Budget Statement

Lord Desai Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Desai (Non-Afl)]

My Lords, I must start by saying that I have known the Chancellor since before he joined the Government. Therefore, whatever I may say about him should normally be taken to be biased. I think he is a very good Chancellor.

I like high taxation so I welcome a chancellor who can manage both to have the highest burden of tax ratio to GDP and, when needed, to spend so that we have the highest debt burden for a long time. Both were necessary, the spending and the high taxation. If we are serious about the Dasgupta report, greening the economy and so on, we shall have to face much higher taxation. We have to stop the illusion that we can have low taxation and high spending, and that in some miraculous way the numbers will add up; I can assure noble Lords that they will not.

The clever thing about the Budget is that the Chancellor has found a way of not disturbing tax rates that much, but he has expanded the tax base. The freezing of personal allowances is an example of that. By doing so, he will collect more income tax without changing tax rates. It should become a permanent policy that the indexing of personal allowances should not be done unless the rate of inflation exceeds the Bank of England target of 2%. There is no need to go overboard. My personal forecast is that inflation is now out of the system and will not come back any time soon. However, I cannot go into that in two minutes.

I welcome the suggestions made by the noble Lord, Lord Butler. I hope that the Government will take seriously the idea that we can tackle the problem of nurses’ pay with a one-off levy on people paying more than 40%.