Super deduction is super, say Tories; opposition MPs more dubious
MPs have begun four days of debate on the Budget, which will culminate on Tuesday with votes on the Budget resolutions (see below). This report picks out some of the contributions on tax matters from the first two days of the debate. They are grouped by topic rather than in the order the speeches were made.
The planned increase in corporation tax and the ‘super deduction’ were – covid support aside – the most discussed Budget measures during the two days of debate.
Conservative MPs could barely restrain themselves in their enthusiasm to praise the super deduction. Mark Fletcher ‘massively’ welcomed it, saying it would give a turbo-charge to business investment across the country and lead us to a greener future. John Penrose said it would encourage international investment in which would not just drive economic growth, but make those jobs permanently competitive and safe for the long term. Andrew Griffith called it ‘revolutionary’ and said it would encourage companies to unleash their potential and to get on with investing and building the future. The Government are standing shoulder to shoulder with risk takers, founders, entrepreneurs and investors, he claimed.
Simon Clarke was delighted and said incentivising businesses to invest in new machinery will be a massive boost. Laura Farris welcomed both the super deduction and the offering to innovators through R&D tax credits. To tackle unemployment, we must support businesses and business investment, and with the super deductions, the restart grants, furlough and the business rates holiday, and the Government is doing exactly that, charged Laura Trott.
A number of MPs thought it would especially benefit their areas. Simon Fell said it was an ‘incredible boon for the North’. For companies in Heywood and Middleton, said Chris Clarkson, the super deduction will be one of the biggest tax cuts in their history and it will get them investing, creating jobs and driving our economic recovery.
A number of Conservatives pointed to the trade off between the super deduction and corporation tax increases. Antony Higginbotham said the Budget struck ‘the right balance’, paving the way for corporation tax to increase on businesses that are making healthy and sustainable profits, but ensuring that losses can be carried back for longer, and providing much-needed support to our SMEs through a reduced tax rate. The super deduction could be transformational for areas such as Burnley, where there is a significant manufacturing sector, he claimed.
Nigel Mills said the super deduction was ‘a super idea’. He thinks that it is what businesses will call for and will need, and it balances out the decision to fairly raise corporation tax. Brendan Clarke-Smith said that while there will be an increase to corporation tax, the super deduction scheme is both innovative and encourages investment ‘at a time when we need it more than ever’.
Treasury Committee chair Mel Stride said he was ‘delighted’ and that it will be ‘a huge shot in the arm for corporate UK’. He is glad the tax increases do not kick in straightaway. UK’s corporation tax will remain internationally competitive, he predicted. His committee colleague Harriett Baldwin said the super deduction was a huge signal to business and should shift the long-standing under-investment by businesses in our economy.
The super-deduction will rocket-boost capital spending and make inroads into the productivity conundrum, said Paul Howell, who would like it extended to other businesses, such as farmers. John Lamont said it was one of the ‘innovative’ new policies to create the good new jobs of the future.
Not all Conservatives were happy though. Christopher Chope highlighted that an increase from 19p to 25p is an increase of more than 30% in corporation tax. He said: “The fact that 65 out of every 100 people questioned like the increase in corporation tax illustrates the extent of the economic illiteracy that sadly abounds.”
Damian Collins warned that the lever of increasing corporation tax, which may have worked in the past, may not work quite so well when we have major companies, particularly in the technology sector, which avoid paying a level of taxes commensurate with the value of the business that they do.
There was a welcome for the return of the small profits rate, with Conservative MPs equating it to help for small business. Saqib Bhatti welcomed the limiting the impact of corporation tax on small businesses because, he said, there will be many up and down the country that will be struggling for the foreseeable future. Small business makes up 98 per cent of the total business population, so a small business rate of corporation tax protects many from the risk of being disincentivised from striving for the next level, said Andy Carter.
Labour were more sceptical about the changes, however. Party leader Keir Starmer said the super deduction was unlikely to make up for the 10 years when the levels of investment growth have trailed so many other countries. Backbencher Nadia Whittome called it a huge £25 billion giveaway to big businesses. Steve McCabe asked why the super deduction policy take no account of whether investment would have occurred anyway, the areas that will benefit, or if it might end up costing rather than saving jobs?
