Budget Statement — House of Lords, 2017-12-04
Topic: Macroeconomics
Richard Balfe (Conservative, Centre-right): My Lords, I shall not try to follow the noble Lord, Lord Goddard, with a contribution on what our good friend Ruth Davidson calls the "southern powerhouse" but shall address other points in the Budget In 100 years’ time, will people look at this debate and the whole debate on fiscal policy that we are having now and wonder what sort of world we were living in? One thing that strikes me is how much the Government underplay their very real achievements and how little the aims of the Opposition differ from those that we are trying to achieve. If you look at the summary of government policy, you will find that in the last financial year, 2015-16, income inequality fell to its lowest level since the mid-1980s. Someone may like to remind us who was Prime Minister then, when it was last at this level. Since 2010 the growth in income from work for the lowest-income households has been higher than in any other major advanced economy. Government policy—I quote from the official document—is "highly redistributive". It says: "In 2019-20, the lowest income households will receive over £4 in public spending for every £1 they pay in tax" It also says that government tax and spending decisions have, "increased the tax contribution from the top income decile", which means that those paying the top level of income tax are paying more than £4 for every £1 they get back from the Government. Yet, listening to people, you would think that we were in some sort of wicked world where everybody was being screwed to the ground and oppressed. I am afraid the facts just do not bear that out. If there are cuts, where are they if government expenditure is going up? I humbly submit that a lot of what is said about cuts just does not stand up. As I have already said, households in the lowest income decile receive over £4 in benefits for every £1 they pay in tax, and, looking closely at the figures, those in the highest income decile contribute over £5 for every £1 they receive back in benefits. Indeed, the document points out, "the poorest 60% of households receive more in public spending than they contribute in tax" That is not a Government oppressing the poor; it is a Government doing their best. I am not saying that a Labour Government would not also do their best but I am not sure that they would find it possible to do any better. I submit that the much-vaunted talk about the few and the many actually refers to very much the same group. Earlier, I heard the noble Lord, Lord Palumbo, make a very good speech putting forward various policies, such as taxing the winter fuel allowance. I think that would be quite sensible but he said it would be electoral suicide. Frankly, it may be electoral suicide but we have to start talking about such policies, even though they are only tinkering at the edges. The fact is that as a society we rely on giving incentives to people to work hard and do well. I know that the Opposition regard £80,000 a year as a fortune. That is where the punitive tax cuts in. Interestingly, it is just £1,000 ahead of the income of Members of Parliament, but we will set aside how they came to that figure The fact is that, if you want to encourage people like head teachers, scientists and leaders in professions, it is not unreasonable to pay them £80,000, £100,000 or even £120,000. If you want top consultants who will work to get to that level of salary late in their career, that is not an unreasonable sum for them to earn. Apart from vice-chancellors, who seem to have set themselves up as a new parasite class, most people, certainly in the public sector—many of these £80,000-plus people are in the public sector—do a good and hard day’s work for their income. Noble Lords would not expect me to make a speech without mentioning that many of them are paid-up members of unions affiliated to the TUC. So the Labour Party and the Conservative Party have workers who work very hard and deserve a reward, and they should not constantly be denigrated However, we need a common purpose between the two parties in relation to tax avoidance. I know that a distinction is made between avoidance and evasion but I always say to people, "Why are the Cayman Islands, the Bahamas and Gibraltar such popular places? They’re popular because you can hide your money there". Not only do the parties have to get together but countries within the OECD and—dare I say it?—within the European Union have to get together as well in responding to the need for common action to close the loopholes. We all know that that is why these tax havens exist. We need a public register of the ownership of offshore companies and trusts. We have a housing problem in London; it would be nice to know who owns all those darkened houses in Kensington and to place some sort of income surcharge on them, would it not? My children—I am very proud of this—went to a private school. In the sixth form, every year, literally dozens of children who had no place in Britain came in and used all the public services. I have argued before that it would be quite easy to add VAT to their school fees, then they would make a contribution towards the economy that they benefit from In summary, we are arguing over angels and pinheads when we should be looking much wider. We should be looking at things such as my Amazon account, where everything comes through Luxembourg so that Amazon can avoid paying quite as much into the public coffers as it would if it came through the UK. The challenge is large, but we lose sight of it and of the huge amount of work that the Government have done in protecting the poorest and the most vulnerable and giving them a chance and a future.