Tom Brake
Main Page: Tom Brake (Liberal Democrat - Carshalton and Wallington)Department Debates - View all Tom Brake's debates with the HM Treasury
(6 years, 5 months ago)
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Geoffrey Clifton-Brown
The need to build more houses is about providing houses for those who cannot afford to buy and get on the housing ladder. There are lots of ways to do that in the affordable housing sector, such as affordable rent-to-buy, staircasing and many other methods. That is what we need to pay attention to. I shall say something about the planning system in a moment.
The structure of house ownership has changed in the past 10 years, in which the number of under-45s who own their own homes has dropped by a million. That is something we need to address, so I find it extraordinary that Labour Members should be carping about the welcome announcement by my right hon. Friend the Chancellor of the stamp duty exemption for first-time buyers for homes under £300,000, with a £500,000 limit in London. They carp about it as if it is somehow going to increase the market for first-time buyers, but the cut in stamp duty is likely to way exceed any consequential increase in house prices, so we should welcome it.
We should also welcome the measures the Government are introducing to build more houses, particularly the use of new town development corporations, which were used successfully by the Conservative Government in the 1980s to create whole new towns such as Milton Keynes. The legislation is still on the statute book. The corporations are partnerships formed among the Government, local authorities, the private sector and the social housing sector to build more houses. They worked in the 1980s and we should use them again, and we should make sure that new town development corporations are able to access more land.
I have two suggestions as to how we should alter the planning system. First, we need to alter the material-start system so that when builders get planning permission it is in all cases for only three years. Secondly, they should always have to build out a site in its entirety for services. That would stop house builders from sitting on land—land banking—for an unacceptable period and put an end to the practice of house builders using a vacant site as a bargaining tool to gain planning permission on other sites. Those would be important improvements.
The hon. Member for Wallasey touched on the Brexit divorce bill—the biggest liability this country faces for the next few years. It has been rumoured that we are going to pay £38 billion, which of course includes our obligations for things such as outstanding budget contributions, financial programmes, agriculture, overseas aid, pensions liabilities and decommissioning liabilities. Nevertheless, as my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) so rightly said, in a negotiation for a second-hand car, one does not go in and pay an excessive price; the clever negotiator pays the right price—the minimum price that they can get away with. That is what we ought to do with the EU. To put it into perspective, is not just about that £38 billion; it is about our promise of two years of payments after we leave, which is an additional £8 billion a year or £16 billion in total. That takes us up to some £54 billion, which is more than our entire transport budget and almost as much as our entire defence budget. That is what we have to think about with regard to those very large figures.
In 1945 the USA loaned us £2.2 billion—£87 billion in today’s money—as war reparations, and it took us more than 50 years to pay it off. I hope at the very least that we will do two things with this payment, if we actually agree it with the EU. First, it should be paid over a significant number of years. Secondly, it should be linked to our ability to earn money from it—that is, through a trade deal and other deals, which will help us earn and pay it off.
Technology is really important if this country is to remain competitive with our foreign competitors and our productivity is to increase. Thankfully, this country has experienced huge growth in digital innovation. However, we have a shortfall of about 40,000 people with the necessary skills in science, technology, engineering and maths to meet the demands of our economy. My hon. Friend the Minister for Universities, Science, Research and Innovation is present. I am delighted to learn that maths is now the most popular subject in our schools, and I am delighted with the extra money to encourage even more children to take maths at A-level. I am glad that the Chancellor announced that our national infrastructure fund will rise from £23 billion to £33 billion, and I am delighted that the main R and D tax credit to enable our firms to invest in even more infrastructure will be maintained. The Chancellor said that a new high-tech company emerges every hour, which is an amazing figure, and that he wants to cut it to every half an hour.
On education, I was pleased to learn earlier this year, having led a long campaign, that primary and secondary school funding will be maintained so that every child in this country gets a budget that increases in real terms every year, and that the secondary school budget would move up to £4,800 per pupil by 2020, which will begin to eliminate the gap between the lowest funded authorities, such as mine in the f40, and the highest funded authorities such as those in the middle of London. Our commitment to spending the extra £1.3 billion that we announced in our election manifesto has given the Cotswold School £450,000 more than it would have got under the old proposals. That is a welcome boost.
The Chancellor had a very welcome announcement for small businesses. There are 5.5 million small businesses in this country and, as he made clear, they are the engine of jobs and growth, so we need to make sure that they prosper. I welcome the fact that, contrary to the leaks about the Budget—thank goodness that leaks are often wrong—we are not going to reduce the VAT threshold, because that would not only introduce more bureaucracy for small businesses, but bring them within the making business digital threshold, which would, at a stroke, introduce even more bureaucracy for them.
Tom Brake (Carshalton and Wallington) (LD)
Does the hon. Gentleman agree that one of the biggest generators of bureaucracy for small businesses, particularly those that import and export, will be new customs arrangements if those are introduced?
Geoffrey Clifton-Brown
The PAC has done a lot of work on customs and I am hopeful about new IT and the introduction of the customs declaration service to replace the existing IT service. Customs will experience a huge increase in the number of VAT declarations when we leave the EU, and it has a really difficult job policing goods that are wrongly coming into this country. Customs needs to take that into account.
