King’s Speech

Lord Razzall Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Razzall (LD)]

My Lords, as a number of noble Lords have found, the debate on the gracious Speech provides the opportunity to comment on the current state of the British economy without having to comment on specific proposals. Notwithstanding the Minister’s brave attempt in his opening speech, and the Prime Minister’s remarks, I agree with the noble Lord, Lord Londesborough, that few can doubt that our condition is parlous. Although we may have just avoided a technical recession, we are bumping along at the bottom with little prospect of growth. Commentators now even predict that in 10 years there will be six major trading entities—China, India, the USA, Japan, Russia and the EU—and we will play no significant role.

I fear it is now appropriate, today of all days, to quote from Kipling’s “Recessional”, written in 1897:

“The tumult and the shouting dies;


The Captains and the Kings depart …

Far-called, our navies melt away …

Lo, all our pomp of yesterday

Is one with Nineveh and Tyre!”

I fear that is us—and that the noble Lord, Lord West, who is not in his place, will never get the ships he requires.

Notwithstanding our parlous position, the right wing of the Tory party consistently calls for tax cuts, believing, as the noble Baroness, Lady Noakes, said—although she did not describe it as such—in the Laffer curve, which has never been shown to work. But why, in 13 years of government, have the Tories not reformed the tax system to raise revenue in a growth-friendly manner? The noble Lord, Lord Forsyth, sadly not in his place, produced ideas in 2006 to reform our tax system which have not been implemented.

No one could deny that the tax system itself is a structural mess. Take the major revenue-raising taxes. The VAT system has numerous exceptions and zero-rated items and is a mess. We have two different personal taxes in income tax and national insurance running simultaneously, with strange marginal tax rates for individuals. In addition, business taxes have been on a rollercoaster. Corporation tax was reduced to 19% but is now back to 25%. Why have the Government not sorted out this mess? It is significant that the Government have even recently abolished the Office of Tax Simplification.

Instead of calling for reform of the tax system, many Tories such as the noble Baroness, Lady Noakes, cling to the idea that there is now £20 billion of room for tax cuts in the short term. In the short term, this is because the budget deficit for the first six months of the fiscal year is £19.8 billion lower than the OBR March forecast. However, the deficit is still £15 billion higher than the corresponding period last year, when on the way to a full-year outturn of £128 billion, which is 5% of GDP. No: in my view, advocates of tax cuts should listen to last year’s speaker at the Mais lecture, who said:

“I am disheartened when I hear the flippant claim that ‘tax cuts always pay for themselves’. They do not. Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere. And it is hard to cut taxes at a time when demands on the state are growing”.


That was not a left-wing economist or a member of the Liberal Democrats or the Labour Party. It was Chancellor Sunak—and I hope Jeremy Hunt is listening.

Theatre Tax Relief

Lord Razzall Excerpts

Thursday 9th March 2023 Lords Chamber

[Baroness Penn (Con)]

The noble Baroness is right that we should think about our international competitiveness. Tax reliefs for the cultural sector are not actually that common, but she has identified one in New York. We have looked at our scheme against that and, overall, our scheme is more generous than the New York one. We are confident that it provides great support for our theatres, not just within the UK but as international competitors as well.

[Lord Razzall (LD)]

My Lords, given that the Minister has mentioned it, may I extend the Question to cover the Government’s attempt to modify HETV tax relief for all audio-visual productions? I appreciate that this is out for consultation, but does she agree that it would be a mistake to increase the minimum expenditure threshold for HETV relief to above the current £1 million per hour, as to do so would threaten the production of many low-budget domestic British dramas, comedies and documentaries? Does she acknowledge that, on this basis, even “Happy Valley” might never have been made? Will she either confirm that the Government have no intention of making this change or, if they are proposing to do so, agree to have an impact assessment before the decision is made?

[Baroness Penn (Con)]

My Lords, as the noble Lord has noted, that proposal is out for consultation. As part of a package of reforms, we are looking at reviewing the £1 million per hour minimum expenditure threshold and considering whether it should be increased to reflect current production costs. However, I assure the noble Lord that, in considering these different reforms, the Government remain committed to ensuring that the final package of reforms best serves the need of our audio-visual industry.

Autumn Statement 2022

Lord Razzall Excerpts

Tuesday 29th November 2022 Lords Chamber

[Lord Razzall (LD)]

My Lords, nobody could doubt that the British economy is a basket case, and I see nothing in the Autumn Statement that can help what most people regard as the sick man of Europe.

