As someone who likes to speak on the first day of the Budget debate, sometimes I have a bit of trepidation that I might listen to a long Budget statement and find that there are not many exciting measures, and then flick through the Red Book looking for things worth more than £1 billion and not find that much. This was not one of those Budgets.
If we look at the new spending totals, we see an increase in spending in the next financial year of £18 billion, and £26 billion in the year after—and that is not to count all the increase in capital spending over the forecast period—so by any measure it is an extensive Budget, especially this year. I would have thought that over the past couple of weeks we would have been hollowing out the Budget, taking out all the expensive things and trying to build in some coronavirus slack, because we just did not think we could afford all the other measures we wanted. We have, though, largely seen all the measures that we wanted, plus some much more extensive coronavirus mitigation measures than I thought we would choose or be able to see at this stage. A total package amounting to around £30 billion is a substantial effort to tackle what I fear will be significant disruption. Those measures will be warmly welcomed by people, and especially businesses, in Amber Valley. Those who fear that they may struggle for cash if their sales drop will be keen on the business rate relief, reduced national insurance payments, delayed tax payments and guaranteed loan scheme.
One measure that has not yet had much attention is the change to allow small and medium-sized businesses with fewer than 250 employees to reclaim from the Government the costs of paying the two weeks’ coronavirus sick pay. That will be a real help for small businesses that will otherwise struggle to stay open if they are paying staff to be off and having to find cover as well.
That was a request from the Naughty But Nice café in Alfreton last week: when staff there first heard that we were extending sick pay to the first day, they wanted to know how they could afford to pay that. Hopefully, they will be happy that we have listened to them.
One thing that we can learn from this situation—I have raised this before with the Minister—is that it shows how important it is that when people are in all substance employed, they actually are employed and are not either forced into self-employment or choose, perhaps because they think they are being a bit clever and can reduce their tax rate, to pretend that they are contractors. There are all the risks of not being employed. People say, “I will never get ill and I can afford a holiday anyway,” but I am afraid people will now be finding out that if the economy contracts, not only will they perhaps be off sick or in isolation for a couple of weeks and not have sick pay if they are not employed, but they may find that as contractors their services will not be required for a substantial period and they really will have no protection. I hope this situation will give the Government even more impetus on that issue.
I welcome the fact that there is no sliding back in the Budget on the IR35 changes. There is now more impetus to put in place some measures to try to make sure that people who are really employed have a legal employment contract. We need to get the tax rules and the employment rules drawn up in the right way to get the substance right. That is in the interests of everybody in this situation. We can see today that it is much easier for the Government to direct help to employers through national insurance or through other tax measures, to help them to support their employees and the costs of employment, than it will be to try to get support to those who are not employed. The only way that we can do that is through more claims for welfare support, and we know that that will take time and be conditional. Everyone wins if we have people in employment.
There are many measures in the Budget that I wish to welcome. The increase in the national insurance threshold is worth £100 for every individual in my constituency. The various freezes to fuel duty, which everybody wanted; the freezes to all alcohol duties; the reduction in VAT on tampons and on newspapers and books online—all those things are greatly welcome, as are the increased spending measures. On the £161 million for the transforming cities fund for Derby and Nottingham, I am sure that my constituents will greatly welcome improved transport for them to get to work in those cities. The £56 million to fill more potholes across the east midlands will be incredibly popular. There is also more money for Access for All.
I hope we can finally get Alfreton station its new level access on both platforms. That has been promised for quite a few years, and it has been committed to. If that money gets the scheme over the line, all the better. There is also the £400 million for the brownfield housing fund for areas with a mayor—I would quite like the east midlands to get a Metro Mayor at some point—although it is also open to councils that are pro-development. There are at least two sites in my constituency—the old Butterley ironworks and Stephenson’s dyeworks—that desperately need to be developed. Hopefully, this money will finally enable those schemes to come forward.
Having welcomed the various freezes to exercise duty, I want to return to a theme I raised in the recent tax avoidance debate. The Government need to start looking
carefully at where tax revenues will come from by at least the end of this forecast period. I think they are finding that a number of the taxes they currently raise money from are under severe pressure, including business rates, which raise £32 billion—we keep having to find ways of mitigating that for more and more businesses, and I absolutely welcome the fact that we have made things easier for shops and pubs and other entertainment venues.
We have also frozen nearly all excise duties, and we will be under real pressure to collect ever more money from fuel duty or alcohol duties. In fact, those might reduce as more people, and especially young people, do not drink or smoke, and as we move more towards electric cars. The Government have also rightly committed not to raise the rates of income tax, national insurance and VAT, but those three taxes alone raise 60% of the total tax take.
We have to take a long-term look at this issue and to be honest and transparent about it with the people of this country. We have to say that we need to raise a substantial amount of tax revenue to fund the public services they value. A lot of the taxes we currently use are under threat either because they are unpopular and or because the way we work or do business is changing and we are not sure how much more we can collect from corporation tax, business rates or employment taxes. Where should the money come from? Who is going to pay it and how much?
That is a debate we need to have. Otherwise, I fear we will get to future Budgets and see large and unpopular tax measures that target certain behaviours or certain people in a way that the country is not prepared for, because we have perhaps not entirely thought through what the impacts will be. While we have some time in a relatively—coronavirus notwithstanding—stable economic position, we can have that debate and find the long-term sustainable taxation plan that we need. I hope the Government will take the time over the next year to start thinking about that.
5.37 pm