Finance Bill — House of Lords, 2021-06-08
Topic: Macroeconomics
Michael Bruce Forsyth (Conservative, Centre-right): My Lords, I begin by expressing complete agreement with everything the noble Lord, Lord Butler, has just said, in particular what he said about the officials who supported the sub-committee and about the chairman, my noble friend Lord Bridges. When I asked him to take on the chairmanship of the sub-committee so that I did not have to chair both, I thought it was something of a hospital pass—but he did it absolutely brilliantly and with great distinction in what is a very complex area. We were very grateful to him for the leadership he gave in his indefatigable way. As the noble Lord, Lord Butler, said, we should be grateful that some of the recommendations have been accepted. I am probably the cynic: they were the ones of general principle, rather than the specifics I want to focus on this doorstep of a Bill. The papers I am holding are the Finance Bill and the papers that enable us to understand what is in it. I cannot help but ask my friend on the Front Bench: whatever happened to tax simplification? Whatever became of the Government’s declared policy of lower, flatter, fairer, simpler taxes? That policy was grounded in the belief that individuals, families and companies will make better investment decisions than Governments and that wealth creation is essential to the support of key public services such as health, education and social care. We wait with bated breath for the Government’s response to the Economic Affairs Committee on social care and on higher and further education We face the biggest financial crisis of our lifetimes—even our lifetimes in this House. It is an enormous challenge facing the Government, but the Covid measures continue to destroy our productive economy. Like a scorpion, the virus leaves behind its sting in the huge backlog of patients requiring serious procedures; the damage done to our young people’s education and career prospects; the impending crisis in housing caused by rent arrears; and the unemployment currently disguised by the furlough scheme continuing. Major industries have haemorrhaged cash on an enormous scale. Substantial debt provided by the Treasury has been taken on and, frankly, will never be repaid. Are we seriously going to take £20 a week from some of the poorest people in the land, just as electricity and food costs are rising? That decision alone is some £6 billion What is the Government’s strategy for facing this challenge? Tax and spend is not the answer. Nor can we continue selling IOUs to ourselves, which is given the name "quantitative easing"—a subject the main committee is about to report on. Inflation is already coming down the track, with the costs of raw materials soaring and pressure on wages rising because of labour shortages at a time when the Government are maintaining employment for many people through the taxpayer The Bank of England’s reassuring messages that there is nothing to see here and nothing to worry about, and that it will delay interest rates as soon as there is inflation—which will be a short-term effect—worry me. I remember, when I was a young man first engaging in politics, how quickly inflation got out of control, as people started pricing for anticipated rates of inflation. It ended in inflation of over 20%, interest rates of 15% and a lot of pain faced by the Conservative Party in government and the country as a whole. Inflation may be convenient for Governments with big debts but, as Jim Callaghan put it, inflation is the father and mother of unemployment The only way we can get through this crisis is by getting our economy growing again. That means recognising that the current long-term growth projections of just under 2% from the Government’s own statisticians are wholly inadequate and not acceptable. We need to change our strategy Increasing corporation tax—here I disagree with the noble Lord, Lord Butler—is the opposite of what is needed if we want to see more investment, growth and employment. Entering a cartel to set a minimum level of corporation tax may be good news for the United States, with revenues from its increasingly overmighty tech companies, but what happened to that vision of global Britain—the place to invest and create jobs and prosperity? The thinking embodied in the Chancellor’s welcome vision for free ports needs to be applied to the nation as a whole. If we believe in competition as the way to secure innovation and prosperity, why are we suddenly abandoning competition in taxation? "Take back control" was as much about setting our own taxes and laws as about regulation. It should be for the other place to decide tax matters and tax policy, not the President of the United States, and not by international treaty. It is the other place’s duty to vote means of supply, and it is wrong for the Executive to circumvent that in this way I fear that, as the President of the United States now appears to want to opine on the Northern Ireland protocol, it may be time for Boris Johnson to have his "Love Actually" moment and not just make the speech but unleash the talents of the British people. That means supporting the self-employed and encouraging outsourcing. While it is commendable that HMRC tackles tax dodgers and abusers, this should not be at the expense of struggling self-employed businesses by imposing additional costs. The self-employed are not the same as those on PAYE. There is no statutory sick pay for them and no holiday entitlement, and the next penny depends on identifying the next job. IR35 is having a severe impact and will discourage others to set up on their own. I talked to someone in exactly that position just over the weekend. These small and medium-sized businesses are the seed corn of our future growth, and the Government should honour their long-standing promise to bring forward a new status for self-employment following the Taylor report, as my noble friend Lord Bridges indicated in his excellent speech a few minutes ago. This was also a manifesto commitment; I cannot remember how many manifestos ago it was, but it was certainly a clear commitment from this Government It now seems every Finance Bill brings forward new powers for HMRC, even before the review of the use of existing powers is completed. This Bill is no exception, taking away the right of appeal to a tribunal for financial institutions to provide specific information about a taxpayer. The disgraceful and effectively retrospective treatment of loan charge victims, such as local authority and health service workers placed in schemes by their employers without full understanding of what they meant, has not been matched with the same zeal in pursuing those responsible for marketing those schemes, now languishing on their superyachts with their ill-gotten gains. I am disappointed that the Government have refused to apply measures retrospectively to these promoters, as recommended by the Finance Bill Sub-Committee, but I welcome the proposals for tougher action that are currently subject to consultation. It is beyond belief that these schemes are still being promoted, and some are targeting workers returning to the NHS. HMRC itself has been using firms that use these schemes To conclude, we need a clear vision from the Prime Minister and the Chancellor and a strategy to get our economy going again if we are to meet our duty to secure a safety net for those most vulnerable and disadvantaged in our country. Higher taxes, more bureaucracy and continuing uncertainty are anathema to achieving that, for, as the Book of Proverbs reminds us, "Where there is no vision, the people perish."