The economic indicators for the next few years are all negative. First, our growth forecast for 2024, 2025 and 2026, as indicated by the OBR, is the worst of all the G20 countries other than Russia. Secondly, government borrowing is at its highest ever level, as noble Lords have indicated, and as a proportion of GDP, it is the highest since the Second World War. Interest costs are helping to cripple the public sector, and as the OBR tells us, the actions of the Bank of England through quantitative easing to get us through the pandemic have involved swapping long-dated gilts for floating rate reserves, thereby giving an early rise in interest rates for government debt as inflation increases. This has made the situation worse. Thirdly, as always, our productivity is the worst of all the G7 countries. The only way to improve productivity is growth and investment, but any policies to help growth have been damaged by the recent antics of the former Prime Minister and Kwasi Kwarteng. Investment possibilities have been reduced; we are no longer the desirable market we once were. Although I disagreed with a lot of Tory policies, I used to believe that at least the economy was safe in their hands—would that were still the case.

Turning to the Autumn Statement itself, first, the freezing of tax allowances to increase tax revenues is a con, if your Lordships will pardon the pun. This is simply designed to enable the Chancellor to stick to the manifesto commitment not to put up income tax rates, but so-called fiscal drag will put up tax for most people. This is clearly an unfair way to proceed.

Secondly, the Government have refused to admit that they have introduced a windfall tax on energy companies despite the fact that they have. Presumably they are saying they have not because the Lib Dems and Labour were calling for it—but they have done it and called it something else. Nevertheless, they have not taken proper advantage of the opportunities given by the huge energy profits. Putting up the rate is not enough. It is ridiculous that the availability of an investment allowance has allowed, for example, Shell to pay no windfall tax despite worldwide profits of nearly £30 billion this year. This tax needs serious reform.

As usual, as my noble friend Lord Shipley said, we have had the clobbering of local authorities. They will be allowed an increase in council tax to fund essential expenditure so that they can be blamed for tax increases to pay for services which should be funded by central government—the same old con trick.

Of course, your Lordships would not expect me to pass on this speech without indicating the elephant in the room: Brexit. The Government say that the major reasons for our disastrous recent economic performance are the pandemic and the war in Ukraine, but our European neighbours have been affected by those factors, and they are doing better than us. As the previous Governor of the Bank of England indicated recently, before the referendum the UK economy was 90% of the size of Germany’s, but that figure is now 60%. As the noble Lord, Lord Eatwell, indicated, despite the fact that the value of the French stock exchange was half of ours in 2015—before the referendum —ours is now smaller than theirs. The OBR let the cat out of the bag over a year ago when calculating that there would be a 4% per annum reduction in our GDP as a result of Brexit, which is significantly greater than the effect of the pandemic. Without Brexit, we would have the growth we need—and, dare I say, maybe Liz Truss might still be Prime Minister.

There are countless examples of the economic damage done by Brexit. I am sorry that the noble Lord, Lord Frost, is not in his place to respond to this, but I will simply mention three. First, we have difficulties exporting our shellfish to Europe; this should have been dealt with in the negotiations. Secondly, our musicians cannot tour Europe because of individual European countries’ restrictions, despite the loss of export earnings from this. The noble Lord, Lord Frost, indicates that this was an oversight. Thirdly, many SMEs have stopped exporting to Europe because of increased bureaucracy.

Any improvement in our economic relationship with Europe is frozen while the Northern Ireland protocol issue is not resolved. Even Andrew Neil told us in the Mail last week that Brexit has not delivered what people voted for: a reduction in immigration. We can forget the ONS figures from last week of net migration of over 500,000 last year, as there were clearly special factors involved. However, the OBR figures for 2025, 2026 and 2027 are based on over 200,000 net migrants generating economic activity, without whom our growth prospects—already the worst in the G20, other than Russia—will be even worse.

Is this what the Government planned when they won the last election on the slogan, “Get Brexit done”? Is this what their red wall voters voted for? When will the Government recognise that Brexit has not brought the proposed sunlit uplands that we were all promised? Does the reaction to the floating, apparently from Downing Street, of a Swiss-type deal mean that we are frozen for ever in a disastrous economic limbo? When will the Government begin serious talks with the European Union to improve our trading relationships and help our economy?

Stock Markets

Lord Razzall Excerpts

Thursday 17th November 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, I do not accept the premise of the noble Lord’s question, which he may be unsurprised to hear. In fact, in 2021, over 120 companies chose to list in London, the highest number since 2014 and ahead of its European competitors. These listings raised a total of £17 billion, the most raised in 15 years.

[Lord Razzall (LD)]

My Lords, I am sure that the noble Baroness must accept that in 2015 the value of the London Stock Exchange was twice that of the French stock exchange, and today it is lower. Will she also accept that there could be a number of reasons for this? First, it could be, as the Governor of the Bank of England said this week, that the markets have lost confidence across the board in the UK economy. Secondly, could it be because of the damage to the economy that the previous Prime Minister did in her 44 days? Thirdly, could this be—whatever the noble Lord, Lord Lilley, might think—a result of Brexit, as the Times said today? Or does she agree that it is all three?