Shadow Chancellor Anneliese Dodds said the expectation that the new corporation tax rate would bring in £17.2 billion a year by the end of the forecast period was a damning indictment of a key Conservative claim that every time corporation tax has been cut in this country it has produced more revenue. She added: “By moving the rate back up in two years’ time, aligning us with our international peers, as Labour has long called for, the Chancellor has created a cliff edge that might otherwise have prompted firms to delay investment and further damage the recovery.” Dodds compared the ‘so-called super allowance for investment’ unfavourably to Labour’s proposal for the Government to support the creation of 100,000 new businesses over the next five years.
Joanna Cherry (SNP) welcomed the increase in corporation tax because ‘businesses in profit can most afford to pay up’. But Sammy Wilson (DUP) was worried about the impact of the corporation tax increases because it will impact on investment, adding ‘If we are going to become the Singapore of Europe, it is important that we become a most attractive place for investment’.
Lib Dem business spokesperson Sarah Olney said the super deduction would enable cash-rich firms to get an extremely generous tax deduction on expenditure on plant and machinery across the next two years before being hit with a corporation tax hike. But after 12 months of little to no trading because of the pandemic, many firms in her Richmond upon Thames constituency simply do not have the cash in the bank to make these kinds of investments: “Demoralised and exhausted after the effects of the past year, their reward will be a huge hike in corporation tax rates.” She added: “It would have been better to have a windfall tax now on the companies that have continued to prosper during the pandemic and then cut rates again in a few years to encourage those who are rebuilding.”
The Washington-based thinktank the Tax Foundation estimates that the global average corporation tax rate is just over 25 per cent, so it is difficult to make the case that a 25 per cent rate in the UK would be uncompetitive, said Jonathan Edwards, Independent.
Concluding Thursday’s debate, Tax Minister Jesse Norman said we must engage with the work of fixing the public finances, and that is why we are asking the largest and most profitable firms to pay more in two years’ time by increasing corporation tax. But he did accept that the low rates of that tax in recent years ‘did not trigger an enormous increase in business investment’. The super deduction policy will get away from the patterns of underinvestment by business, and this is a way of attempting to move corporate Britain in that direction, he said.
The High Street, business rates and online retailers
The plight of the High Street and in particular the impact of business rates continues to loom large in MPs’ concerns. Everyone welcomed the continuing business rates holiday but many wanted it to go further.
It is not enough to continue with the business rates holiday, said Matt Western (Labour). The Chancellor failed to do the right thing and undertake the wholesale revision needed to address the massive distortion in our economic landscape. Alex Sobel (also Labour) said that the Chancellor’s announcements fall short of Labour’s calls for 100 per cent business rates relief for retail, hospitality and leisure to be extended in England for at least a further six months from July. We need more support for our tourism sector than has been offered today, he said.
Lib Dem Shadow Treasury spokesperson Christine Jardine called for a zero business rates policy for all small businesses in 2021-22.
On the Conservative benches, Sir David Evennett said news of the business rates holiday will be most welcome across the country, as it is a sizeable operational expense for many business, and this measure will help to mitigate the impact of the coronavirus pandemic.
Gagan Mohindra said things he would like the Treasury to look at in future include “the wholesale reform of business rates, as this will be critical to ensuring our businesses do not all leave our city centres and high streets and revert to an online-only or virtual presence. That, in my humble view, is not a legacy we would be proud of. Covid-19 has accelerated the change in our working and buying habits. I urge the Chancellor to grasp this opportunity for tax reform to ensure that all businesses have a level playing field.”
Many MPs continue to be unhappy with levels of tax paid by digital multinationals. Tobias Ellwood (Conservative) would like the Government to raise the taxation of digital multinational such as Google and Facebook at the G7. Sammy Wilson (DUP) said there are opportunities for tax increases that will not actually hurt businesses or individuals in the UK, such as on ‘Amazons and Googles’. Calum Eastwood (SDLP) said we know that small retailers are on their knees yet there is no mention of a windfall tax on Amazon.
