21:59 - The House divided: - Ayes: 234 / Noes: 282 - Question accordingly negatived.
22:13 - The House divided: - Ayes: 283 / Noes: 235 - Question accordingly agreed to.
The Economic Secretary to the Treasury (Sajid Javid)
I beg to move an amendment, to leave out from “House” to the end and add:
“notes that as a result of the action this Government has taken to cut, cancel and delay fuel duty rises families will save around £159 on fuel costs by April 2013; further notes that under the previous administration’s plans, voted for by the Leader of the Opposition and the Shadow Chancellor, pump prices would be 10 pence higher than they currently are; also notes that motorists in island communities are benefiting from the fuel duty discount pilot scheme; recognises that this Government has introduced a number of other measures to support families including a £1,100 increase in the personal income tax allowance from April 2013, three years of council tax freezes and a cap on rail fares; commends that these measures have been in part affordable because of the Government’s record of success in tackling tax avoidance and evasion which is on track to raise an additional £7 billion per annum by the end of this Parliament; and welcomes the Government’s commitment to do more to help with the cost of living in the future subject to the constraints of the public finances.”
I see that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) has been abandoned by her boss—
Sajid Javid
My boss is in Brussels on Government business. The hon. Lady’s boss is probably too busy cooking lasagne for someone. As usual, he is busy chasing the headlines and has left her to pick up the pieces.
Rising living costs have made life difficult for millions of households. I know that first hand. Like millions of others, I have lived under financial distress, so I know what it is like to worry about paying the bills and living within a tight budget, and the Government know about that, too. Times are tough. We inherited the biggest deficit in the developed world and the largest in our peacetime history, and international commodity prices continue to rise, raising the cost of living. Since May 2010, the price of wheat is up 72% and the price of Brent crude is up 31%. While talking about commodity prices, I note that the price of gold is up 40%. Had the previous Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), not recklessly sold off the nation’s gold reserves, our country would be £10 billion richer. That is money we could have used to help hard-working families.
To clear up the mess left by the Labour party, we have had to make tough decisions, but we have prioritised the cost of living wherever we can. We have cut income tax, frozen council tax, capped rail fare increases and, moving on to the Opposition’s motion, we have delayed and cancelled the fuel duty rises that they supported.
Mr MacNeil
The Minister states that the price of wheat has gone up. Bread and butter prices have clearly increased dramatically. Is this not exactly the wrong time for the Government to put 3p on the price of a litre of fuel?
Sajid Javid
That is exactly why the Government have taken action on the cost of living, which I will move on to shortly. Let me first talk about the Labour party’s record. It will not admit that it delivered the biggest deficit in the developed world. The shadow Chancellor said only three weeks ago that under Labour
“there was not a structural deficit”.
In fact, there was a structural deficit of £71 billion in 2007-08—more than 5% of this country’s GDP. We should thank him. Whenever anyone might need reminding why the Labour party must never be allowed to run this country again, the shadow Chancellor steps up to the plate—and this motion is another reminder.
Sheila Gilmore (Edinburgh East) (Lab)
Does the Minister accept that it is misleading constantly to give a cash figure for the size of deficit and say that it is higher than in countries with a far lower GDP?
Sajid Javid
I think that the hon. Lady needs to study the figures and understand what “percentage of GDP” means.
Andrew Selous
On tax avoidance, will my hon. Friend confirm that this Government have done far more than Labour ever did to reclaim tax due to the Exchequer, and does he agree that the Opposition should give credit where it is due?
Sajid Javid
As always, my hon. Friend is absolutely right. I will come to that later.
In the Budgets of 2009 and 2010, the shadow Chancellor and his colleagues endorsed seven rises in fuel duty between 2010 and 2014.
Dan Rogerson (North Cornwall) (LD)
The Minister finds himself in a strange set of circumstances whereby he is having to take the Opposition’s advice to abandon the policy that they pursued in government. What does he think it will be next—returning the top rate of income tax to the 40% that it was for most of their time in office, or perhaps reintroducing the 10p rate?
Sajid Javid
My hon. Friend is absolutely right to point out that the Opposition are all over the place.
