Income Tax (Charge)

Richard Fuller Excerpts

Thursday 28th October 2021 Commons Chamber

[Edward Miliband]

My hon. Friend is completely right and I will come to that point in a moment. The Government will no doubt have all kinds of excuses, but this is a sin of commission, not just omission, in the sense that the Government are actually doing things to make the problem worse.

The problem is that the Chancellor could not bring himself to admit any of this yesterday. Here is the issue: it is not just that he did not say any of this, but it is like the Government actually believe their own rhetoric, and the Budget is the result. Yesterday we saw raid upon raid on the living standards of working people: council tax hikes, hidden in the Budget document—not announced by the Chancellor; a stealth raid on the self-employed worth £1.7 billion over the coming five years—not announced by the Chancellor; and of course the national insurance hike on ordinary families confirmed.

Maybe I am a bit old fashioned in this respect, but let us remember that this is a direct breach of the promise that every Conservative Member made to their constituents at the general election. What did they call it in their manifesto? Alongside a picture of the Prime Minister—drawing on his long and unblemished record of truth telling and candour—it said:

“My Guarantee… We will not raise the rate of income tax, VAT or National Insurance.”

I look forward to them all explaining at the next general election why they have broken that promise. The hon. Member for North East Bedfordshire (Richard Fuller) is nodding. Perhaps he would like to explain why they have broken their promise.

[Richard Fuller (North East Bedfordshire) (Con)]

I have been goaded into intervening by the right hon. Gentleman, who asks a very direct question. I think the honesty will be that we will say that we wanted to protect the public finances, and that post covid, given the choice of either borrowing more money or asking those with the broadest shoulders to bear the burden to cover those costs, we decided that we should do the latter.

[Edward Miliband]

It is certainly not those with the broadest shoulders who are being affected, and I thought the reason that the Government raised taxes was for social care. It is yet another guarantee from the Prime Minister that is not worth the paper that it is written on.

The IFS tells us this morning that taxes will be £3,000 more per household than when the Prime Minister came to power. As my hon. Friend the Member for Leeds West (Rachel Reeves) said in her excellent speech yesterday, this is about the choices that the Government are making. Also buried in the Red Book is that the Chancellor saw fit to cut taxes on the banks by more than £1 billion because he was so worried about the burden they were facing, just like last year when he made the choice to cut stamp duty for second home owners because he was so worried about them. He was obviously less concerned about the burden of higher energy prices facing millions of British people, because he refused to cut VAT on fuel as he should have done.

In a way, the most shameful part of the Budget is the Chancellor’s refusal to reverse his £1,000 cut to universal credit, which hit 6 million families. For all the smoke and mirrors, this morning we know the truth about universal credit. According to the Resolution Foundation, three quarters of families on universal credit will be worse off, even after the changes to the taper. It says that the taper changes

“will be overshadowed by last month’s £6 billion cut to entitlement: three-quarters of families on UC will lose more from the £20 cut than they gain from the Budget changes. Even if we also take into account the…National Living Wage, the poorest fifth of households will still be an average of £280 a year worse off overall.”

The fact that Conservative Members were wildly cheering a policy yesterday that sees millions of working families far worse off shows, I am afraid, that they do not get it either.

--- Later in debate ---

[Kwasi Kwarteng]

I was not making a personal attack on the hon. Gentleman’s role. If he had listened to what I said, he would know I was not commenting on his record as an MP; I was simply saying that the tone and negativity he expressed in that particular intervention in this debate did a disservice to his constituents. I was making a specific point.

[Richard Fuller]

To bring my right hon. Friend back to what the Opposition spokesperson, the right hon. Member for Doncaster North (Edward Miliband) was saying about the haste with which money can go to support my right hon. Friend’s plan for energy-intensive industries, is this not the same Labour Front Bench that was urging my right hon. Friend to give money to a business that is now under review by the Serious Fraud Office? Is my right hon. Friend’s prudence not therefore wiser than the rashness of the Opposition Front Bench?

[Kwasi Kwarteng]

That is a very good intervention. Labour Front Benchers were urging that £170 million from the UK taxpayer be given to a business that we now know has been recapitalised, has money from private creditors and is still operating. It would have been a disaster to sign away £170 million directly in the way they urged.

In conclusion, the Budget is a blueprint for a stronger Britain: a country where those with innovative ideas will get the support they need to turn them from dream to reality; a country where those whose talent is nurtured and whose skills are honed will get support, ongoing interest and strong engagement from the Government; a country where those who do an honest day’s work will receive a decent wage. We have every right to be confident about our future. We have listened to the litany of woe and despair for too long and, as my right hon. Friend the Chancellor said yesterday, we are optimistic and excited about the future of our country. Only a week ago at the global investment summit, people from across the world were desperate to invest in the UK; they believe in their bones that the UK is a great place to do business.

--- Later in debate ---

[Richard Fuller (North East Bedfordshire) (Con)]

It is a pleasure to follow the hon. Member for Stockton North (Alex Cunningham) and to hear his observations on the Budget for his constituents.

