Daisy Cooper

This time last year, Government Ministers told us repeatedly that their No. 1 mission was growth, but after Labour’s second Budget, it is clear that growth is nowhere to be seen. The OBR makes it clear that the Budget has almost no meaningful growth measures at all. The Confederation of British Industry has concluded that the Government’s growth mission has stalled, and others say that it is positively anti-growth. We Liberal Democrats have consistently said that the Government cannot just tax their way to prosperity; they must grow their way to it. The most effective way of doing that—the single biggest growth lever that the Government could pull—is fixing our relationship with Europe. The Conservative-Reform Brexit deal has been a disaster for our country and for British business. It has left our public finances with a £90 billion Brexit black hole; the Labour Government know it, and the Secretary of State for Work and Pensions has just said it, but for some unfathomable reason, the Government will not just get on and fix it. We Liberal Democrats once again call on the Government to get serious about fixing our relationship with Europe. Research by the House of Commons Library shows that a better deal—a deal within the Government’s red lines, that excludes a customs union, the single market and all the rest—could raise an additional £25 billion a year in revenue. With our proposal of a bespoke UK-EU customs union, we could raise even more. Members on the Labour Benches will say, “We have all these new trade deals. We are fixing this relationship,” but once again, the OBR report from yesterday spells it out in black and white. It says that the lasting effects of Brexit more than wipe out the combined benefits of all the Government’s new trade deals. If the Government want economic sustainability, it is clear as day what they need to do. The same could be said about headroom. This time last year, we knew that Donald Trump was heading back into the White House, and we Liberal Democrats warned the Government that they had not left enough headroom to deal with the economic headwinds, which were predictable and predicted. We welcome the fact that the Government, as part of their mission to create a sustainable economy, have provided more headroom this time around, but we disagree with the way that they built it, relying on billions from unfair stealth taxes and other tax hikes on people and small businesses. That was not a fair choice; a fairer choice would have been to ask the big banks to do their bit. The Government know that if they do nothing on the big banks, taxpayers will pay out approximately £30 billion to the big banks between now and April 2031—not because of any risk that they have taken, or any loans they have made, but because of a glitch in quantitative easing. In the middle of a cost of living crisis and a cost of doing business crisis, the Government seem happy for £30 billion of taxpayers’ money to be paid out to the big banks, but we Liberal Democrats are not. That is why we have called for a windfall tax on the QE-related parts of the profits that the big banks have received, which would raise £30 billion for the taxpayer over the next five and a half years. We propose that just less than half of that money be spent on slashing energy bills by removing levies from them, but we would not lose the revenue for the insulation schemes that the Government have just axed. Some of the money could also be used to slash VAT by 5% for hospitality, attractions and visitor accommodation over the next 17 months until April 2027. That would give a boost to local economies in every single village, town and city across this country to get our economy moving again. That is the kind of growth stimulus that we Liberal Democrats would pursue. It is incredibly frustrating that the Government are not doing more for our high streets. They will say that they are looking to introduce permanently lower business rates multipliers. They may have done so, but the new, higher valuations were published this morning, and many businesses are warning that they could simply wipe out any benefit that businesses get from the lower multipliers. I saw a WhatsApp exchange between some of my pub landlords in St Albans this morning, and when one of them saw the higher valuation for their independent pub, they replied with a single word. It was the word that Boris Johnson used to describe his approach to business. I am very worried that the combined impact of higher valuations and the new multipliers could put even more of our high street businesses in jeopardy, so I ask the Government to come clean and publish the combined data as soon as possible. I hope that a Minister can tell us—if not today, I hope that they will promise to come back to the House and do so—how many businesses have been brought into paying business rates for the first time, and how many might see their business rates go up overall. If the picture is bleak, I hope that the Government will tell us what actions they will take to protect the great British high street. Small businesses also need action on energy support. Just last week, my Liberal Democrat colleagues and I wrote to the Government asking Ministers to instruct the Competition and Markets Authority to launch an investigation into the lack of competition among energy suppliers, and into practices that we believe are preventing small businesses from getting the best energy deals. The Federation of Small Businesses is making the same call. This issue has to be fixed, and I hope that Ministers will look at it. On income tax, the Government have broken their promise in all but name by freezing income tax thresholds for a further three years. This policy, started by the Conservatives and continued by Labour, means that in the tax year 2030-31, British taxpayers will pay an additional £67 billion in income tax to the Treasury. The Institute for Fiscal Studies says that these stealth taxes are the largest single tax-raising measure since 1979. What will the result be? Well, the OBR says that disposable income—a byword for living standards—will go down, in large part due to this tax rise. Is it any wonder that people in all income brackets simply do not feel any better off? Turning to the so-called mansion tax, we in this House all know that council tax is broken, but adding extra layers does not make it any fairer. Economists from left to right all agreed yesterday that the Government’s proposals are complicated and will cause bunching in the tax system. They are a messy compromise that does not raise very much money, and will raise none for around three years. These proposals could result in many appeals and could distort behaviour. This is not the way to fix property taxes. [Interruption.] The Parliamentary Secretary to the Treasury chunters from his seat. That was several Prime Ministers and several general elections ago. When the Liberal Democrats called for such a tax, the Conservatives wanted to stay in the EU; I think we can all agree that there has been a lot of water under the bridge since then. If the Government were serious about pursuing wealth, they could make a much fairer choice and go after the big banks and the tech giants. On the tech giants, why did the Chancellor slip out a review of the digital services tax yesterday, without announcing it in the Budget? I think we all know the answer, but let me be plain: if the Government are gearing up to cut taxes for people like Elon Musk and Mark Zuckerberg, while raising taxes on struggling households, that would be a massive betrayal. As for the dividend tax, the Federation of Small Businesses summed it up when it said that “Hikes to dividend tax mean the government continues to make investing in your own business one of the least tax-friendly things you can do with your money.” Fundamentally, the root problem remains. This Budget, like last year’s Budget, is nothing more than a Treasury tax grab. The Government are still yet to outline a vision for the economy and for the country, and the lack of joined-up thinking is so stark. Last year they said that they were going for growth, and then they inflicted a growth-crushing jobs tax. This summer the Government’s own pension investment review said that four in 10 people are not saving enough for retirement, but now the Government have announced a measure that the OBR says will reduce pension contributions before the commission has even had a chance to report. This is a “spend now, pay later” Budget, with pension changes and other expensive additions pushed right to the end of the forecast. Clearly that is a way to buy time for some growth to emerge, but what happens if it does not? The Government have had an opportunity to set out their path to delivering the change they promised, but I fear that they have squandered it. We Liberal Democrats wanted this to be a Budget that tackled the cost of living, that saved our high streets, and that was going to go for growth through a better deal with Europe. I am sorry to say that this Budget was botched; it was bungled; it was a missed opportunity. Whatever we call it, the bottom line is that this Budget does not deliver for the British people. I fear that the Government have run out of ideas. I fear that they are also running out of time.