If we had found a way to halt all the rises that Labour had planned, we would have done so, but if we had gone ahead with its plans, fuel duty would have continued to rise. Fuel would be 10p per litre more expensive by now, costing the average Ford Focus driver £159 extra by April 2013. Let us put to bed once and for all the idea that Labour is the party fighting to support people on the cost of living.
Mr Donohoe
As the Minister was in his place earlier he will have heard me ask what is the amount of tax on a litre of petrol. Does he agree that, for the first time, a Government should allow that figure to be displayed on the forecourts of all our petrol stations?
Sajid Javid
I can tell the hon. Gentleman that because of the policies of the Government he supported, there were 12 rises in fuel duty, so it is a lot higher today than it would have been otherwise.
This Government are taking action. Since the coalition came together, our economic plans have won international credibility. We have cut the deficit by a quarter. Because of this, we have secured record low interest rates and opened up Britain for business once again.
Andrew Percy (Brigg and Goole) (Con)
The Opposition’s motion has absolutely no credibility given their record in government, and that is why I certainly will not support it. My hon. Friend is right to point out that the Government have done some good things in this respect. May I send him a message from the people of Brigg and Goole, which is that we welcome what has been done thus far but desperately want this rise to be cancelled or delayed again?
Sajid Javid
My hon. Friend makes himself absolutely clear. He has been an avid campaigner on this issue, and his point of view is certainly being taken on board.
These low interest rates have helped hard-working families up and down the country with their cost of living. With interest rates low, mortgage bills are also low. If interest rates rose by just 1%, average mortgage bills would increase by almost £1,000 a year.
Bill Esterson (Sefton Central) (Lab)
The hon. Member for Brigg and Goole (Andrew Percy) said that his constituents want the planned rise in fuel duty to be cancelled—as do my constituents—and the Minister said that he agreed with him, so why does he not support our motion?
Sajid Javid
If the hon. Gentleman is patient he will hear about the action we have taken to help with the cost of living.
Mr Marcus Jones
Who is trying more to help hard-working people with the cost of living—a Government who have frozen council tax for the past three years or a Government who doubled council tax during their term in office?
Sajid Javid
My hon. Friend knows that the answer to that question is that it is this Government who are on the side of hard-working families.
Mr Graham Stuart (Beverley and Holderness) (Con)
As my hon. Friend knows, many of my constituents live in sparsely populated rural areas, and the cost of fuel has an immense impact on their family finances, yet they realise that running the country with massive deficits puts their children’s futures at risk and means that money that could have been spent on public services is instead spent as Labour wants—on interest.
Charlie Elphicke
There is opportunism not only on fuel duty but on tax avoidance. Under the previous Government, income tax paid by hard-working families in the working nation rose by 81%, but Labour Members let business off the hook, with corporation tax receipts going up by only 6%, because they were so obsessed with the prawn cocktail circuit.
Sajid Javid
My hon. Friend has done a lot of work in this area and speaks with great knowledge. He is absolutely right to point out Labour’s inaction.
Guto Bebb (Aberconwy) (Con)
I speak as a Member of Parliament representing a Welsh constituency. Is my hon. Friend aware that this Government made available to the Labour Administration in Cardiff money to freeze council tax in Wales, but they declined to do so?
Sajid Javid
That is a shocking disclosure, but what more could we expect from Labour?
Dr Whiteford
We all know that the Government inherited a mess, but does the Minister accept that the increase in fuel duty will harm recovery by holding back businesses and households?
Sajid Javid
I think that the hon. Lady would welcome the action that the Government have already taken on the cost of living and on fuel duty.
This Government have also been working hard to get people into work. There are more people in employment than ever before. Unlike Labour, we have no problem in welcoming the fact that the private sector has created over 1 million jobs over the past two years. That equates to more net new jobs created in the private sector in two years than were created in 10 years under Labour. With this support in place, we have strained every sinew to cut taxes where we can to ease the cost of living. We have cut fuel duty—a cut that Labour opposed—and frozen it for nearly two years. Fuel is now 10p cheaper than it would have been under Labour, helping family budgets. We have cut income tax for 25 million people and lifted 2 million people out of income tax altogether. We have frozen council tax for two years and announced that we will do it again next year. This Government have saved families £220 per annum on the average council tax bill. We have capped increases in rail fares so that commuters do not face substantially above-inflation rises.
