Taxes

Question

14:58:00

Asked by

To ask His Majesty’s Government whether they have any plans to raise taxes this year.

My Lords, the OBR will produce a new forecast in the autumn for the annual Budget, and the Chancellor will take decisions based on that forecast. We will set out our fiscal plans at the Budget in the usual way.

I thank the Minister for his Answer, which is much as I expected. The Government recently had their first anniversary, which was marked by a series of U-turns. Will the noble Lord use his persuasive powers to ask his Treasury colleagues to get rid of the jobs tax, making one further U-turn?

I am not quite sure what tax the noble Lord is referring to, but absolutely not, because it is essential to stabilising the public finances and to funding our public services. The party opposite welcomed all the spending we announced in the spending review a few weeks ago, so if it wants the spending, it has to have the taxes to pay for it.

My Lords, when the Treasury is considering how it is going to increase its revenue, will it give careful consideration to the fact that UK graduates repaying student loans are already disadvantaged, in that they are paying 9% additional tax above just over £20,000 to pay off their loans? Here is an example. A student spoke to me recently who is a young teacher with an old-fashioned loan that now stands at only £9,000, through very careful repayment, but who is paying £64.51 a month in interest on the loan. As we consider tax, I ask the Minister to encourage the Treasury to make student loan repayments, or at very least the interest on them, tax-deductible.

I am grateful to the noble Baroness for her question. It was premised on a hypothetical, and I am not going to speculate on the next Budget now. I absolutely understand the issues that she is raising, and I am very happy to take those points back to my colleagues in the Treasury.

My Lords, the Minister has said several times in this Chamber that the Government have no present plans to introduce a tourism levy. Will he repeat the same pledge about a wealth tax?

I am grateful to the noble Lord for his question, and I should start by wishing him a very happy birthday. I have said what I have said on tax. I am not going to give a running commentary on the fiscal forecast, nor am I going to speculate on tax rises now. As I said, we will do things in the usual way. The Chancellor will ask the OBR to produce a new forecast in the autumn for the annual Budget and will take decisions on that based on that forecast.

My Lords, we understand that today at the Mansion House, the Chancellor will avoid the word “tax” and instead focus on pumping risk-taking into financial services as the mechanism for growth. The financial crash of 2008 was entirely generated by risk-taking, all of it legal, allowed by the regulation of the time, widely admired and never called to account. I can understand some streamlining of regulation, but since on every front, safeguards are being taken away slice by slice, will the Government now issue a summary of all the safeguards that both the Government and the regulators have discarded, so that we can assess whether or not we are repeating the past?

The noble Baroness is speculating on a speech that has not been delivered yet, so perhaps we should wait for the Mansion House speech this evening to see what my right honourable friend the Chancellor of Exchequer says in it. Absolutely, though, the Chancellor wants to see a greater rebalancing from risk to growth. I think that is absolutely right, but of course, we must make sure that we continue to regulate to avoid risk while we also maintain growth.

My Lords, the Opposition seem to be suggesting that we can cut taxes without finding a way of bridging that gap in the Budget. Does my noble friend agree that it looks as though the Truss fantasy politics and economics that we saw nearly bring the country to its knees are still there with the Opposition?

I completely agree with my noble friend on that point. Every time we hear from the party opposite, it opposes every single measure we have taken to stabilise the public finances, yet at no point has it opposed the spending that that has gone to fund. That is exactly the mistake Liz Truss made in her mini-Budget, which saw mortgage payments rocket for working people. They are still paying the price of those higher mortgages, and that is something we absolutely will not do.

My Lords, I understand why the Minister refuses to give hypotheticals on forthcoming tax. However, this Government made a clear commitment not to introduce taxes on working people. They have looked very much like a fish on the end of a hook over the last 12 months when trying to define what a working person is. Perhaps they should have thought about that before they made such a clear, binding commitment. Without being hypothetical, does the Minister agree with the Chancellor, who, during that election campaign, defined working people as “people who go out to work and work for their incomes … There are people who do have savings, who have been able to save up, and those are working people as well”? Does the Minister stand by that commitment?

A working person is someone who goes out to work. The Government have pledged not to increase taxes on working people. We stand by that, which is why we are not increasing their income tax, national insurance contributions or VAT.

My Lords, the concentration during this Question has been on national finance and national taxation, but the real crisis is in the finance of local authorities of all descriptions in all parts of the country, and under all political control. Do the Government intend to look at the basis of financing local authorities so that we can introduce a robust scheme before the end of this Parliament?

I am grateful to my noble friend for his question. A council tax cap of 5% was introduced by the previous Government. Councils do not have to increase council tax by 5%, but under the rules they cannot increase it by more than 5% without a local referendum. That remains the position.

My Lords, when the Treasury team are preparing the Budget, will they have a look at the precedent of Sir Geoffrey Howe’s Budget of 1981, which was delivered in very similar economic circumstances to those of today? It was the most unpopular Budget of my political lifetime but also one of the most successful, because it paved the way for recovery with growth, lower inflation and rising living standards. Does the Minister think that the present Chancellor has the courage to concentrate on the public interest and the medium-term health of the economy, or will there be an obsession with rather reckless promises in the manifesto or short-term reactions in the newspapers and opinion polls?

I am grateful to the noble Lord for his question and for his expertise. That Budget created the deepest recession in British history, so I do not know that we necessarily want to follow it in its entirety.

Oh!

I think that history is on my side here. On whether the Chancellor has the courage to do long-term reform and what is right for the British economy, she has shown that, absolutely she has.

My Lords, the Labour First Minister of Wales last week called for a wealth tax. Have the Government heard that, and will they take good notice of the Labour First Minister of Wales?

We listen carefully to all Budget representations, but as I say, I will not speculate on the next Budget now.

My Lords, the fact is that we are all too close to a fiscal and economic crisis, much of which this Government have created. Debt interest is now a substantial proportion of departmental expenditure, productivity is flatlining and by 2028-29 the tax burden will be at its highest level in the country’s peacetime history. Does the Minister recognise that further tax rises are not the path to sustainable recovery? Will he affirm that he recognises that taxing people and taxing businesses ever more heavily will only undermine our productive capacity and further reduce the growth we all want?

The noble Baroness has a rather selective memory: she seems to have forgotten about the last 14 years. But she is quite right that the most sustainable way to repair the public finances is through growing the economy. At the last fiscal event, the OBR scored our planning reforms as the biggest increase in growth of any non-fiscal measure, and we hope very much that it will continue to score our growth measures. As she says, that is the most sustainable way of repairing the public finances.