I have almost come to the end of my speech. On bureaucracy for small businesses, it is essential that we try to keep it down and help them wherever possible. I am particularly pleased, as I am sure are businesses in the Cotswolds, that the small business rate relief will be maintained. Rates can be a real burden for small businesses with premises on which they pay high rents and high rates, particularly in an area such as the Cotswolds. Those that have managed to be taken out of the rates ambit altogether will be very glad to hear that they will not be brought back into it in the coming year, which is what they had feared. Residents and businesses in the large rural area of the Cotswolds will be particularly glad to see the freeze on fuel duty for yet another year; that will help them. Incidentally, I am sure that individuals in the Cotswolds—and, indeed, the entire country—will be really pleased to see the freeze on wine, spirits and cider. I am sure that that will be particularly welcome.
To sum up, this has been a prudent Budget—nothing more than I would expect from my right hon. Friend the Chancellor, who is doing a great job for this country with his economic stewardship. I am sure that our economy will go from strength to strength, that our education will get better, that there will be more high-tech IT jobs and that there will continue to be a record number of jobs and of apprenticeships.
If the Labour party had anything to cheer about, it would surely be that we are employing a record number of people in this country. I would have thought that it would be particularly pleased at the Chancellor’s announcement that poverty is reducing in this country and that child poverty has reduced by more than 1 million in the past 10 years. [Interruption.] That is what the Chancellor said; I am only repeating it. I know that the Opposition would not like the figures to be correct, but the fact is that they describe what is happening.
Chris Evans (Islwyn) (Lab/Co-op)
It is a pleasure to follow the hon. Member for The Cotswolds (Geoffrey Clifton-Brown), a great parliamentarian who serves with distinction on the Public Accounts Committee with me. It was good to hear him.
Those of us who have been in the House for a number of years feel that this is like groundhog day or déjà vu—we have seen it all before. The difference with this Budget, though, is that after a general election, the Chancellor usually has to dole out the medicine, and the British public who have just voted the Government in have to take it. The difficulty that this Chancellor faces is that he has to please people of all persuasions. I have no doubt that when the right hon. Gentleman fed to the media that he wanted to reduce the VAT threshold for businesses, he was put off when he looked towards his Irish colleagues. I am sure that the freeze came out of not economic prudence, but political necessity.
But the Budget speech was no different from any other we have heard before. It began with a number of lame jokes—I am sorry, but the Chancellor is no comedian; who did not see the joke about cough sweets a mile off?—but this is no laughing matter. The elephant in the room for this and the previous Budget has been Brexit, although the Chancellor dedicated only a few lines to Brexit in his previous Budget. We are now at the most seminal moment in post-war British history—we are leaving the European Union. The Chancellor said early on that the Prime Minister had set out a clear vision—I must be the only one who does not know what that vision looks like. Actually, all we have had is the Chancellor saying that £3 billion is being put towards any consequentials of Brexit.
Chris Evans
I would have liked to have heard at least some sort of plan about the single market and the customs union. I would say—I shall diverge a little, if you will allow me, Madam Deputy Speaker—that those of us who are concerned about Brexit have been unfairly attacked as remoaners when we simply want to get the best deal for the country as we leave the EU. Some £3 billion has been put aside for Brexit, but we heard nothing from the Chancellor about £350 million per week for the NHS. Perhaps the Chancellor wants to drag the Foreign Secretary here to talk about where that £350 million is, because I have not seen it. While he is at it, perhaps he will talk to the nurses.
Jo Swinson (East Dunbartonshire) (LD)
The British economy today faces three key challenges. First, we have low productivity, with the associated wage stagnation that comes with it, and of course the reduced tax receipts. Secondly, we have high public sector debt. We must recognise the constraints that that places on what is possible economically, and be honest about some of the hard choices that need to be made. Thirdly, there is Brexit, which has already been described as the elephant in the room. We see the uncertainty it is creating for businesses and investment in the country, its impact on our economy, and the opportunity cost of all the energy and money being spent on preparing for it that could otherwise be directed elsewhere.
The Chancellor is a serious man. We had significant differences in coalition but in recent months he has appeared to be one of the few voices of reason in the Cabinet on Brexit. He had an unenviable task coming to the House today, given the picture of higher inflation, lower growth, lower productivity and high levels of debt. It really is bleak. The economy will be £45 billion smaller in 2021 than had been projected just in March this year, so his attempts to paint a cheerful vision of the future were rather less successful than his jokes. The truth is, as the Chancellor knows, that this Budget, the next one, the Budget after that and all future Budgets are made all the more difficult because of Brexit and the extreme approach to it that this Government are pursuing. Making it clear that an exit from the single market and the customs union is a red line for the Government—this is aided and abetted by the Labour Front-Bench team—imperils the future of the UK economy, and the Chancellor knows it.
