Bishop of Portsmouth responds to Chancellor’s Autumn Statement

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portsmouth241016On 29th November 2016, Lord Young of Cookham moved that the House take note of the economy in the light of the Autumn Statement. The Bishop of Portsmouth, the Rt Revd Christopher Foster, spoke in the debate:

The Lord Bishop of Portsmouth My Lords, after nearly three years in this House, and having had the opportunity to speak in most of the debates responding to the Budget and Autumn Statements, it is not difficult to note the tendency for some contributors to applaud proposals they consider welcome; for others to criticise proposals they consider to have sectional interest or bias; and to have the expectation—or at least the hope—conveyed that the Chancellor and the Government will, and can, do even more when they are praised for welcome initiatives. I want to do a little of that this afternoon, though recognising the restrictions the Chancellor faces. I invite the Minister, and through him the Government, to reflect on what they ought to do—I introduce a moral note in using that phrase—to repair the fractures of trust, address growing injustices that are perceived as more hurtful than inequalities, and create not just a flourishing economy but a nation where people believe there is more that unites us than divides us. Indeed, my question to the Minister is whether the Government can better articulate their rationale and approach in the important area of inequality and injustice.

First, I welcome the new National Savings and Investments bond on terms, and with a maximum investment set low enough, I hope, to ensure that it is not monopolised by those who already have comfortable levels of savings; and with the advantage of a decent rate of interest, which I trust the Minister will confirm will be set according to interest rates available at issue rather than now. Similarly, the Productivity Investment Fund is a welcome tool in addressing a significant national economic challenge. I hope that there will be more much-needed policies and strategies to raise productivity. I am glad too that some LIBOR fines are to be committed to armed services’ charities which, as I know not only from the naval charities in and around Portsmouth but also from the splendid work of Army, Air Force and tri-service charities around the country, do so much to support our service men and women and, just as importantly, their families.

In the Chancellor’s Statement, which I heard from the Gallery last week, there were two commitments in relation to there being no change in policy and its implementation. They are in contrast and give emphasis to the question I raised earlier about whether the Government believe this ought to happen—whether the commitments are just. There was a commitment to the pensioners’ triple lock for this Parliament and that departmental spending plans will “remain in place”. That is protection against inflation, and potentially more than protection, for all people of pension age, some of whom indeed need it but not all, and no protection —indeed, the expectation of declining income—for people who are predominantly in pressing circumstances, often with young or vulnerable family members. The departmental spending plans freeze key benefits, tax credits and local housing allowance rates for private rented accommodation to 2020. Ought we, not only as a Government but as a nation, to be content with that?

The aspiration to encourage work, which I know is a factor in the Government’s policymaking—although sometimes obscure, if not hidden—is in my judgment the right one. The dignity of work is important, but so is the dignity of just treatment across the population and across generations. I therefore welcome the rise in the national minimum wage, look forward to further rises and, meanwhile, urge good employers to pay the living wage. With rather less enthusiasm I note the reduction in the universal credit taper rate by 2%. Of course any reduction is good, but because it is a reduction after tax and national insurance, it is an even smaller reduction than it seems, amounting to a marginal tax rate not of 63%—which is often said to be far too high as a marginal tax rate for people on higher incomes—but in practice a rate of 75%. Can the Minister explain why people should not see an injustice in the operation of two such different approaches to offering incentives for hard work? Why is 75% or even 63% an acceptable marginal rate for those in low-paid employment?

Similarly, the raising of the income tax threshold again will be welcomed by many of us in the country and indeed in this House, and with the benefit we shall all receive. Taking some more people out of income tax liability is welcome but—and I am sure the Minister is aware of this—the benefit of raising the threshold is disproportionately small for taxpayers with low income on benefit because of the 63% taper rate. The advantage for those not receiving benefit will therefore be about threefold higher as a proportion of income. What plan do the Government have, as the benefits to the lowest paid of raising the threshold decline, to introduce new measures to address the unjust disadvantage for poorer working people and families?

I appreciate that the Chancellor is yet to deliver a Budget, is unwilling to make two sets of fiscal announcements each year, and is constrained by uncertainties and unknowns after the events of this year —boxed in by Brexit, as a colleague of mine put it. I hope that at the least he and the Government can indicate readiness to be more flexible than so far indicated on the pressures facing working people and families on low incomes, particularly if inflation does cumulatively rise by over 12% by 2020 as the OBR forecasts. The outlook for some is worrying, and it would be good as well as right for the needs of those just managing to be indeed paramount, as promised.

Lord Young of Cookham The theme of intergenerational inequality was raised by the right reverend Prelate the Bishop of Portsmouth and others. To put that in perspective, pensioners have lost what used to be the age allowance, which they got when they reached a certain age. That has been abolished. Of course, people have to wait longer and will have to wait even longer before they get the state retirement pension and lower interest rates have tended to disadvantage pensioners and help younger people. It is not entirely a one-way equation.

The right reverend Prelate the Bishop of Portsmouth welcomed the LIBOR fines going to service charities. The noble Lord, Lord Bilimoria, welcomed the reduction in corporation tax, although the noble Baroness, Lady Kramer, was not quite so keen. My noble friend Lord Leigh made the point that something he suggested three years ago has now happened—so perhaps what he suggested today will be in a future Budget in three years’ time. I note what he said about the diverted profits tax, which in his view ought to raise a larger sum of money than it does.

(via Parliament.uk )