Budget Resolutions - Income Tax (Charge)

Part of the debate – in the House of Commons at 2:27 pm on 31st October 2018.

Alert me about debates like this

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks 2:27 pm, 31st October 2018

I am most grateful, Mr Speaker. I remind the House of the business interests declared in the register.

Unlike the previous speaker, Drew Hendry, I commend the Budget and I look forward to supporting it in the Lobby tomorrow. The Chancellor of course had the advantage of rising tax receipts and lower borrowing, and he has made his choices, but they have been good choices. I look forward to supporting them.

In the end, this Budget should be judged on how it meets some of the bigger challenges: on how it strengthens the resilience of our economy as quantative easing comes to an end and capital might seek a more profitable home in the United States; on how it helps to narrow our still substantial productivity gap with France and Germany, as well as the United States—I commend the Secretary of State for Business, Energy and Industrial Strategy in particular for securing a massive increase in the investment allowance, which really will help our firms to start to narrow that gap; and on how it makes us properly match-fit for Brexit. I applaud the additional resources being given to UK Export Finance and the very significant increase in expenditure on research and development. It is in those areas that we are going to have to grow our capability if we are to succeed as a first-class global economy.

I would like to pick out three particular areas that I think require more attention. The first is infrastructure. Again, I was delighted to see a really significant increase in the roads budget. However, the recent proposal to take an entire motorway in my constituency and turn it into a potential lorry park illustrates just how fragile our roads system is if it can choke up so easily.

It is noteworthy that the three most important wealth-creating regions of our country—the south-east, London and East Anglia—are divided by the Thames. There are 17 bridges in London west of Tower Bridge; there are only two road crossings east of it. Every day, my constituents and thousands of others in Kent and in Essex, on both sides of London, are queuing to get over the River Thames, at untold cost to our economy and our business. That is because successive Governments have been ludicrously slow in giving us the infrastructure we need. It took 70 years to add a second tunnel at Blackwall and 28 years to add a bridge to the Dartford tunnel, and it now looks like taking 18 years to build the third lower Thames crossing. I urge my right hon. Friends to look again at the infrastructure bureaucracy to see how we can speed up the development of the critical infrastructure that we are going to need in future—the airports, the ports and the river crossings that will enable us to make a success of Brexit.

Secondly, there is investment in our schools and skills. I fully understand that education spending for the next spending period will not be determined until the spring, but I think my right hon. Friends are already aware that school budgets are struggling to cope at the moment, with rising pupil numbers and the huge increase in the number of pupils with additional needs, meaning that education authorities such as Kent County Council are continuing to have to divert resources away from the main schools funding block to deal with those particular pupils. I do not think I am alone in this House in urging my right hon. Friends to look again at the schools budget, not just for 2021 but for the new financial year for schools beginning in September.

My final point is on savings. The current savings ratio, at 4.9% of disposable income, is the lowest for 50 years. It has been falling year after year and is now the lowest since records began. Coupled with some of the steep recent increases in consumer debt, that should set alarm bells ringing. I am quite struck by the number of constituents I see in my surgeries who are living on the edge, if I can put it like that—who have nothing to fall back on when they hit harder times. We have to return to that in future Budgets.

One of the more painless ways of boosting savings, of course, is to encourage share ownership—not through the mandatory, confiscatory plan put forward by the shadow Chancellor, but by simplifying and incentivising the current share schemes. There are share incentive plans at the moment, but some of them are 40 pages long. There are employee ownership trusts, but they do not apply to companies owned by private equity. We need to look again at all this to simplify it so that it is easier for employees to have a genuine stake in their firms. We must reduce the holding period and improve the tax treatment so that we have genuine share ownership.

With Brexit looming, one might have expected a Budget that was a holding operation. This was much more than a holding operation; it was a very skilful set of choices. But outside the European Union, I believe, we are going to need even more ambition as a Government. We will need further, radical steps to improve our tax competitiveness, to improve our export record, to drive up our productivity, to modernise our infrastructure, and to improve the quality and quantity of our spending on skills and on schools. That said, I commend this Budget.