Income Tax (Charge)

Sarah Olney Excerpts

Thursday 4th March 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD) [V]]

In common with so much of what we have seen from this Government during their handling of the pandemic, this was a Budget for selected beneficiaries. Carefully picked groups are going to do well, but it was quite clearly not a Budget for the nation as a whole.

We could have had, for example, a bold move on business rates. Real reform in this area to level the playing field between high street and digital retail has been long overdue. Consumer behaviour is changing, and that change has been accelerated by the pandemic. What is the long-term future for our town centres? How will our communities thrive without the retail businesses that traditionally provide the heart of our towns? We need to lower the barriers to entry to retail and other town centre businesses, and invite new entrepreneurs to try new ideas.

But instead of business rates reform or devolution of power to local authorities, which could have allowed for real change across the whole country, a select few high streets, mostly in Tory-supporting constituencies, get a cash bung. The Chancellor’s bold new plan is for a super deduction that will enable cash-rich firms to get an extremely generous tax deduction on expenditure on plant and machinery across the next two years before being hit with a corporation tax hike. I can tell the Chancellor that after 12 months of little to no trading, many firms in my constituency simply do not have the cash in the bank to make these kinds of investments. Many of them will be burdened by a great deal of debt and unable to take on any more, and will face a long, slow road back towards profitability. Demoralised and exhausted after the effects of the past year, their reward will be a huge hike in corporation tax rates. I am concerned that many will consider it not worth their while. It would have been better to have a windfall tax now on the companies that have continued to prosper during the pandemic and then cut rates again in a few years to encourage those who are rebuilding. Again, only a select number of businesses will benefit from these changes.

We need to see policy for real stimulation and growth in the green economy. We know that we need to transition from carbon-emitting industries if we are to achieve net zero, so we must grasp the nettle of investment in green jobs. There is real opportunity for growth there, but the private sector is waiting for Government strategy and policy to set a direction. The Chancellor could have set that direction yesterday with promises to invest in green technology or to come up with a bold new plan for retrofitting to replace the green homes grant, but he did not.

What is the Chancellor’s plan for investing in sectors that will create jobs in the future? It is freeports, in selected sites, yet there is little evidence that they create economic activity rather than displace it. Again, we see the benefits concentrated in preferred areas of the country rather than a strategy for the country as a whole. The one advantage of freeports, of course, is that they can avoid customs duties and paperwork, currently creating such a barrier to trading thanks to the Government’s terrible deal with the EU. I find it extraordinary that the Chancellor made no mention of how he plans to offset the OBR’s projected 4% hit to the UK’s GDP as a result of leaving the EU. The Chancellor is bringing forward planned economic activity or concentrating it in specific areas of the country rather than investing in new sources of wealth and future jobs. This Budget ignores the real needs of our economy, both for the immediate challenges of the pandemic and for its long-term future.