My Lords, I declare my interest as chair and adviser to pension firms and as adviser to a social enterprise specialising in helping employees manage high-cost debt with workplace loans.
It is an honour to speak in this debate and to follow so many excellent contributions from noble friends and colleagues from all sides of the House. I welcome this Budget, but it may be entirely irrelevant, because Brexit and the terms on which we may leave the EU are far more important for our economy.
In general, the Budget had giveaways for many different groups. I commend the sensible, time-limited encouragement of business investment, help for the high street, the plans—albeit limited—for a digital platform services tax and the announcement of austerity coming to an end. The national productivity fund, mentioned by my noble friends Lord Gadhia and Lord Leigh, is definitely welcome. Productivity in the workplace has been impacted by ongoing financial concerns among those becoming ever more indebted. Therefore, I welcome the help for those struggling with excessive debts, the £55 million from dormant assets to help the problem of unaffordable credit and the 60-day breathing space.
It is also vital to build on the national retraining scheme plans—I welcome the £100 million from the Government to help job-specific training. I urge my noble friend the Minister to ask the Chancellor to make sure that this works for older employees, too. Men and especially women face ongoing discrimination in the labour market, within both the workforce and the recruitment process, which undoubtedly damages productivity and growth.
I welcome in particular the absence of radical pension reform—there have been so many changes. I am pleased that the basic framework remains for now while auto-enrolment continues to roll out until next April when it reaches the full rates. Small changes such as pension funds being allowed to invest in growth assets and encouragement of moves towards a pensions dashboard are also welcome. Increasing the personal tax threshold to £12,500 next April will help protect the pensions auto-enrolment programme from a rising number of opt-outs as employee contributions rise from 2% to 4% of relevant earnings.
However, this rise has a major downside because it worsens the social injustice in pensions inflicted on low earners, who are mostly women. More than 1 million people earning between £10,000 and the personal tax threshold, which is currently £11,850 but will rise sharply next April, will be forced to continue paying 25% extra for their pension if their employer chooses the wrong type of administrative arrangement, as so many have done. This scandal has been ignored time and again. I hope that my noble friend will urge the Government to show that they care about these lowest-paid workers and remedy the injustice.
There were some other missed opportunities, in particular on social care. There is no money in the system, at public sector level, local government level or at individual level, to pay for social care. We need urgently to ensure that measures are introduced to incentivise people to put money aside for funding long-term care needs. A Green Paper is promised “shortly”. Meanwhile, families are unprepared for care needs. Baby boomers, that huge demographic chunk of the population, have not planned to set aside money for care. If we were to introduce incentives to help families put some funds away to pay for care, they would be able to choose when, where and how, and what quality of care they might prefer, rather than just relying on whatever the state might provide. Eight million over-60s have more than £300 million in ISAs and billions of pounds in pensions. Those baby boomers could be incentivised to keep some of that money for their 80s in case they need care. If we do not act soon, more of that money will be spent.
I declare an interest in that I own an electric vehicle. I was disappointed that benefit-in-kind company car tax rates were not addressed in the Budget. They will rise next year from 13% to 16%, which goes entirely against the thrust of policy and the Road to Zero strategy. Sales of zero-emission cars are flat year on year, and we are falling ever further behind other countries. The rise in the benefit-in-kind tax will hit demand in that most important company car market, yet in the following year the tax will drop to 2%. Clearly, people will delay purchasing electric vehicles. I hope that the Chancellor might reconsider at the very least bringing forward the 2% tax rate or perhaps abandoning altogether for a year the company car tax for electric vehicles—the benefit-in-kind tax. If we want to be a leader in this area, it is a shame that the Chancellor has not responded favourably to the letter that I and many others sent to him requesting such action.
There is one more issue I want to mention. I understand my noble friend Lord Northbrook’s concerns about the post-Budget announcement on reform of probate fees, but I find the criticism rather harsh. I am pleased that the Government have listened to previous concerns and reduced the planned fees that they announced in 2017, but under the new plans 60% of estates will pay just £250, similar to today. The cost of legal or professional fees are far larger than this probate fee. For example, an estate of £100,000 is estimated by Which? to be charged, on average, £4,000 by a bank, while a £500,000 estate would face bank charges of closer to £10,000 to £20,000. In that context, a few hundred pounds from the probate fee is desperately needed to keep the court and tribunal system up to date and ensure that there is continued free access to justice in cases such as child support cases, domestic violence cases, mental health reviews and female genital mutilation protection cases. I think that all such cases deserve some small cross-subsidy from the biggest estates.
I was also encouraged to see the clear threat from the Chancellor that the giveaways in this Budget will not be available in a no-deal Brexit scenario—presumably to entice the ERG to support any deal put to Parliament. In that context, I remain horrified by the continued talk of no deal. Let me be clear: if we do not reach any deal with the EU, we will be undoing far more than this Budget. Our 40 years of industrial success are at risk. National security, the national health, food supplies, manufacturing jobs, peace for Northern Ireland— the list goes on. How any even semi-responsible Member of Parliament could seriously still be considering leaving the EU on so-called WTO terms is beyond my comprehension. This game of bluff must stop. Our country has large debts—it needs business success and international co-operation, especially with our nearest neighbours.
I believe that this Budget was judiciously judged, but quite frankly, whatever is pencilled in for next year or thereafter in terms of taxation and spending could be entirely swept away by a damaging Brexit. I hope that the Government will ensure that the voices in our party who seem determined to risk our future on a kamikaze no deal, or even a Canada-style agreement, are sidelined as soon as possible.