The Ladies’ First Post-Brexit Budget

London, House of Commons, Wednesday, 20 March 2019, 12:37

The Deputy Speaker: I will have ORDER in this house! Mr Skinner, for the sake of your own health, I advise you to contain yourself. I call upon the Chancellor of the Exchequer to deliver the budget statement. Mrs Leadsom.

Loud cheers from the Conservative benches – jeers from the other side.

The Chancellor of the Exchequer: Thank you, Madam Deputy Speaker. It is my task today to deliver the first full spring budget since our country finally succeeded in disentangling itself from the European Union. And in one bound we were free! And may I take the opportunity to thank and salute my Right Honourable Friend, the Deputy Prime Minister, for the extraordinary skill with which he led the negotiations with our European friends over nearly two years.

Before I do so, I am sure that the whole House will join me in expressing our sympathy for the European Commission President, Mr Juncker, who was finally escorted away this morning from the European Parliament, still gibbering, by white-coated clinicians, having barricaded himself inside a convenience for more than a week. We thank the German Chancellor for promising to find him an appropriate sanatorium in Germany.

Today, with the permission of the House, I wish to deliver the most radical budget in British fiscal history. But, while my male predecessors in this great office of state have taken an hour or more to deliver their budgets, this woman shall detain you for no more than fifteen minutes. In our project to make Britain the most dynamic, modern and humane economy in the world, my emphasis shall be on simplicity.

I’ll speak about personal taxation first because that is what most ordinary hard-working people want and need to know about. From now on, the Personal Allowance[i] will be fixed at the National Living Wage per hour times a 37.5 hour week times a 52 week year. That way, nobody on the minimum wage will pay income tax, which sadly was always the case under the Labour Government of 1997-2010. Keep it simple.

I have already reduced the rate of Employees’ National Insurance Contributions to 10 percent. That means that people earning above the Personal Allowance and the Lower Earnings threshold for NICs (which are now the same) pay 20 percent income tax plus 10 percent NICs. So: 30 percent of their taxable income. From next year, Income Tax and Employees’ NICs will be amalgamated into a new flat tax, to be called the Citizens’ Contribution.

I can hereby announce that, if the level of the Citizens’ Contribution will be 30 percent next year, our target is to reduce that level to 20 percent over the next decade. We want International Britain to be a place of high freedom and opportunity – but low taxes, especially personal taxes.

And now I turn, as the first British Finance Minister for nearly five decades to be unfettered by the EU straitjacket, to be able to attune our VAT regime to the international dynamic economy that we are fast becoming. Hitherto, British Governments have not been free to make sensible adjustments to the VAT regime so that, for example, it has to be levied at the same rate on feminine hygiene products as on domestic energy. Yet, at the same time, successive British governments have also introduced bizarre anomalies into the VAT regime for short-term political convenience. This is the Jaffa Cake Problem. (Cakes are subject to VAT, but not biscuits; bottled water is subject to VAT, but not milk; pasties hot are VAT-able but not pasties cold). There are entire departments of international accounting firms dedicated to interpreting the voluminous and increasingly incomprehensible VAT regime that has evolved over many years.

Madam Deputy Speaker, from midnight tonight, all food and comestibles will be VAT exempt. Everything else, except salaries but including postage stamps, will be subject to VAT at the standard rate, which I hereby reduce to 15 percent. And, Madam Deputy Speaker, our medium-term aim is to harmonise our VAT regimes, as indeed our agricultural subsidy programmes, with those of our Commonwealth partners. Which could eventually involve abolishing VAT altogether.

There is uproar in the Chamber – Tory MPs start chanting “Andrea, Andrea”…Labour MPs holler. The leader of the Liberal Democrats faints and is stretchered out of the Chamber.

Deputy Speaker: I WILL have order in this House… Mrs Leadsom…

The Chancellor: Thank you, Madam Deputy Speaker. This allows us judiciously to stimulate English wine production and the vital Scotch whisky industry… I must admit, Madam Deputy Speaker, that if I prefer a glass of Kentish Chapel Down, the Right Honourable lady the Prime Minister favours single malt…

Laughter on both sides of the House…

And now I turn to the vibrant issue of corporate taxation. Madam Deputy Speaker, we are sick and tired of playing cat and mouse with the new breed of multinationals – I could mention Google, Amazon and Starbucks – who are so adept at tax avoidance that it has become the debased art of tax evasion. Until now, under European Union rules, they have gamed the system and taken us all for chumps. The entire concept of corporation tax is out-of-time. But from midnight tonight, all multinational corporations that operate in the United Kingdom will be subject, not to corporation tax, but to Corporate Contribution. Madam Deputy Speaker, this will be either 12.5 percent of profits generated by UK subsidiaries or one percent of GLOBAL SALES – WHICHEVER IS GREATER…

The Chamber erupts. Chants of “Andrea, Andrea…” from the Tory benches. Denis Skinner MP gesticulates.