The right hon. Member for Loughborough (Nicky Morgan) rightly said that there is no pot of gold at the end of the Brexit rainbow, although the more appropriate metaphor is that of a thunderstorm. We learned today that the cost of Brexit preparations is not just the £700 million already allocated but a further £3 billion, which is more than the extra money that could be found for the NHS, and that tells its own story. We need to add to that the exit bill, and who knows what that will be—£20 billion, £30 billion, £40 billion? In addition, there is the overall hit to the economy, which the OECD has suggested could be £40 billion. It is no surprise that these figures were not stuck on the side of a bus in the referendum campaign.
To promote the health of our economy we have long needed to use the advantage of low borrowing rates to increase investment in the economy, so I welcome some of the measures set out today to unlock new house building. However, they are not ambitious enough. As ever in Budgets, the devil is in the detail. The headline figure touted was £44 billion, but only £15 billion of that was new and just £6 billion of it was extra for increasing the housing supply. As my hon. Friend the Member for Bath (Wera Hobhouse) said, there was next to no help for extra social housing, which of course is badly needed as part of the mix.
On the NHS, Simon Stevens had asked for £4 billion next year, but the Chancellor’s response does not come close. The new revenue peaks at £1.9 billion next year and then drops to £1.1 billion. As I say, Liberal Democrat Members appreciate that hard choices need to be made, and if we want to resource our NHS and social care properly we need to look at how to find the funds. That is why we have proposed an increase in income tax of one penny in the pound specifically for the NHS and social care. It is worth noting that social care was something the Chancellor did not even think worth mentioning in his remarks.
Jo Swinson
Next year, £1.9 billion, so the Chancellor has fallen significantly short. I am sure the Foreign Secretary will be beating a path to his door to try to make that bus happen—or perhaps not.
On social care, we need serious responses and serious cross-party work to find long-term solutions instead of the half-baked policies, cooked up in secret, that the Government offered at the last election. On taxation, there was a missed opportunity not only to increase income tax in the way my party has suggested to fund the NHS, but to increase capital gains tax and corporation tax. Instead of this race to the bottom of trying to get to 17%, we could keep that a competitive rate of 20% and get the additional funding that that would generate.
The Chancellor was right to say that international action is needed to create fairer taxation, but he failed to address the role of the overseas territories. We should require them to comply with UK standards on transparency, or companies registered there should be prevented from doing business in the UK. In the spirit of being transparent, I ought to be transparent about the fact that my husband works for Transparency International UK. In the context of rocketing executive pay, it is impossible to escape the contrasts between the rich, who can hide their assets and avoid tax, those on middle incomes in both the public and private sectors, who are facing real-terms pay cuts, and the poor, many of whom, whether they are working or not, rely on benefits to make ends meet.
The right hon. Member for Ross, Skye and Lochaber (Ian Blackford) mentioned the £12 billion of cuts to benefits that are still to come—£12 billion of cuts that the Liberal Democrats blocked in the coalition. The rise in the income tax threshold, although welcome, contrasts with the continued freeze in benefits. That was bad enough last year or the year before, but in the face of inflation of 3% it will cause real hardship. We see some changes to universal credit, but the wider problems have been ignored, not least the £3 billion of cuts that were introduced in 2015. Universal credit needs to be paused while the problems are ironed out. There is merit in having a simpler system, but using the new system to make deep cuts fools no one and undermines the important principles that underlie universal credit.
On the environment, I welcome the consideration of new charges on single-use plastics—a Lib Dem idea—but there is precious little else to demonstrate that the Government appreciate the scale of the climate threat we face. They have scrapped rules for zero-carbon homes, cut subsidies for solar and renewable heat, privatised the green investment bank and scrapped the Department of Energy and Climate Change. Today, we saw no new resource for tidal, waste from energy or carbon capture and storage. The Government do not have a strong record on the environment.
On a positive note, I welcome a couple of things in the Budget. I welcome the investment in technology, such as artificial intelligence, driverless cars and geospatial data. I was going to make the point that ethics need to be at the heart of how we proceed, because whether we can do something is not the same as whether we should do something. I was therefore delighted to read on page 45 of the Red Book that the Government intend to establish a centre for data ethics and innovation. That is urgently needed and we should lead the way in that area. On that issue, I say well done to the Government and I look forward to exploring it further with Ministers.
I also welcome the national retraining scheme, in particular the partnership with the CBI and the TUC to make that work, with the focus on digital and construction skills in the first instance. However, I would say, particularly in the context of the automation challenge to our workforce, that we should be looking more at the care sector. There are certain things that robots will not be able to do in the near, or indeed the distant, future. One such thing is caring and human empathy. We also face a demographic time bomb, so we need to be upskilling and investing in the care sector to change it from a low-status profession to one that we recognise as high-skilled. We should therefore ensure that it is properly resourced.
In conclusion, our country faces big challenges and opportunities. There is a bleak economic outlook, low productivity, the threat of climate change, the pace of technological change and the impact of automation on work. Those challenges are enough to keep any Government awake at night. They need attention, innovation and new ideas. Instead, we have a Government obsessed and consumed by Brexit, and they are not even doing that competently. The economic picture outlined by the Chancellor today makes it clearer than ever that we need an exit from Brexit.