Robert Largan: Cutting Council Tax would do more to level up than cutting Corporation Tax

18 Jan

Robert Largan is MP for High Peak and a Member of the Levelling Up Taskforce Committee. Onward’s report, Levelling Up the Tax System, is available at this link.

At the last election, in northern constituencies like mine, many people voted Conservative for the first time. They did so for three main reasons: to “get Brexit done”; to stop Jeremy Corbyn becoming Prime Minister; and because they wanted to see their area “levelled up”.

We’ve left the EU with a deal and Corbyn has been consigned to the dustbin of history. In 2024, voters will judge this Government on its successes and failures in levelling up.

So far, the debate on levelling up has focused on spending, particularly on infrastructure and understandably so. There is a desperate need to invest in infrastructure in places like the High Peak, whether that be our roads and railways or our schools and hospitals or even our digital infrastructure. But this spending is only part of the levelling up equation. We also need to look seriously at how our tax system works and whether the burden is spread fairly across the whole country.

That is why the Levelling Up Taskforce along with the think tank Onward have published a new report on Levelling up the tax system.

The report takes a new approach, analysing the impact of different taxes on different parts of the country. For example, taxes such as council tax and VAT fall the hardest on the most deprived regions, while average council tax per head in London is lower than anywhere else in England, despite house prices being much higher.

We often hear about how London generates £1 in every £5 of tax receipts. But this ignores the fact that London generates less tax than any other region as a share of their GDP, partly because it benefits from much higher levels of commuters than other places. If we’re serious about levelling up, we need to reassess this situation.

The report considers which tax changes might have the biggest impact on helping people in the most deprived parts of the country as we recover from a global pandemic.

Because there are lots more Band A properties in poorer regions, cutting Band A council tax by a ninth would save 54 per cent of households in the North East an average of £147 a year, 43 per cent of households in Yorkshire an average of 146 per year, and 41 per cent of households in the North West an average of 148 per year. This would put more money in people’s pockets quickly.

While another reduction in corporation tax would benefit London most, an increase to capital allowances for plant and machinery or industrial buildings would be of far greater benefit to the North, Midlands and Wales where there are far more manufacturing businesses. Such a change would lead to large savings for businesses in places like Cheshire, Derbyshire, the West Midlands, Teesside, East Yorkshire, Northern Lincolnshire and Cumbria where capital spending is highest.

I’m not seeking to write the Chancellor’s budget for him but I hope that this report can open up a new dimension in the levelling up debate and help inform how we make tax and spending decisions in future. At the very least, the regional impact of different tax measures should be a standard part of Treasury analysis.

We won’t be able to level up the whole country if the Government has one of its hands tied behind its back. The full fiscal firepower of the Treasury is needed if we are going to give real change for parts of the country that have been neglected by Westminster for far too long.

Robert Largan: We need a National Skills Strategy Skills policy. Not oversaturating our labour market with graduates.

9 Aug

Robert Largan is the MP for High Peak

When I was elected last year, I fully expected my priority to be getting more infrastructure built in the North. The Conservatives won a mandate to do just that, to fundamentally reshape our economy. Coronavirus has made this task more urgent than ever before.

Rishi Sunak, the Chancellor of the Exchequer, has been leading an innovative and nimble response from the Treasury. On top of ground-breaking schemes like the Job Retention Scheme to mitigate the economic impact of Coronavirus, we have seen the launch of an ambitious project to rebuild this country over the next decade.

Building up our infrastructure is about more than funding. It is about backing British industry and workers. As I pointed out in the chamber following the Chancellor’s statement, the Government has to get it right on the nuts and bolts of delivery.

The Government has proven it is willing to put in the investment we need to get building again and improve the planning system so we can build faster. However, we need the skills to get people to do the building.

According to last year’s Engineering Construction Industry Labour Market Outlook report, 81 per cent of employers said that applicants did not have the required skills or expertise. Over half of employers identified the ageing and retiring workforce as the main cause of the skills gap in their industry. There is a clear need to train young people and retrain older people to grow the workforce we need to get building again.

The skills gap across the board has been holding us back for decades. It has made our economy less productive than our competitors and denied opportunities to people across our towns and regions. Without bold action, this problem will get worse. The Industrial Strategy Council estimates that 20 per cent of the workforce will be under-skilled by 2030. Instead of oversaturating our labour market with graduates, we should be boosting apprenticeships, training and retraining, and vocational and technical education.

Under Conservative-led Governments since 2010, we have seen many promising policies to invest in skills. It was good to see the Chancellor build on this progress with extra funding for subsidised jobs for young people, apprenticeships, and training schemes in the Summer Economic Update. What has been lacking, so far, is a strategic approach towards investing in our workforce.

When the Chancellor fleshes out his plan to rebuild this autumn, he should put forward a National Skills Strategy. Investment in skills needs to be well-targeted, particularly towards the industries that will get infrastructure built. This will help tie together the Government’s approach towards promoting the skills we need to maximise opportunities for job creation.

Thanks to the introduction of the Industrial Strategy, we have seen a series of Sector Deals directing investment towards the industries of the future. The same principle can be applied to skills by discussing with specific industries how to turbo-charge support for their workforce so they can grow and recruit. Infrastructure is the best place to start.

After a decade of political upheaval, the country is ready for a decade of renewal. Rebuilding our infrastructure and investing in our workers will deliver that renewal. It is about time that we followed the example of FDR’s New Deal and prove exactly how much good government is capable of achieving.