Deputy Speaker: I will have order… Mrs Leadsom…

The Chancellor: And if they don’t like it, like our European friends, well… tough! That is the price of doing business in one of the world’s most dynamic economies.

And now we turn to the highly charged terrain of pensions. Hitherto, the State has sought to encourage people to provide for their non-productive retirement years by giving massive tax breaks to the pensions industry. There are two problems here. The first is that the concept of retirement is fast becoming redundant. People are living longer and will spend more of their autumn years in part-time work, by choice. Indeed the world of work is in rapid flux. People change jobs, retrain, rest and re-join the workforce in a much more complex pattern than when our pension regime was first constructed. The second problem is that all tax breaks distort markets. Who now would go back to the “MIRAS” system whereby, until the early ‘90s, mortgages were subsidised by the state? That was quite obviously a mechanism which benefited the well-off at the expense of the not-so-well-off. And that’s what we, the post-Brexit Conservatives, the Party of the People, REALLY object to. Madam Deputy Speaker, all tax breaks benefit the rich. Period.

Cheering and chanting on the Tory side…

That is why, Madam Deputy Speaker, I am today consigning to oblivion the entire edifice of pension taxation that has grown, like Topsy, over more than 50 years…

Uproar… The Leader of New Old Labour has a spasm… The Leader of New-New Labour begins to hyper-ventilate…

Speaker: I will have ORDER…

Chancellor: Unfortunately, Madam Deputy Speaker, in their efforts to encourage providence, previous Chancellors have just created complexity from which only those who are prepared to pay the highest fees can benefit. However, from midnight tonight I shall liberate all ordinary people who wish to save for the future, however modest their circumstances. All interest received will be tax-free up to a threshold of £50,000. Also, may I add, Madam Deputy Speaker, this morning I signed an order to abolish all tax on dividends and all forms of capital gains tax for all individuals and corporations…

Hysteria in the Chamber: Tories shouting “Andrea, Andrea…” Opposition MPs rolling in their seats…

And now regarding stamp duty. Unfortunately, my predecessor hugely complicated this part of the tax code. From tomorrow a flat stamp duty of one percent will apply on ALL financial transactions, without exception…

Mr Dennis Skinner: So that’s a Tobin Tax, then?

Chancellor: Given that the Europeans have established the Tobin Tax to recapitalise their banking system since the Italian catastrophe of 2016, we should use this opportunity to rationalise the dysfunctional system that I inherited.

Regarding the outlook for foreign trade, the ease and celerity with which the CANZUK trade union was formed – Canada, Australia, New Zealand and the UK – is a case study in how the coincidence of kinship, goodwill and mutual interest can trump politics. The Right Honourable Lady, the Prime Minister will be flying to Ottawa tomorrow for a meeting of CANZUK heads of government, which will be graciously opened by Her Majesty. India will be attending as a co-partner. For the moment, our policy of keeping the USA at the back of the queue – despite objections – remains unchanged.

Finally, Madam Deputy Speaker, as the House will know, huge advances have been achieved in the last two years in welfare reform under the wise stewardship of my Right Honourable Friend, the Member for Preseli. But in this new world, this Government wants to move from a state where welfare reform is necessary to one where a welfare state is no longer necessary…

Labour jeers and protests…

And we have a vision of how to get there. In a world of ultra-rapid technological change, just as we have protected ordinary people against unfair job competition from immigrants – we should also protect them from job losses caused by robotic automation. But no, Madam Deputy Speaker, we shall not stop the march of the robots. Instead, we shall empower people to reach new heights of aspiration and fulfilment by rolling out the Universal Income in years to come. I know that this idea was rejected in Switzerland in 2016. But we wish to replace the Welfare State with the Universal Income State over the next 20 years. If humans must surrender their jobs to robots they should then be given the chance to become musicians, philosophers, dancers and archaeologists at the state’s expense. To that end I have set up a Royal Commission under the competent leadership of Lord Kempton-Cumber which shall hopefully report early in the new parliament. One early area of consensus is that the Universal Income will only be available to citizens who have paid taxes for ten years.

The deficit is still too high, if declining. Only spend-side reforms can check it. That is why NHS Digital, which has already been taken up by six million people under 30 years old, is both a massive advance in healthcare and a major cost reducer.

Madam Deputy Speaker, I have set out a post-Brexit roadmap for a dynamic and optimistic country which shall become a benchmark for the economic, political and moral leadership of the world. In this independent but international country, the sky is the limit. I commend this budget to the House.

There is rapturous acclaim. The leader of New-New Labour swoons… The Leader of New Old Labour puts his head in his hands and is stroked by the Member for Hackney…

[i] The threshold below which no income tax is paid at all.