To say the past month at Westminster has been frenetic is, if anything, to understate the case. The Hamas attack on Israel on 7th October and the consequent Israeli retaliation have resulted in bulging electronic postbags for most MPs. Given the horrific pictures we have witnessed on our television screens, this is unsurprising. Most people recognise that there is blame on both sides, but just want the slaughter to stop.
Domestically, too, things are hotting up, with a general election looming on the horizon. Last week we witnessed the first King’s Speech for over 70 years, setting out the legislative programme for the final year of this Parliament. Bills announced ranged from facilitating the use of driverless vehicles to tougher penalties for serious crimes and the phasing out of smoking – meaning that no one now under the age of 14 will ever be able legally to purchase cigarettes.
And there will undoubtedly be more legislation. As His Majesty put it: “Other measures will be laid before you.” One very early Bill may be necessary to address the Supreme Court judgment, expected on 15th November, on the legality of the Rwanda policy on immigration.
Wednesday, 22nd November will see Chancellor Jeremy Hunt’s Autumn Statement. It will be a big moment. The Government’s focus has been on squeezing out of the economy the inflation that manifested itself after the Covid pandemic, coupled with addressing the deficit that was the price of providing general financial support during the period of lockdown.
The consequence has been a higher tax burden than any Conservative Chancellor would wish to see. I, and many colleagues, want him not only to address that burden but also to create the conditions for the growth we need to provide the revenue for better public services.
Recent reports indicate that Mr Hunt has some £13 billion of unexpected fiscal headroom, the result of higher-than-expected tax receipts and falling borrowing. The Chancellor, who has asserted that he is a low-tax Conservative, now has the opportunity to prove it.
Top of his agenda should be corporation tax. At 25 percent, it is considerably too high and is deterring businesses from establishing themselves and expanding in the UK. That was proved when AstraZeneca decided to build their new production facility in Dublin, rather than North-West England, their original choice. Ireland’s headline corporation tax rate is 12.5 percent. The UK simply can’t afford to lose investment from the likes of AstraZeneca.
And there is much more that the Chancellor can do to help stimulate growth. He might, for example, consider raising the VAT threshold, which at present inhibits small businesses from expanding. Or he could turn his attention to IR35, which operates as a disincentive to entrepreneurship. Or he could give the entire nation an early Christmas present and cut the standard rate of income tax.
Whatever happens on the 22nd, be prepared for more eye-catching measures at the Spring Budget. That will set out the Government’s stall for the election a few months later.