Joanna Cherry (SNP) asked where the promised ‘online tax’ is when many high street retailers are frustrated when they see how companies such as Amazon and Apple have benefited from the pandemic. Jonathan Edwards (Independent) said it is imperative that the UK find an answer to the question of how to tax the digital world with given the pandemic-induced shift to online retail, with online sales accounting for a record 35 per cent of total retail spending in January 2021, up from 20 per cent in February 2020.
VAT and duties
There was broad support for the continuing reduced rate of VAT for the tourism and hospitality sector.
Mel Stride (Conservative) said it will help particularly hard-pressed sectors. Another Conservative, Andrew Jones, said that reduction will boost demand. Boosting domestic tourism will certainly help, but there is also significant pent-up local demand that the measure will help to unlock, thereby underpinning thousands of jobs, he said. Anthony Mangnall (also Conservative) remarked that the sliding mechanism to 12.5 per cent provides certainty for businesses.
Ian Blackford (SNP) welcomed the VAT cut but it should have been retained at five per cent for much longer. Christine Jardine (Lib Dem) said that she would have liked to see the VAT cut stay in place until the end of the financial year and not just for hospitality but for all businesses. Another Lib Dem, Tim Farron, said the VAT cut was welcome, but not extending it to alcohol ‘is a crippling blow to wet-led pubs’.
Two Conservative MPs argued for a VAT increase to fund the scrapping of business rates. Kevin Hollinrake explained: “Because of the threats from Amazon and the like, one way we can ensure fairness is to scrap business rates and replace them with a small increase in VAT. That would be a simple solution to the problem and set that fair and level playing field for many SMEs in this country”.
Sir Edward Leigh said ‘the truth is that we have a very unequal tax system’. Giants such as Amazon are paying an infinitely small proportion of their profits and turnover in business rates and are driving small businesses and shops out of the high street, he argued. Leigh thinks that there is something to be said for abolishing business rates all together. How would we pay for that? We could pay for it through a three per cent increase on VAT on all businesses, he said. That, of course, would hit the very large businesses such as Amazon, which pay derisory levels of tax, very hard indeed, he said, adding: “Tax complexity creates a structural bias in favour of the very rich and the big corporations, and that is not fair.”
The freeze on fuel and alcohol duties was welcomed by Conservative MP Paul Bristow. He said: “Thanks to successive Conservative Chancellors, we are saving a fortune when we fill up our tanks, with a 10-year freeze on fuel duty. The beer freeze means that we also save when our glasses are filled at the pump.”
Tax rises (Conservative reaction)
While most Conservative MPs were supportive of the Chancellor’s tax proposals a number expressed concerns about the impending increase to the tax burden.
Father of the House Sir Peter Bottomley said that we ought to pay attention to what the tax rate is as well as what the tax take is. “This is one of the curiosities of our national economic discussion. My former supervisor Professor Sir James Mirrlees—I was his worst pupil—did a calculation of what he thought the appropriate tax rate was: when he was young, he thought it was around 27%; by the time he got older, he had become a bit more socialist and thought it was around 33%. We are now running at 38%. Both the level of taxation and the rate of taxation deserve better public discussion, and I hope that the Chancellor can encourage forums for doing that.”
Bottomley added that one of his constituents suggested “that the Chancellor should consider having separate tax codes for different key workers, as a way of recognising their contribution. I said, “You will always have a boundary problem, but then you always have a boundary problem, whatever you do in life.”"
Mark Harper does not think we are undertaxed, because the tax rises in this Budget will leave us with the highest tax burden in his lifetime. He hopes that they will be temporary and that, once we have got the public finances back into shape, the Chancellor will be able to look to continue increasing public spending in line with the growth of the economy, but also to reduce taxes so that people can keep more of their hard-earned income.
