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Economy: Spring Statement

My Lords, the move on fuel duty is not in the right direction as far as the climate change agenda is concerned. Even where the Chancellor generally moved in the right direction, he did so in a very limited way—for example, exempting in his post-Brexit freedom VAT on certain energy efficiency products, of which I thoroughly approve. However, he should have gone much further; the anomaly in the construction industry is that construction and demolition do not attract VAT whereas refurbishment and retrofit do. It is no use restricting the lifting of VAT to just some areas; it puts the whole balance for developers and planners in favour of demolition and rebuild and against refitting in a climate-resilient way. Demolition and rebuild have a considerable impact on emissions,

both through the disposal of construction material and through rebuild using vast amounts of material such as glass and steel, which are highly fossil fuel-intensive.

I will say a few other words about the Statement which do not relate to the Government’s agenda. The Chancellor had rather more room for manoeuvre than he expected a few months earlier. He could have used that money to tackle effectively the immediate cost of living crisis, in which the lowest quantile is most likely to suffer the most. For example, he could have restored to universal credit the £30 he had just taken away or replaced it in some other way in the social security and taxation system. In view of escalating energy bills, he could have provided additional support to low-income groups to deal with them. He could have extended help to households to meet the costs of insulation and energy. He could have reduced the initial rate of taxation, which would primarily benefit the lowest paid, instead of fiddling with the national insurance threshold—I do not object to its equalisation principle, but the move benefits everybody, and actually those in the higher tax rates more than others.

The Chancellor could have provided direct support for public transport instead of cuts in fuel duty. In addition to their environmental effects, larger cars with larger mileages tend to be driven by the more affluent groups, and many in the lower quintile do not have cars at all. The Chancellor could have spent more money on the care service or the NHS. He could have spent the money on enhancing the NHS.

We expect Chancellors to use the last few minutes of their speech for the thing they think is most important. Despite the cost of living being so high, it was very odd that this Chancellor used it to announce a future cut in income tax, which will come into play just before the next general election. He may have thought that was clever, but even his most rabid supporters in the press have not seen it that way. They have seen this as a political move which discredits him and takes some of the gloss off him. The ploy has not worked. Neither the public nor the press has thought this was a brilliant move, and reserving most of his headroom for that announcement has taken away from what he ought to be doing both in the immediate cost of living crisis and the longer-term climate challenge.

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