Gloria De Piero (Ashfield) (Lab)
Can the Minister explain how tax cuts for millionaires helped hard-working families?
Sajid Javid
If the hon. Lady is referring to the previous Budget, the changes we made to the top tax rate were covered more than six times by other changes that we announced. This Government want to create a tax system that is both efficient and helps to create jobs.
Ian Swales (Redcar) (LD)
Does the Minister share my surprise that the previous Government thought it was fine to give tax relief of £250,000 a year on pensions contributions, and may I confirm that not one of my constituents has complained about the cut to £50,000?
Sajid Javid
My hon. Friend makes a good point and shows again where this Government are taking action to balance the nation’s finances.
We are doing a lot more to try to help those in need. We are investing more than £4.5 billion over this Parliament in affordable housing, delivering 170,000 new homes. We have replaced Labour's ineffective stamp duty relief with schemes that work, such as Firstbuy and NewBuy, helping more than 25,000 first-time buyers to find their way on to the first rung of the housing ladder.
Let us look at Labour's claims on tax avoidance. It wants us to clamp down on a scheme that uses a specific tax relief around travel expenses—a relief about which in 2008 the Labour Government, when presented with the facts, chose to do nothing.
Sajid Javid
I will in a moment.
The Labour Government, when presented with the facts about this tax relief in 2008, chose to do nothing. They declared:
“The Government has considered—
Sajid Javid
If the hon. Lady is patient, I will give way in a moment—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I do not need an answer back; I am just saying that the hon. Lady does not need to keep jumping to her feet. The Minister has promised to give way, but I do not know whether he is giving way now.
Sajid Javid
Not yet.
The hon. Lady does not want me to tell the House what the Labour Government did when they looked at this tax loophole. They declared:
“The Government has considered all the consultation responses and believes that on balance the negative effects of changing existing legislation outweigh the benefits"
To address just this issue, this Government have already strengthened HMRC's enforcement and compliance teams, and protected tens of millions of pounds of revenue. So the nub of today's debate is a call to clamp down on avoidance of a relief that the Opposition declared they could do nothing about, to pay for a cut in fuel duty that they supported. Mr Deputy Speaker, you couldn't make it up.
Stewart Hosie (Dundee East) (SNP)
The Minister said he wanted to talk about tax avoidance, so let us talk about it. Why did the Chief Secretary to the Treasury promise at his party’s conference last year thousands of extra tax inspectors, and why have the Government failed to deliver any of them?
Sajid Javid
I thank the hon. Gentleman for that question; I will come on to it.
Bill Esterson
It would be great if the Minister spoke to the fuel duty motion—[Interruption.] The fuel duty part of the motion. He talks about tax avoidance. Many of my constituents used to work at HMRC—they do not any more because his Government got rid of them. How can he be serious about tax avoidance when he has not provided the new inspectors he promised and has cut some of the staff who were there when the Government took office?
Sajid Javid
The motion mentions tax avoidance—he really should read his own party’s motion. The number of HMRC employees went down from 96,000 to 66,000 under his Government.
Labour Members had 13 years to clamp down more widely on tax avoidance. They had 13 years to do what they are calling for today. Did they take that chance? No. There were 13 years of inaction, and a consultation gathering dust in the Treasury archives. Even then, their figures simply do not add up. They claim that clamping down on this tax relief would bring in £650 million, but figures released while they were in power show it would bring in significantly less. If they ever want to regain credibility on the economy, they need to apologise for the mess in which they left the economy and learn to stop making irresponsible, unfunded promises.
Christopher Pincher (Tamworth) (Con)
Only the deluded or those who want to avoid tax will oppose the closing of tax loopholes. Many people have criticised some companies for avoiding tax, but a company called Stemcor pays only £163,000 from the £65 million of profits it makes each year—about 0.1% of its revenues. If companies are to be criticised, should not Stemcor be criticised?