David Davis said the latest deficit figures published before today were £394 billion a year. That is £14,000 per household. Just looking at the size of the number tells us that no tax policy can solve it, he said. The idea of imposing £14,000 per household of taxes is ‘nonsense’; it would be designed to destroy any economic recovery. Only a recovery policy designed to restore the tax base and remove the need for subsidies will close that gap, he said. He is worried that inward investment will fall because of the corporation tax rises. “Income tax increases, whether direct or stealthy, reduce aggregate demand; they reduce the amount of money people can spend. Corporation tax increases suppress investment. Capital gains tax increases deter both domestic investment and foreign investment.”
It is very important that tax incentives are correctly honed so that we get the boost in private sector investment that we want, said John Redwood. The only way to get this very big deficit down is to have more revenue and less expenditure, and the only legitimate expenditure to cut is ‘all the spending we have been doing as a poor substitute for a decent economy with well-paid jobs and successful businesses’.
Richard Drax remarked that ‘Global Britain’ requires low taxes, less state and a lithe public sector. He cautioned that some businesses will not be able to repay the loans that they have already taken out.
However Treasury Committee member Anthony Browne said even fiscal conservatives must admit that sometimes taxes must rise, and now is such a time. There is no fairer way to do it than to freeze the threshold on income tax and to raise corporation tax on highly profitable companies, he said.
Freeports and Brexit
MPs’ views on freeports divided down party lines.
For Labour Keir Starmer said that, “Instead of putting blind faith in free ports, the Chancellor would be better served by making sure that the Government’s Brexit deal actually works.” Shadow Chancellor Anneliese Dodds said that eight freeports do not add up to a grand plan for our economic future, and there is a strong chance that they do not create new economic activity overall, but instead just move it around.
Responding to Dodds, the Secretary of State for Work and Pensions Thérèse Coffey, said freeports will create tens of thousands of extra jobs right around the country.
Conservatives with constituencies near to freeports were especially keen. Ben Bradley thanked the Chancellor for choosing the east midlands as home to one of the new freeports because of the impact of the jobs and growth that can come from the site which is vital for the recovery across the east midlands. Jane Hunt said the new freeport at East Midlands Airport will create a centre for business and promote jobs and growth not only at the site itself but in local business clusters.
Simon Jupp claimed the Devon freeport will bringing investment, trade and jobs. On the super deduction is worth around £25 billion to UK companies and will kickstart an investment-led recovery. Far from the freeport just displacing activity from elsewhere in the economy, the Ford site and the Petroplus site are redundant industries, said Jackie Doyle-Price. Katherine Fletcher said: “Freeports will help us get our goods to the world”.
Brexit did not feature prominently in the debate, but a number of opposition MPs did raise concerns. Munira Wilson (Lib Dem) complained that there was nothing in the Budget to help those exporters hit by Brexit red tape. Ben Lake (Plaid Cymru) said Wales alone received around £375 million a year in needs-based funding from the EU schemes, yet now it will be expected to compete for a much smaller pot of money, he worried.
Paul Blomfield (Labour) highlighted that hidden in the figures of the Budget is an admission that Brexit will hit GDP by 0.5 per cent in the first quarter alone, and the OBR has of course said that there will be a long-run hit of four per cent. These are the inevitable consequences of erecting barriers to trade with our biggest economic partner, he said.
Personal and employment taxes were relatively low profile during the two days of debate, despite significant announcements in the Budget.
On income tax, former Labour Leader Jeremy Corbyn noted that many in the public sector would be hit not just by the pay freeze but also by ‘a stealth income tax rise’ through the freezing of the tax allowance. Alison Thewliss (SNP) also called the freeze on income tax thresholds ‘a stealth tax rise’ for ordinary earners. Similarly, Wendy Chamberlain (Lib Dem) said freezing the personal allowance is a stealth tax that simply means that the poorest will pay an increasing proportion of their income in tax as many begin to make the transition from universal credit to employment as the economy recovers.
Jerome Mayhew (Conservative) said incomes have been supported by tax money over the last year, so a gradual clawback via the freezing of income tax thresholds is a fair way to start the job; it is a sensible, gradual approach, where the better-off pay more.
