Budget Statement

Viscount Chandos Excerpts

Friday 12th March 2021 Lords Chamber

[Viscount Chandos (Lab) [V]]

My Lords, speaking as a non-Marxist member of the Labour Party, I think that this much leaked Budget is a case study for the long-established rule that the better the immediate reception, the worse it proves to be once more measured analysis has taken place. The noble Lord, Lord Macpherson, pointed out that all the pressures on future public spending are upwards and my noble friend Lord Eatwell returned powerfully to the need to increase resilience in every area of the economy and society.

The Government have responded reasonably well to the immediate economic shock from the pandemic, albeit with devastating exceptions, such as for many self-employed, and sometimes, we understand, in the teeth of opposition from the Chancellor. But the Budget starkly exposes—as that other non-Marxist, the noble Lord, Lord Forsyth, spelled out—the poverty of the Government’s longer-term plans, by unduly prioritising future fiscal consolidation over reversing the massive cuts of the past 11 years to so many unprotected areas of public services.

In this context, with a Government trying to justify deeply inadequate pay proposals for the NHS on grounds of affordability, the decision to delay the correct increase in corporation tax for two years is wrong, particularly when combined with the introduction of the super-deduction allowance for the same period. To the extent that the corporation tax rate affects investment decisions, multinationals and global investors will take the rate set for 2023-24 onwards as the relevant one in their considerations. The tax revenue forgone would be sufficient to cover desperately needed targeted increases in public spending. This is the worst of both worlds.