Sajid Javid
I thank my hon. Friend for that point. It would not be appropriate for me to talk about any individual company, but he makes a good point. Any company that is engaged in aggressive tax avoidance needs to explain itself.
Tax avoidance ran rife under Labour. We have taken action. We are investing £900 million to tackle tax avoidance and evasion, which will deliver £7 billion a year by 2014. We have already signed a groundbreaking agreement with Switzerland to make it much more difficult to evade tax. In March this year, HMRC closed a business property loss scheme within a week of its disclosure. At the G20, the Chancellor and his German counterpart announced concerted co-operation to close gaps in international standards and to crack down on international tax avoidance. Labour's former City Minister, Lord Myners, was on the radio only this morning welcoming this progress.
Underpinning all this progress, we are introducing a general anti-abuse rule so that no one can follow the letter of the law but abuse the spirit and get away with it—something else on which the Labour party never delivered. This is what real action on tax avoidance looks like.
Fiona O'Donnell (East Lothian) (Lab)
If it is all going so well, why cannot the Minister do something to help my constituents who cannot afford to fill up their cars?
Sajid Javid
This Government do not shy away from making tough decisions. We are getting on with cleaning up the mess left behind by the previous Government, and we are doing everything we can to help hard-working families with the cost of living and putting money back into their pockets. Our action on fuel duty is a part of this. Fuel duty is currently 20% lower in real terms compared with its peak in March 2000, and 7% lower compared with May 2010. If we had continued the policies of the previous Government, pump prices would, quite simply, be higher—fuel would be 10p more expensive per litre. I know that some hon. Members will call for a further freeze in fuel duty today. I can assure them that the Government understand the financial pressures that hard-working families are facing. Subject to the constraints of the public finances, this Government are determined to keep helping families with the cost of living.
I urge hon. Members to reject the Opposition's motion and to support the Government's amendment.
Bill Esterson
I am always happy to be guided by you, Mr Deputy Speaker. I wonder whether the hon. Gentleman is aware of the research—
Bill Esterson
Thank you. I wonder whether the hon. Member for Ipswich (Ben Gummer) is aware of the research by FairFuelUK that points out that a 3p increase in duty would deliver a 0.1% drop in GDP and the loss of 35,000 jobs. Does he accept those figures?
The Exchequer Secretary to the Treasury (Mr David Gauke)
We have seen this evening how what might have looked like a clever wheeze to the Opposition on Friday looks opportunistic on Monday and merely exposes their lack of credibility and consistency. That is perhaps a pity: as my right hon. Friend the Member for Wokingham (Mr Redwood) pointed out, the cost of living is an important issue.
I thank my right hon. and hon. Friends for their contributions today—and, indeed, Opposition Members. In particular, I thank my right hon. Friend the Member for Wokingham and my hon. Friends the Members for Ipswich (Ben Gummer), for Waveney (Peter Aldous), for Tamworth (Christopher Pincher), for Cleethorpes (Martin Vickers) and for Witham (Priti Patel) and, perhaps above all, my hon. Friend the Member for Harlow (Robert Halfon), who, unlike Labour, has a record of consistency on fuel duty.
Given the general sense of amnesia on the part of the Opposition, perhaps I can begin by setting out a little of the context, which was the set of policies proposed by the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), for reducing the deficit—his discretionary fiscal tightening. It was a plan seen as inadequate by the International Monetary Fund, the CBI, the Governor of the Bank of England, the credit rating agencies and, judging by the general election result, the British people. In lacking credibility, the plan ran the risk of leading to higher interest rates, and as my hon. Friend the Economic Secretary pointed out, for a mortgage of £100,000, a 1% increase in mortgage rates would lead to an additional £1,000 in mortgage payments.
