our constituents to be well-off, financially and economically, for their families and their futures. A lower tax burden would also mean more money available to businesses to invest and expand. The Chancellor touched on some measures, and I shall do so shortly, on jobs and higher salaries. Naturally, this leads to more resources for economic growth. That is also why I fundamentally believe the Government should look to bring the levels of personal taxation down. The Chancellor mentioned that today, but I might suggest a few cheeky measures to say what more we can do on that, as more can be done.

Today’s autumn statement marks—these might actually be the words of the Chancellor—a major moment when the Government and the country change gear and focus on how to drive growth in the decade ahead with the a package of tax measures, while seeking to ensure that inflation continues to fall. That is absolutely right. There are different ways in which it can be achieved, and the Chancellor has outlined the ways in which he wants to make sure that it happens.

On the measures announced today, naturally I support cutting the main rate of national insurance contributions—the infamous NICs—from 12% to 10%. It was refreshing to not only address but go as far as abolish class 2 contributions for the self-employed. That will have implications and the devil is in the detail, as touched on by the hon. Member for Hackney South and Shoreditch, including issues of interoperability, such as how that will relate to and engage with the pensions system, technical measures and delivery. That is a fact of life. I do not want to be pointed, but HMRC and DWP use two different systems that are not always interoperable; I am a former DWP Minister and a former Treasury Minister, so I have seen that in action. I urge the Government to pay attention to the delivery of that measure, and I have no doubt that the Public Accounts Committee will be watching very closely as well.

On reducing the tax burden, my colleagues on the Treasury Bench will expect me to say that I maintain, fundamentally, that we can do more to freeze income tax levels. I know Treasury Ministers have heard me and indulged me on that subject before. Back in 2010, the measures around the tax-free threshold and increasing the higher rate threshold were a significant way to help families directly, in a sustainable way. I point to that example because it did not lead to a fall in inflation. Of course, the inflationary measures we see now—external measures, such as the war in Ukraine and energy prices—are different, but I will continue to lobby the Government relentlessly because I want to see a shift in tax-free and higher rate allowances.

That is important in the context set out by the OBR today, which states:

“Tax changes in this Autumn Statement reduce the tax burden by 0.7 per cent of GDP but it still rises in every year to a post-war high of 37.7 per cent of GDP by 2028-29. Income tax increases explain most of the increase in this forecast, rising from 10.2 per cent of GDP this year, to 11.3 per cent in 2028-29”.

Those increases are driven by, dare I say it, the threshold freezes in income tax rates and the nominal earnings growth that will come from that. The implications are self-evident: more of our constituents will pay more income tax, there is the infamous fiscal drag and more people will move into higher rate bands, so ultimately 400,000 more people will pay the additional rate.

[Dame Meg Hillier]

Does the right hon. Lady agree that will create a burden for those people who will then have to complete a tax return? In addition, there will be an impact on child benefit, so there is a double whammy once people hit the higher threshold, if they have children.

[Priti Patel]

The right hon. Lady is correct and makes an important point. I do not want to be boxing the ears of my hon. Friends on the Treasury Bench today, which is their day, but I sound like a broken record on this subject. I would go for complete streamlining and simplification of the tax system, even on NI, where I would like to see measures such as the merger of income tax and NI. I would love to see a simple system where we do not have the burdens of bureaucracy. Even when we spoke about full expensing in the Budget, the business and regulatory implications are pretty vast. The childcare measures are very good and encouraging, but from, a personal perspective, even more complexities are being introduced to the system and we, as Conservatives, could do much more to streamline that.

[Ian Blackford]

I encourage the right hon. Lady on what she said about the integration of tax and national insurance. Although such measures are not without their complications, they can be overcome, so perhaps there should be some work across the House to examine that issue. Let us make things simpler and more straightforward for all our taxpayers.

[Priti Patel]

We could have a separate debate on a single income tax and all sorts of other measures. I would like to see tax transparency as well. I am so old-fashioned that I think we should be able to follow every pound of Government expenditure, and that there should be far greater transparency for the public in that regard. I am sure that the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) would support that, too, from her perspective as Chair of the Public Accounts Committee. I do not say these things lightly. In this modern day, when we have much greater digitalisation and access to information, our constituents naturally also want to see more transparency in that area, especially while the Government are investing in artificial intelligence and all sorts of other things, including bots. His Majesty’s Revenue and Customs could be run by bots before we know it, although on that basis alone we might get more efficient telephone conversations and call handling. None the less, more needs to be done, and we should welcome that.

I will move on to a couple of other measures, but just while we are on the subject of taxation and revenues, I wish to make a point about the savings that can be made from Government efficiencies. This matter has not been addressed today, but the Chancellor did touch on it. There is much more work that needs to be done in this area, although I appreciate that this is an autumn statement and not a full-fat Budget. For the spring in particular, this is one area where we can do much more in boosting state productivity. The Chancellor always mentions the P word—productivity—but in 2021-22, just as an illustration, the Government delivered £4.4 billion-worth of efficiency savings. In monetary terms, that was significant, but it represented just 0.4% of public expenditure —a drop in the ocean. For the benefit of our constituents, let me say that that is £1 for every £250 spent. Again, much more needs to be done in that area.