Jonathan Edwards (Independent) said that the Chancellor’s income tax proposals were far too timid. He should have followed the new US Administration by increasing income tax directly on incomes above $400,000—about £300,000—by introducing a new pandemic tax band. But the redistributive zeal required to tackle the UK’s inequalities should also look at taxation on held personal wealth, as is the case in Norway, Switzerland, and Spain, he said. He hopes the Treasury’s Tax Day on 23 March will signal a full-scale review of how wealth in the UK can be taxed more fairly and justly in the long term.
Richard Burgon (Labour) called for a huge state investment programme funded by record low borrowing costs and taxes on the ‘super-rich’, starting with a 50 per cent rate on those on over £125,000.
On property taxes, Felicity Buchan (Conservative) wants a fundamental reform of stamp duty, believing it is a tax on social mobility.
Lilian Greenwood (Labour) commented that now is not the time to raise taxes or cut household spending power, but that is precisely what the Chancellor is doing, forcing councils to implement a 5% hike in council tax, freezing the pay of key workers, taking money out of people’s pockets, cutting the money that they have to spend with local businesses and on our high streets, damaging the recovery.
Tax administration and compliance
Public Accounts Committee chair Meg Hillier welcomed investment in HMRC and DWP to look at fraud and error. “These are small amounts. But it was this very Government who pushed bounce back loans through, as the National Audit Office has said, with very little regard to risk. A slight delay of 24 or 48 hours would have put less risk on the taxpayer for the guarantee on those loans. With regard to some of the furlough schemes, at the early stages it was right to get this out the door, as my Committee has acknowledged, but later, more safety mechanisms could have been put in place. That money is good money chasing bad, in many respects. The risk appetite was high.”
Jeremy Corbyn (Labour) was unhappy that the Budget “said a great deal about corporation tax and business taxes, but it did not say very much about tax evasion or tax avoidance. Not increasing statutory sick pay while at the same time doing nothing about tax evasion and tax avoidance says it all about Tory priorities.” Catherine West (also Labour) complained that there was no real ambition on the question of international tax evasion and avoidance, “which could bring in funds to tackle some of the problems that desperately need tackling, and to address our mounting debt problem.”
Sammy Wilson (DUP) was disappointed that the announcement of additional inspections for tax fraud is ‘so small’.
The Green Economy
Meg Hillier (Labour, PAC chair) said a few figures had been announced on green initiatives “but there is no clear plan”. “I will look in detail at the little bits of money announced today, as my Committee, the Public Accounts Committee, is examining issues relating to the green economy in a series of inquiries.”
A number of her Labour colleagues made similar points. A massive green economic stimulus on the scale of that in the United States was needed in the Budget, said Clive Lewis, instead, we got the decision to freeze fossil fuel duty. This Budget will entrench inequality and it failed to tackle the climate crisis, he argued. Mick Whitley commented that the Budget contains a meagre £20 million for floating offshore wind production and no new investment for a green recovery in the automotive, steel or aerospace sectors. Bill Esterson said the Government showed their lack of commitment to green investment by scrapping the industrial strategy council.
Rebecca Long Bailey said if the Government were serious about tackling climate change, they would grab the opportunity to reverse decades of de-industrialisation with a bold green regional investment strategy. Barry Gardiner said the Chancellor should have said that the super deduction could be used only for sustainable green investment, and not to subsidise what could be environmentally damaging infrastructure by oil and gas corporates.
Alison Thewliss (SNP) said VAT cuts for repairs to buildings would help to end the scourge of derelict buildings and encourage investment in our built environment. VAT cuts could also be used to boost investment in energy efficiency measures, thereby contributing to our net zero ambitions, she added.
Former Chancellor Sajid Javid, Conservative, spoke about the need to recognise the value of the natural world in our national accounts and the Chancellor to formally ask the UK Statistics Authority to review how that might be done.
Economic support and welfare
MPs universally welcomed the continuation of furlough and the SEISS, as well as the extension of the universal credit (UC) £20 uplift, but many wanted the support to go further and for longer.