If I may, I will summarise what I believe are the views of my constituents in North East Bedfordshire. Bedfordshire is probably able to speak for much of the country. My first observation is that this was a fair Budget. In very difficult times, there was a tremendous risk that the Budget could be mispositioned, misplaced, or perhaps focus on the wrong priorities. My right hon. Friend the Chancellor demonstrated a fairness in his Budget and that, I think, would be reflected in the views of my constituents. They would also say that it was a very thoughtful Budget. Although I have not done a survey—I know that others have—I am reassured in my thoughts that the Budget was fair and thoughtful, because the latest opinion poll shows that the majority of voters think that, too. Indeed, a majority of Labour voters approved of the Budget as well.

Some measures were very relevant to my constituency. There is a great interest, for example, in support for buses, and rural bus services in particular. This is especially true in Stockfold and Arlesey, and the additional funds will be welcome. There is a great interest in and support for active travel networks—for cycling and walkways—particularly in the new developments between Sandy and Potton and Biggleswade, and for additional resources for special educational needs provision. There is a lack of SEN provision in my constituency and I look forward to working with Central Bedfordshire Council on a proposal so that we might benefit from that additional funding.

On balance, my constituents would also say that taxes are too high and that they need to come down. Looking at the Budget report, it was interesting to see what this Government are doing. Some reports say that there has been some largesse in spending, but if we look at the period of spending from the 2020-21 out-turn to 2024-25, we see that, in real terms, current expenditure is pretty flat. It is into the investment side of public services where this Government are putting additional resources. Before the pandemic, public expenditure as a percentage of our overall economy stood at 39.8%.Yes, it has grown now to what I would suggest is an unsustainable 53.1% of the economy in 2020-21, but by 2024-25, it will go back down to 41.9%. We will be on the right trajectory to get back to where we were before the pandemic, but with an emphasis on investment rather than current expenditure. Those are worthy points to make and support the fact that taxes will come down, as the Chancellor has said.

Every Budget must be presented within the context of what is going on, and none more so than this one. We are coming through the covid period and through the Brexit transition. Even today, a French Minister has said that the only thing the British understand is force. That is unwelcome language. We do not want to have opposition from France or from any other member of the EU, but there will be issues about the Brexit transition that will affect the economy. We have spoken a lot today about climate change, but not so much about the changing relationship with China and what that does to supply chains. The other contextual factor is the OBR forecast itself. It is ambitious in its forward growth projections in the near term. All of those issues provide the context for the Budget.

What we should really focus on is the purpose of the Budget. One of the great advantages of being given the honour to return to Parliament as the representative of North East Bedfordshire was to support our Prime Minister in setting our country’s strategy post our departure from the European Union. That, ultimately, is the purpose of this Budget; it is to marshal the talents and the resources of our people to create a successful, global Britain on this new international basis. This Administration under this Prime Minister have the opportunity to become one of the great reforming Administrations of our country. The purpose of this Budget is to provide the confidence to investors, to the public and to the Government themselves that they can take those major steps to ensure the long-term strategic success of our country in that new direction. I think that it does that very well indeed in very difficult times.

It is important though that we cast a critical eye over some aspects that have the potential to knock the country off course. The first is on capital markets. The Bank of England has indicated that it has intentions to stop repurchasing and quantitative easing when interest rates hit 0.5% and then potentially to start restricting the money supply by making additional repurchasing if interest rates hit 1%. That could have a significant impact on the cost of Government borrowing, which is why the Government are right in this Budget to chart a downward course.

On labour markets, we should remember that the United Kingdom with its flexibility has one of the best labour markets in the world, in large part due to reforms undertaken by Conservative Administrations, but the Government must make sure that they achieve their increases in productivity targets.

We should also cast a critical eye over public sector efficiency, particularly in relation to health. If I could say also to the Minister that a further critical eye should be cast over the accounting of public sector pensions, which has been the subject of many questions. We went through tremendous changes in public sector pensions a decade ago, but as the Institute of Economic Affairs paper pointed out just last week, there is much ambivalence and discretion over the way in which the Government are currently accounting for public sector pension costs. The estimated under-reported cost is of the order of £57 billion. That is not a slight accounting error, but a very major difference in costs, which is caused by the way that the Government sort out how they account for public sector pensions. It is worth their looking at that seriously and it is worth consideration by the Treasury; I hope that they will look into it.

Let me close on three points. First, as the Chancellor said, the Conservative party has demonstrated that it is the party of public services, although I would say that that is demonstrated not by how much is spent, but by the quality and efficiency of the services delivered to the public.

Secondly, the Conservatives are the party of low taxes. That must mean that the Chancellor will fulfil his promise—I believe he will—to reduce taxes, because taxes are too high and an unsustainable burden on enterprise. However, we all have to recognise that any tax reductions in this Parliament will mean that choices will have to be made, and they should be focused on improving the efficiency and enterprising part of the economy.

Thirdly, the Conservative party is the party of work. As I listened to Opposition Members, I reflected on the questionable negativity of the Opposition to many of the measures that have dramatically changed the importance of work in this country over the last decade. It was the Conservatives who introduced the living wage. It was the Conservative party and the coalition that did so much to increase the personal tax allowance. It was the Conservative party and the coalition that did so much to reform the benefits system that was a restriction on people’s willingness to work. It was the Conservative party that introduced the universal credit system. And it is this Budget that has introduced the taper relief at the original level that was set by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith).

All those points indicate that this was—as I think the people of North East Bedfordshire believe—a fair, thoughtful and reasonable Budget.