Finance Bill

Part of Bill Presented — Constitutional Convention (No. 2) Bill – in the House of Commons at 4:25 pm on 21st July 2015.

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Photo of George Kerevan George Kerevan Scottish National Party, East Lothian 4:25 pm, 21st July 2015

Thank you for your forbearance, Mr Deputy Speaker. I had to slip out of the Chamber to take part in the Treasury Committee’s questioning of the Chancellor, and I bring a few bon mots from him to add to the debate.

The test of the Finance Bill and Budget is whether it will raise productivity—one might ask why the Chancellor has waited for five years to get round to that necessary development, but that is the test. Does the Bill meet the test? No it does not. Between the March Budget and the summer Budget, the Chancellor has reduced projected capital spending and we raised that point in questions to him this morning, but in his boyish way he avoided answering it. Nevertheless, we have seen a reduction in the projected capital spend.

Capital spending is vital. It is the basic thing we need to get the plant, machinery and infrastructure that raise productivity, and Britain’s fundamental weakness in productivity is that we do not spend enough on capital and plant per worker. The Chancellor is cutting his projected capital spending, and he has done that in the five months since the March Budget and now—I wonder why.

The Chancellor had an interesting explanation for why he is doing that—in the Treasury Committee he could not avoid saying that that is what he was doing—because he said that he had discovered a way of making the outcome of his spending more efficient so that he needs less of it. If he goes on in that way, in another five months and by the time we get to the autumn statement, he will have reduced capital spending projections even more. I am talking about capital spending projections to 2020, so there is no real indication in the Budget that productivity will rise.

There are other things wrong with the Budget. Consider the investment allowance that Huw Merriman alluded to. De facto, the annual investment allowance is being cut from £0.5 million to £200,000. I know that, formally speaking, the available capital allowance was a marginal £20,000, and an emergency £0.5 million level was introduced in a previous Budget. Like some classic huckster trying to sell, the Chancellor pretended that the capital allowance was going to be removed on 1 January 2016, so that he could suddenly appear and say that actually it will be £200,000. We all knew that he was going to do that because in the autumn statement and the March Budget, while talking about his desire to raise productivity, he somehow neglected to tell us that the annual investment allowance was going to be not £20,000 but £200,000 in January.