Let me continue on the theme of hard-pressed taxpayers. This was not mentioned today, but at previous fiscal events I have voiced support for the fuel price escalator. I believe that we should do much more to back our motorists and make sure that the 5p cut in fuel duty, which was introduced in 2022, is maintained. There is some important signalling that we can do as a Government to ensure that the UK’s 37 million drivers are not seen as a cash cow. We must back them and continue to remain on their side.

That brings me to business taxes. Our economy relies on private enterprise. I am an Essex MP, and Essex is the county of entrepreneurs. Some 80% of my constituents work for small and medium-sized enterprises, which is 20% higher than the national average. We are proud of those SMEs, but we really need them to keep their head above water. That is why we must always support businesses —small businesses as well as big businesses. It is the small businesses that are the engines of economic growth.

I am proud to represent a county where we have businesses that are hungry to innovate and invest, and I want the Government to free them from the shackles that hold them back. A lot of that is regulation and red tape; and there is far too much of that. I have previously called for a freeze of the small business rate multiplier, and I am pleased that the Chancellor has agreed. That in its own right will have some benefits. I know that it has been reinstated for another year, along with other retail and hospitality measures. Retail and hospitality are burgeoning and important sectors that can help to boost our struggling high streets.

I welcome the continuation of business support with full expensing, which I have touched on, but there should be greater clarity over how that will operate, what it will mean for businesses, and the burdens that it will place on the sector. Will firms have to employ an army of accountants who will eat into their business expenses? Reducing overall taxes on businesses is, of course, welcome. It will help firms to invest, to create jobs and to boost supply, which is incredibly important.

When I call on businesses to invest, that also means that we must do much more to get them to invest in skills. Skills and productivity are the biggest challenges that we face. I would, at some stage, like to press those on the Treasury Front Bench on why we are still not committing ourselves to a labour market strategy around some of the key sectors where we know we have shortages in skills growth. When it comes to specialist sectors, we want to be the hub for technology, innovation and science, so we need to consider what more we can do. We also need to consider the work that is required around the green economy. As a former Home Secretary, I can say that we rely far too heavily on migration to fulfil our labour market needs. For the past five years, even when in Government, I have consistently and continuously called for that to be addressed. It sits with the Treasury, not just the DWP, and I urge the Chancellor to make good on those calls. I have discussed it with him several times.

I want to speak about the importance of the energy sector. The Chancellor touched on connectivity to the national grid in today’s autumn statement. I am an Essex MP. Off the coast of the east of England, we have enormous potential when it comes to increasing our energy security, because we have been successful in producing renewable energy offshore. We are effectively a hub in the east of England, where we have had investment. Efforts to develop the sector and increase renewable energy are welcome, and we are proud of the work that has taken place, but we are now suffering from the lack of strategic planning.

Windfarms have received consent and been developed without serious thought being given to interoperability and connection to the network and to the grid. That has resulted in one of the most deeply unpopular policies from central Government, which is now affecting the whole of the east of England: the National Grid’s plan to cover the east of England countryside with over 100 miles of pylons and overhead power lines. Our constituents do not support that. I am fully aware of what the Winser review says, and of the prospect of support—financial bribes, as my constituents call it—for local residences, but we need to ensure that there is proper engagement.

We are putting forward alternatives to pylons, and offshore options that we want to work with the Government to develop. That would support our renewables sector, bringing further skills to our region and our country. Ultimately, we have to address the issue of local constituents feeling frustrated. They resent that this is being done to them, rather than it being their suggestions and some of the local investment being taken into consideration. There is a sense that decisions are being made in an opaque way and that their views are being ignored. I would welcome better dialogue and consultation from the Government on this.

The Chancellor touched on the fact that devolution deals are under way. This is a work in progress for us in Essex. I would very much like to engage with the Treasury and the Government on what a greater devolution deal would mean for our fantastic county, particularly when it comes to investment in skills and infrastructure. Devolution deals can promise the earth, but central Government have to deliver the goods, and it has to translate into a return on the investment locally. In Essex, we are net contributors to the Treasury, so we can apply the multiplier effect and work out where we are getting the benefits, and where we are not getting our return on the investment. We should have further discussions on that.

I welcome the direction of travel in the autumn statement. The Chancellor has opened the door to sound economic principles of lower taxes. I welcome the support for business, which is fundamental. I urge everyone on the Government Front Bench to continue to look at ways to lower taxes, including personal taxes. Times have been tough for the British public. We want to ensure that all our constituents are able to keep more of the money that they earn, and ultimately have a secure economic future.