Labour leader Keir Starmer set the tone, expressing disappointment that the £20 uplift is only for a few more months and the kickstart scheme is helping only one in 100 eligible young people. He also thought the £500 isolation payment should be made available to everyone who needs it. The Budget also falls far short of what was needed to support the self-employed and freelancers, he said.
Shadow Work and Pensions Secretary Jonathan Reynolds said that even if kickstart worked, the scale of the challenge is already greater than the full capacity of the scheme. Reynolds suggested we should promise young people an offer of education, employment or training and link those jobs and training to the challenges the country faces on social care, the NHS, schools and climate change (with time spent on furlough should count towards that limit). The UC uplift should remain until it is finally replaced with a system that provides ‘genuine security for all’, he said.
Chair of the Work and Pensions Committee Stephen Timms (Labour) said the UC uplift should have been announced weeks ago and the total of £20 a week will be cut just as furlough ends and unemployment reaches its peak. The House of Commons Library says that the only precedent for that is the 10 per cent cut in unemployment benefit introduced by the National Government in 1931. But he did welcome the bringing forward to April of the increase in the period over which UC advances will be recovered to 24 months, and the reduction of the maximum rate of deductions to 25 per cent of the standard allowance.
Meg Hillier (PAC chair, Labour) said we should also be tackling the challenging issues in respect of different employment statuses, especially as COVID-19 has had different impacts on different groups of people. The poorest get a welcome prop-up with the extension of the uplift to universal credit, but only to September, she observed. “I am not sure that I can see—I am sure the Chancellor would agree that he does not have a crystal ball—what will suddenly change in September that will mean that people do not need the extra £20 a week.”
Other Labour MPs expressed similar sentiments. Seema Malhotra said removing the two-child limit and the benefit cap would lift hundreds of thousands of children out of poverty, but the Chancellor chose not to do it. It is indefensible that the Chancellor has only extended UC by six months, said Kim Johnson, saying a lifeline for millions of the most vulnerable will be wiped out at the same time as furlough ends, and this will push hundreds of thousands of people deeper into poverty. The Chancellor has created ‘a perfect storm’ by planning to cut universal credit just as unemployment peaks, while he has also continued the Conservatives’ ‘hostile environment’ for disabled people by ignoring legacy benefits, remarked Mary Kelly Foy.
Protecting jobs and maintaining incomes through furlough is only a baseline, said Barry Gardiner. Alongside it, the Chancellor should have put in place incentives for companies that spread employment through job sharing while using non-employed hours engaged in a new, paid national retraining scheme for the zero-carbon industries of tomorrow. That would have been transformational and given people currently in old industries hope and security for the future.
The Welsh Government have provided the most generous support package for business and workers in the UK. In contrast, this Government have excluded three million people from support schemes for nearly a year, said Jessica Morden. Ellie Reeves said while the Budget means the newly self-employed in 2019-20 will no longer be excluded, those changes could have been made months ago to help to protect livelihoods.
Yvonne Fovargue said the pandemic has raised awareness of the relatively low level of benefits, and it is not just charities and faith groups that believe that the amount should be increased; it is also the general public.
SNP MPs offered similar criticisms. Ian Blackford questioned the lack of compassion in only extending the £20 uplift for six months. To expect businesses that have been closed to make increasing contributions to furlough is simply unacceptable when they do not have the cash flow, he argued. The cut-off date for entry into job retention schemes should also be revised, he said, ensuring that support is available to the growing numbers who have started new jobs since the end of last October.
Alison Thewliss said arbitrary cut-off dates in the support schemes are deeply unhelpful. The cliff edge in the fifth SEISS grant for those above or beneath the 30% drop in turnover seems incredibly unfair and incredibly steep, she argued. Furlough has been welcome for some, but for others, including the three million excluded, who have not received a penny, this Budget offers nothing, commented Carol Monaghan. Out of work support will be at its lowest ever level since 1990 when universal credit is cut in six months’ time, noted David Linden.
For the Lib Dems, Christine Jardine said furlough should be extended for as long as we need it, and all the self-employed and excluded should be brought into it. She added that the Government should look to pilot and trial schemes of a universal basic income because the end of the £20 extra UC and furlough will end when unemployment could rise again.
