Budget Resolutions
Debate between Wes Streeting and Lord Tyrie
Wes Streeting
I agree with the right hon. Gentleman that merely delaying by a year is insufficient. Does he agree that the Chancellor should enact the Treasury Committee’s other recommendations and that, unless he does, today’s Budget will be good news for accountants and bad news for small businesses?
Mr Tyrie
The hon. Gentleman makes a powerful point, and of course I support his support for the proposals that we worked up together on “Making tax digital”. I will continue to make those points as vigorously as I can on behalf of the Committee, and I am sure that the Chancellor is listening. We should welcome his acknowledgment that the pre-existing proposals were not workable, and we have already had a bit of adjustment. Now that the door is ajar, perhaps we could have another conversation through the gap.
European Union (Notification of Withdrawal) Bill
Debate between Wes Streeting and Lord Tyrie(7 years, 3 months ago)
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Mr Andrew Tyrie (Chichester) (Con)
I was a remainer and I think it was a mistake to leave. I still think it is a mistake to leave, but that decision has been taken and tomorrow night the House will respect the decision. The question now is not whether we are leaving but where we shall arrive. We must focus on the best way of securing that, not only in our interest but in the interests of the whole continent. We need to grasp the opportunities of Brexit, which do exist, and their significance. The Prime Minister was right to say that she is going to seek a bold and ambitious trade agreement with the EU. Anything that disrupts trade is likely to diminish it and, therefore, output. A deal that safeguards both the UK and our counterparties from that disruption is therefore much needed, and in practice there may be only a little over a year to negotiate it.
So, a transitional arrangement—probably a formal agreement—is going to be absolutely essential. Without it, firms in the financial sector, for example, will act pre-emptively to protect their shareholders from the consequences of a cliff edge. A large number of them have given evidence to the Treasury Committee on exactly that point, and they are not all making it up. The action they will take has already begun in a small way, and it is much more than just brass plating. We need to be clear that the absence of a transitional agreement will cost jobs and economic activity, at least in the short to medium term, and we should not just let that business slip away.
A clear and early commitment from the Government to a transitional period—what I and a number of others have been calling a standstill—at the end of the article 50 process should be priority No. 1 for agreement at the start of the negotiations.
Wes Streeting
I am grateful to the Chairman of the Treasury Committee for giving way. Does he agree that such transitional arrangements are not only in our national interest, but in the interests of every other EU member state, which is why they should agree to the Government’s suggestion sooner rather than later?
Mr Tyrie
I agree. Other states have an opportunity to agree a deal, because it would be obtainable under qualified majority voting, and does not require unanimity, as a careful look at article 50 shows, although that point was not initially understood.
If the UK leaves the customs union, a huge amount of work will be required to develop and enforce rules of origin. Despite the extra bureaucracy, I still think there is merit in leaving. If the greatest opportunities turn out to be in Asia in the medium to long term, as many forecast, we should put the country in a position to benefit. I strongly agree with my hon. Friend the Member for Gainsborough (Sir Edward Leigh), who is no longer in his place, that a liberal economic internationalism should underpin everything we try to develop in our trade relations.
Budget Resolutions and Economic Situation
Debate between Wes Streeting and Lord Tyrie
Mr Tyrie
That is exactly the point I was coming on to make. We have just seen that the Chancellor has been forced to adjust his short-term policy to take account of what the OBR is now saying. He has altered his plans of only four months ago, and so long as the rule remains in place, he will have to do so again after the next fiscal event. That is mainly why the Treasury Committee concluded—the Leader of the Opposition did not give the whole quote—that it was
“not convinced that the surplus rule is credible in its current form.”
There is merit in something that can give some guidance, but it must be something less than one of these cast-iron rules that turn out to be so brittle they get smashed the first time there is a problem.
There are the public expenditure rules. On public expenditure, the Government have ring-fenced about three quarters of public spending—health, schools, defence, international aid, pensions and child benefit. That is a heck of a lot. I will give an illustration of the effect of doing that. The Chancellor said that he needs to find only 50p in every £100, which I think he said will come mainly from value-for-money savings across the public spending framework. In fact, of course, three quarters of that framework is ring-fenced, so he really needs to get £2 in every £100 from the quarter from which he can raise it.
Then there is the tax rule. It says that the Government are committed, in law, not to increase VAT, income tax or national insurance contributions, which collectively amount to three quarters of Government revenue. I voted for that piece of declaratory legislation. I am not very keen on declaratory legislation, but I went through the Lobby for it. I must say, speaking personally—not on behalf of the Treasury Committee—that I would much rather have voted for legislation that prohibited Chancellors from tying their hands behind their backs in such a way, and I would like to limit hypothecation at the same time.
I will not detain the House for very much longer, except to say that the Budget measures will need very careful examination by the Treasury Committee. There is certainly quite a bit to examine, as there usually is every year. As the son of a shopkeeper, I cannot be anything but delighted to hear what has been said about class 2 national insurance contributions and small business rate relief. Although I will take a close look at that, it sounds as though that is exactly what is required. The reduction in corporation tax to 17% should not be underestimated. I would not mind betting that we will get some more revenue from that, quite independently of the anti-avoidance measures that are being pushed through.
The sugar tax has been limited to fizzy drinks and soft drinks. Speaking personally, if we are going to have a tax based on sugar, I wonder whether we should not consider widening that base in the longer run. After all, it is not just the sugar in drinks that is held to be harmful. Whether we always want to define tax bases on health grounds is another matter, but that bridge has been crossed now that such a levy has been introduced.
There are the cuts to the capital gains tax rates, the lifetime ISAs—they look very interesting and are certainly worth examining carefully—and of course the changes to income tax thresholds. There are quite a few other things, but those are the main ones for now. There is a lot for the Treasury Committee to examine with all this. We will get at it in the coming weeks and produce a report for consideration during the passage of the Finance Bill. There are quite a number of colleagues from the Committee in the Chamber at the moment.
We will score all the tax measures against whether they make the tax system simpler or more complex. We will reduce that assessment, on the basis of technical advice from the leading authorities in the field, to a number. Simplification is a mantra: everybody says we must have a simpler tax system, and every year Tolley’s tax guide expands. We must now, much more rigorously, start to create the conditions in which we can reverse that process. One of them is to flag up just how much more complex the tax system is becoming.
We will look carefully at the distributional impact of the measures. I regret that the Chancellor decided to change the basis of the assessment that the Government agreed to produce on the distributional effects. He originally, and very helpfully, published that in 2010, but he changed it in 2015, which I regret. We will look at that issue. Continuity of method, which he agreed to in evidence to us, is absolutely crucial.
Wes Streeting
I am grateful to the Chairman of my Committee for giving way. He is talking about the distributional impact of the Budget. Does he not see it as a source of regret and deep concern that the biggest revenue raiser in this Red Book will be the cuts to personal independence payments for disabled people?
Mr Tyrie
The hon. Gentleman has had a chance to look at the Red Book, but I have not. We will certainly examine the merits or otherwise of that important remark. I will make sure that he gets an opportunity to make his points when we cross-examine witnesses during our evidence sessions.
We will take a close look at the remit letters for the Bank of England. It is often taken for granted, but a very great deal of power has been transferred from the Treasury to the Bank of England on key questions. It is not just about interest rates, but about much more than that, particularly with quantitative easing in place and the financial stability aspect as well. We will examine that very carefully, and it is extremely important that we do so. With that, and of course the work we are doing on the economic and financial costs and benefits of membership of the EU prior to the referendum, there will be a very great deal for the Treasury Committee to do.