Budget Resolutions and Economic Situation

Victoria Atkins Excerpts

Monday 20th March 2023 Commons Chamber

[The Financial Secretary to the Treasury (Victoria Atkins)]

I thank colleagues across the House for a spirited debate, in which we discussed some profoundly serious issues facing our constituents and our country. Although there may be very different ideas across this Chamber on how to deal with those issues, I am sure that Opposition Members will accede, in an air of understanding how important this is to our democracy, that while we may have different ideas, we all fundamentally want the same thing: to look after our constituents and this great country.

I particularly want to thank all right hon. and hon. Members who have revealed to us their expertise in science. I commend my hon. Friend the Member for Hazel Grove (Mr Wragg) on his frankly ingenious use of the phrases “levelling up” and “productivity increase” when it comes to the number of swimming pool lanes in the Marple leisure hub. I also suspect he is the first colleague to get “inflatable flamingo” into Hansard.

The Government have a bold and ambitious plan to grow our economy, which will be driven in part by our taking a seat at the table of science and innovation superpowers. It is a plan for the future, not just in the realm of science and technology, but of our economy altogether. Just as we can improve people’s lives through science, innovation and technology, as my right hon. Friend the Secretary of State outlined at the start of the debate, we can also create highly paid and rewarding jobs across the UK, and we plan to do exactly that through our levelling-up work and our investment zones.

Of course, the way taxes are levied will be an important part of our success. As the Minister responsible for the tax system, I have asked my officials to keep three objectives in mind: making tax fairer, making tax simpler and making tax supportive of growth. By creating the right incentives through tax, we will harness British ingenuity to make us a science superpower.

We have heard a lot of statistics in this debate. In an effort to share the goodwill and cheer everybody up a bit, I thought I would give some more statistics, to put just a little colour and context on some of the stats we have heard. Since 2010 we have grown more than major economies such as France, Italy and Japan, and about the same as Europe’s largest economy, Germany. On growth, last year we had the highest growth of any G7 economy.

While Opposition Members understandably like to focus on the bad news that this year we are not meeting the hopes we all have in respect of growth, it is important to draw out the OECD’s fuller forecast, which is that cumulative growth between 2022 and 2024 inclusive for the United Kingdom is predicted to be higher than for Germany, Japan or the United States. The World Bank says that, out of all of the big European countries, we are the best place to do business. Surely the Labour party does not disagree with that. Global CEOs say that, apart from America and China, we are the best country in which to invest.

That is precisely why we have announced the full expensing policy, which will support the corporation tax policy and the annual investment allowance for smaller businesses. We have the world’s third trillion-dollar technology economy, after the United States and China. We have built the largest film and TV industry in Europe—again, we had some good news for that industry last week with the tax reliefs that the Chancellor announced. In terms of the personal, a disadvantaged pupil is 85% more likely to go to university now than they were a decade ago.

We have also built the largest life sciences sector in Europe, something my right hon. and hon. Friends representing Cambridgeshire are particularly keen to emphasise every time we meet. The Government recognise the value of small and medium-sized enterprises to the wider R&D ecosystem of the UK and the hugely important role that research and development and innovation plays for the economy and for society.

Even in extremely challenging fiscal circumstances, we must prioritise R&D, and indeed we are prioritising it. That is why we are introducing an enhanced credit whereby, if a small or medium-sized business spends 40% or more of its total expenditure on R&D, it will be able to claim a credit worth £27 for every £100 spent, something welcomed by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton).

[Emma Hardy]

Does the Minister share the concerns that I set out earlier about the fraud involved in the R&D tax relief, which equates to more than £1 billion being lost in fraudulent investments that HMRC is yet to be able to fully claw back for the taxpayer?

[Victoria Atkins]

Not only do I agree with the hon. Lady, but I am going even further than the changes that we have made to the R&D scheme. She will see in the Finance Bill some practical measures to help small businesses ensure that they are not inadvertently—or indeed, sometimes fraudulently—dragged into that scheme. I do not want a pub restaurant claiming that discovering avocado is a research and development issue, so we are absolutely clamping down on that. I know that other hon. Members around the House raised that as well.

To put a little context on the R&D changes, they mean that an eligible cancer drug company spending £2 million on research and development will receive more than half a million back to help it to deliver breakthrough treatments. Of course, R&D is not confined just to life sciences and the tech sector; it is also, as my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) righty set out, even present in the ceramics industry. I very much look forward to the things he mentioned coming into fruition.

My hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell), the hon. Member for Llanelli (Dame Nia Griffith)—I apologise for my pronunciation of her constituency—and others mentioned Horizon. The latest update that I can give the House is that, of course, we have expanded the Horizon guarantee until the end of June this year. I am delighted to say that my right hon. Friend the Secretary of State and my hon. Friend the Science Minister met the EU ambassador only last week to continue our discussions about that scheme.

In relation to corporation tax, of course, we have one of the most supportive business tax regimes in the world. We have the lowest corporation tax in the G7. The UK’s research and development expenditure credit offers the joint highest uncapped headline rate of R&D tax relief support in the G7 for large companies, and the Government’s announcement of full expensing for businesses from 1 April this year will make a huge difference to businesses.

As my hon. Friend the Member for Poole (Sir Robert Syms) noted, that tax cut, which is worth an average of £9 billion a year for every year that it is in place, is focused only on those businesses that invest. That is targeted help for the businesses that will invest in our country—I hope, having noted his comments about the super-deduction, that my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) will welcome that.

I genuinely think that the confirmation of the 12 investment zones is one of the most exciting parts of the Budget. Each investment zone will drive innovation and growth in one of our key future sectors—including life sciences, advanced manufacturing, green industries, digital and technology, and creative industries—and, importantly, will be aligned to local economic strengths, with a total investment of £80 million over five years.

My hon. Friends the Members for Don Valley (Nick Fletcher) and for Bracknell (James Sunderland) both put up strong, heartfelt arguments in favour of their areas. I am afraid that I cannot make decisions at the Dispatch Box, but I wish them well in that.

Another exciting development is for my hon. Friend the Member for Ynys Môn (Virginia Crosbie), who is developing a real reputation for representing her constituency and the need for nuclear. We are delighted that Great British Nuclear will launch the first stage competition for small modular reactors, which is expected to attract the best designs from domestic and international vendors. I know that she will watch that carefully

My hon. Friend the Member for Erewash (Maggie Throup), who brings to the Chamber her expertise not just as a former science graduate but, importantly, as a former Health Minister, welcomed the announcements made last week on medicines and medical technology regulation. The MHRA has some exciting developments coming down the road, including being able to set up new approval processes for the most cutting-edge medicines and devices to ensure that we continue to be a global centre for their development, and a new system that will allow rapid, often near-automatic sign-off for medicines and technologies approved by other highly respected and trusted medicine regulatory bodies around the world.

On pensions, Opposition Members have appeared not to support the Government’s efforts to get more doctors back into the NHS. A fact: the Royal College of Surgeons of England has reported that 69% of respondents to its survey said that they were cutting their hours because of pensions rules. Another fact: the chair of the Association of Police and Crime Commissioners says that this is a “game changer” for keeping police chiefs fighting crime. Another fact: the Association of School and College Leaders said:

“It is in the national interest”.

I take some guidance from the shadow Health Secretary, the hon. Member for Ilford North (Wes Streeting), who said that it will “inevitably save lives” to make these changes. That is why we are doing it. We can introduce it in two weeks’ time, and I very much hope that Opposition Members will support it.

Childcare is another massive policy, but I am very pleased—