What did the Darling plan not include? It did not include anything to increase the personal allowance for income tax, which under our policies has resulted in cash savings of £546 for basic-rate taxpayers, or anything on council tax. Our freeze—in contrast to the average 5% increases we saw from Labour—saved average band D households nearly £220. What was actually in the Darling plan? We had an increase in employers’ national insurance contributions—the jobs tax, which was largely reversed by us, although that does not stop Labour calling for cuts in employers’ national insurance contributions. Most pertinent for today, we also saw fuel duty increases, with a 1p increase on 1 October 2010, a further 0.76p increase on 1 January 2011 and then 1p increases in real terms on 1 April in 2011, 2012, 2013 and 2014.
The argument we have heard this evening from Labour is: “It’s all very well; we made the announcement, but we had no intention of implementing those proposals”—that is one for fiscal credibility from Labour. Alternatively, the decision has been completely ignored, so that one could have missed the fact that any scheduled increases in fuel duty are Labour’s proposed rises. Now Labour’s argument is: “We intend to save the nation from our very own policies.” It is as though the last Labour Government never existed, but unfortunately for all of us they did, and we are having to live with the consequences.
We know that high oil prices are causing real difficulties in ensuring that motoring remains affordable. We have listened to hard-pressed motorists and businesses, and we have acted. This Government have acted by easing the burden on motorists by £5.5 billion between 2011 and 2013 and by cutting fuel duty. We acted by cancelling the previous Government’s fuel duty escalator for the rest of the Parliament and by introducing a fair fuel stabiliser, so that fuel duty will increase by inflation only when oil prices are high. We acted to ensure that there will be no increase in fuel duty this year by deferring the next increase to January. That action ensures that duty at the pump will have been frozen for 21 months, and pump prices are now 10p lower than under Labour’s plans. Even following the inflation increase in January, average pump prices could still be approximately 6p a litre lower than if we had implemented the previous Government’s fuel duty escalator in 2011 and 2012. That means that a typical Ford Focus driver will be £159 better off between 2011 and 2013, and that the average haulier will benefit by approximately £4,900 during the same period.
Labour Members argue that we could do more about tax avoidance, but that ignores the fact that under the present Government yield raised by HMRC will increase by approximately 50%. It also ignores the fact that it was their party that voted against proposals to deal with disguised remuneration—a particular form of tax avoidance—which are now saving us £750 million a year. Instead, we hear about umbrella companies that are inflating workers’ travel and food expenses and reducing tax and national insurance contributions.
In an article, the shadow Chancellor—who, of course, is not here today to defend his own policies—wrote of tax avoidance:
“Ministers have failed to take tough action to stop it happening.”
What he did not mention was that the Ministers in question must have been those who consulted on the matter in 2008 and then decided not to change the law. Even four years on, the shadow Chancellor cannot stop himself briefing against the Treasury team of the right hon. Member for Edinburgh South West.
Incidentally, HMRC has strengthened compliance in this area. It has, among other things, won a large case worth £158 million. Moreover, changes in the national minimum wage scored an increase of £90 million, while protecting low-paid workers.
The fact is that it is this Government who are reinvesting money in HMRC, enabling us to secure an additional yield of £7 billion by the end of the current Parliament. It is this Government who are increasing the number of people working in compliance and enforcement in HMRC. It is this Government who are introducing a general anti-abuse rule. It is this Government who have passed legislation to deal with disguised remuneration. None of those measures was introduced by the Labour party when it had the opportunity to do so.
We have recognised the impact that high pump prices are having on motorists, families and businesses. The last Government had no credible plan to deal with the debts that they created and no credible plan to support motorists, but we have listened and responded. We have cut fuel duty, we have scrapped the fuel duty escalator, we have ensured that there will be no increase in fuel duty this year, we will have kept fuel duty frozen for 21 months, we will continue to support motorists with our fair fuel stabiliser, and we have tackled tax avoidance. We taken action not only on fuel duty, but on council tax and on income tax.
The British people know that this is a Government who, within the considerable constraints left to us by the Labour party, will take action to protect them from rising pressures and difficulties with the cost of living. The Labour party has tabled an incredible, opportunist motion. I urge the House to reject it and to support the Government’s amendment, safe in the knowledge that we will do all we can to protect the British people from the rising cost of living.
Question put (Standing Order No. 31(2)), That the original words stand part of the Question.