Budget Resolutions

Ranil Jayawardena Excerpts

Monday 11th March 2024 Commons Chamber

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

It is a pleasure to follow the hon. Member for Birkenhead (Mick Whitley), because he speaks straightforwardly about what the real Labour party thinks: that we should have a wealth tax in this country and more money spent on benefits, which will hit those who work hardest. It is class warfare again from the Labour party, hitting middle Britain. That is why I rise in support of the Budget, because it is another step in the right direction towards helping hard-working people, towards lower taxes and towards our Conservative principles that people can best spend their money—they earned it and they deserve to spend it.

For the average worker, 27 million working people will now receive a tax cut of around £900, based on a cut from 12% to 10% less than six months ago, and now a cut from 10% to 8%. That is a total NI cut of a third. It is great news and I warmly welcome it, but it comes as part of a wider package. It is important that other points are not lost in that excellent news, which I am delighted the Labour party will vote for when the Division comes tomorrow. We are cutting taxes for the self-employed and for SMEs by making sure that NI is cut for the self-employed and the VAT registration threshold is increased. That is great news.

We have gone further, too. We have made sure that families are rewarded again in our tax and benefit system. Families are the bedrock of our country. They are the key to a brighter future. The high-income child benefit charge is being amended, with an average £1,260 uplift for those affected families, which is a major step in the right direction. I warmly welcome it, having discussed it with my hon. Friend the Financial Secretary to the Treasury in the past to make sure that families get a fairer deal. The most impactful change is one that does not come in just yet: the collection of household information, because that will allow families to get an even fairer deal in the years ahead. I hope that the Chancellor will deliver upon that.

A transferable allowance for all married couples would cost £6 billion in Treasury speak, but would reduce poverty by 4.3%, with the poorest families getting the greatest benefit. One in 10 households would see their net income rise by more than 5%. In the short run, it is possible to target that even further, perhaps only at parents with children under 18, which would cost £3.6 billion, or even a smaller scheme to opt out from the free childcare that this Government are offering. That would address the unfairness that the tax system creates, where a couple earning £60,000 with two children can pay over £7,000 more as a single earner than if both adults earned £30,000 each.

Our tax cuts are good news, and they go beyond those personal taxes. I am delighted that the Treasury and the OBR have accepted the existence of the Laffer curve on capital gains tax. That is a great first step, and I hope that they will see it work and go further and apply it to other taxes in the years ahead. A cut from 28% to 24% to encourage more supply in the housing market for first-time buyers and for second steppers is a great thing, though I urge my hon. Friends on the Treasury Bench to think further at the next fiscal event about scrapping or at least cutting stamp duty land tax. That could get our housing market moving, particularly by helping downsizers and second steppers.

I also urge Ministers to look again at inheritance tax, because abolishing it would grow the economy, encourage more people to stay in work for longer and boost receipts to the Exchequer. The proof of that is Sweden, where inheritance tax has raised roughly the same proportion as it does in this country—less than 1% of all revenue to the Treasury. Sweden abolished inheritance tax in 2004, in a move that enjoyed cross-party support. The result was a boom in entrepreneurship, economic growth and tax revenues that the tax had previously suppressed. It created a surge in assets being transferred not just to family members; it was invested in business. Moribund capital was being used for innovative reasons and productive purposes. Family businesses became more entrepreneurial, too. It was a win-win. Contrary to some briefings from the Treasury ahead of this Budget, by abolishing inheritance tax or at least cutting it significantly, overall tax revenues can go up. The proof is there. Any action on inheritance tax is non-inflationary, which makes it a safe choice as we continue to battle inflation.

I want to turn to growing the economy. We need to build more roads, some railways and some homes. Investment is going into roads, and I encourage the Government to go further and to streamline the planning process to make it more possible. The A303 tunnel needs to happen. The M31, which I keep banging on about, needs to happen. The lower Thames crossing, for which £300 million has been spent on planning fees, needs to happen. These are the keys to unlocking future economic growth across the country. It is clear that for every pound spent on building roads, the return is many times over to the Exchequer in the years ahead.

We also need to boost housing supply in our cities, because that is where we get the biggest economic return from building homes. Huge amounts of brownfield sites are ready to be unlocked, and I am delighted to see that the package announced could unlock at least 80,000 homes. That is a great start. More than a million can be built in London alone on brownfield sites. There is further investment in transport infrastructure in Cambridge to unlock growth there.

The last few years have not been easy for the British economy. We have faced the legacy of covid, the war in Ukraine and conflict in the middle east. Those challenges have been tough, but we have made good progress and we are turning a corner. The inflation that rose around the world has now more than halved. The economy has performed better than forecast. Mortgage rates that rose around the world are starting to come down, and debt is on track to fall as a share of the economy, too. The job is not done, and this shows the real choice that we face: our plan to reward work and grow the economy, or back to square one with a Labour Government or anyone else who will back them up and put them in with higher taxes, lower growth, and fewer jobs in our economy for our hard-working people.