Income Tax (Charge) — House of Commons, 2021-10-28
Topic: Macroeconomics
Richard Quentin Fuller (Conservative, Centre-right): 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.