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Budget Resolutions and Economic Situation

There were some good bits—or perhaps one: the cut in corporation tax. Of course we take some credit for a measure for which we campaigned, but that does not mean that every single aspect of the Budget was correct. Let me give another example. The Chancellor’s position on mainstream corporation tax is to reduce the reliefs, allowances and so on, but to reduce the rates as well. That is entirely sensible, but for smaller companies, he has done quite the reverse: increased the rate and increased additional allowances. That seems an illogical, and perhaps unfortunate, position. Perhaps there is an explanation that we have not heard. I raised a point earlier about the curious phrase ““legitimate small businesses””. There may be an explanation there. [Interruption.] The reference was to ““legitimate”” businesses, as if those businesses that did not invest were somehow illegitimate, but I do not intend to pursue the point. Also on investment, we have the abolition of tax credits for pension funds—the most notorious aspect of the 1997 Budget. Curiously, at the time, in 1997, that was justified as helping investment. The Chancellor referred yesterday to the 125,000 people who lost their work pensions through no fault of their own. He was absolutely right: it was not their fault. That is more than can be said for the Chancellor, whose tax raid has contributed to some of the difficulties with occupational pension funds. However, the Chancellor made an announcement yesterday about the financial assistance scheme.