Munira Wilson said that, with a year having elapsed since the emergency economic measures were introduced by the Chancellor, it was unforgivable that the vast majority of the three million excluded remain overlooked—in particular, directors of limited companies. These are not wealthy tax dodgers but are ordinary, hard-working folk at the heart of our high streets, she said. Tim Farron similarly highlighted that there is nothing in the Budget for the freelancers, directors of small limited companies, taxi drivers, hairdressers, personal trainers and the like.
Ben Lake, Plaid Cymru’s Treasury spokesperson, was concerned that despite the changes to the SEISS, hundreds of thousands of people are still deprived of any support. And the delaying of the cut to UC will still lead to 26,000 families in Wales not being able to afford essentials in six months’ time.
DUP’s Jim Shannon was pleased to see the extension of furlough his concern was that the devolved nations are coming out of lockdown at different times, and therefore there should perhaps be a ‘wee bit of flexibility’.
Conservative MPs generally accentuated the positive. Huw Merriman said the continuation of furlough, help for the self-employed, business rate relief and extending temporary VAT reduction will give business the confidence to reopen and plough on. Miriam Cates claimed the fiscal support provided by this government is greater than that of almost any other country in the world, and it has disproportionately benefited those on the lowest incomes. Robert Halfon said the six-month extension to the uplift in UC will incentivise work and reduce the welfare poverty trap.
Nigel Mills welcomed 2019-20 tax returns being used to bring in those people who changed their occupation during that year. He hopes that when the grants are calculated, the income from that year will be used as one of the three years for the average for all claimants so that they can have a more realistic assessment of what their earnings were, rather than it being based on years that can be quite a long time ago for some.
Secretary of State for Work and Pensions Thérèse Coffey said the UC extension will take this well beyond the end of the national lockdown. Suspending the minimum income floor means that hundreds of thousands of people will continue to receive financial support based on their current actual earnings. She urged employers and employees to take full advantage of this additional time of furlough to get ready to return to work, and do the training and refresher courses. Thanks partly to the extension of the furlough scheme, the OBR is now expecting a better jobs outlook than it was in its November forecast.
David Mundell (Conservative) said our system of cash faces three big issues: the ongoing issue of access; the inverse issue of depositing cash, and the increasingly pressing problem of acceptance of cash. The Government should come forward with legislation and plans on this issue, he said.
Kevin Hollinrake (Conservative) remarked that according to the Office for Budget Responsibility UK’s debt to GDP ratio, which is currently 100 per cent, will be 314 per cent by 2060 if we do not do anything about our tax system. His solution is an adult social care premium. It is not a tax any more than motor insurance is a tax; it is a small amount of money that people put aside for a rainy day. It is done on a mandatory basis and will solve one of the key problems, he explained.
The Chancellor missed an opportunity to help the co-operative movement in leading a recovery to a fairer and more inclusive economy. He should have shown real ambition by committing to double the size of the co-operative sector, remarked Florence Eshalomi (Labour).
The Chancellor has announced no fiscal rules against which we can judge his performance, complained Dame Angela Eagle, adding ‘He has created a tax day later this month, so that he does not have to spoil his big day in the sun announcing all the giveaways’. Eagle said: “We know that this Government wants to return us to the same insecure economy and unequal country that has been thrown into such sharp relief by the virus.
On the motives behind Tax Day, Alison Thewliss (SNP) claimed that by doing it outside the Budget process the Chancellor will avoid the fiscal analysis and proper scrutiny a Budget would face and he is giving high earners enough time to shift savings into ISAs or other tax-free schemes.
Over the medium term, the Budget saw £66 billion-worth of tax rises—tax rises that will also fall on teachers, nurses and police officers for the years to come, said Liam Byrne (Labour), who thinks that this is the biggest tax rise that we have ever seen in Budget history, and it is so high because the growth rate for this country is coming further and further down.
These Budget debates were held on Wednesday 3 March and Thursday 4 March 2021. There will be two further days of debate on the Budget this week.
By Hamant Verma