Taxation: Income Tax Threshold

Lord Clark of Windermere Excerpts

Wednesday 16th March 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, of course I am not going to rise to that bait, but I would like to point out—and it is another reason why I encourage people to study the Red Book in close detail—that, in contrast to the mood among many observers and certainly in the media, the target for this year’s nominal budget deficit has come in lower than forecast at the Autumn Statement. The only reason that it is at the same level as a share of GDP and that the overall current debt level to GDP is higher than desired is the evident other news that the level of nominal GDP was significantly lower than before. In terms of policy, and on the contrary to what was said in that question, the plan is very much in place and on target.

[Lord Clark of Windermere (Lab)]

My Lords, the Minister has quite rightly taken pleasure in announcing the higher level of income that people can earn before they start to pay tax at 20%, and of course we welcome that. But there is a group of people who, it was announced in the Budget, will lose 100% of their income. I am talking about disabled people in receipt of personal independence payment. The Chancellor evaded the details of that decision, so I wonder if the Minister can advise the House of the Treasury’s estimate of the number of disabled people who will lose part or all of their benefit.

[Lord O’Neill of Gatley]

My Lords, I plan to make some longer comments specifically about this sensitive issue next week when I open the debate on the Budget. There are some very important complexities behind the policies which, frankly, were misunderstood in the way they were reported at the weekend.

Income Inequality

Lord Clark of Windermere Excerpts

Thursday 21st January 2016 Lords Chamber

[Lord O’Neill of Gatley]

My Lords, I take the noble Lord’s suggestions with great interest. I repeat that it is the responsibility of boards and their shareholders to analyse and support the compensation of their chief executives. As we have touched on in parts of the productivity plan, those boards and shareholders should think carefully on an ongoing basis about the justification for those levels of remuneration.

[Lord Clark of Windermere (Lab)]

My Lords, I think that a number of us were surprised by the Minister asserting that inequality has actually been decreasing over recent periods. Does that take into account the zero-hours contracts and the regional variations?

[Lord O’Neill of Gatley]

My Lords, it is a reality of life that, when evidence gets in the way of perception, it surprises people. But on the widely accepted global measures—of which ours is one—measured inequality has been declining slowly since the 1980s, whether they include disposable income or are without it.

Comprehensive Spending Review

Lord Clark of Windermere Excerpts

Monday 1st November 2010 Lords Chamber

[Lord Clark of Windermere]

My Lords, the noble Lord, Lord Plumb, has spent a lifetime in politics very successfully defending and advocating the interests of the farming community. He tempts me to mention another side of the rural community—that of the forestry industry. As a former chairman of the Forestry Commission, I am going to yield to that temptation. Like every other government department, the Forestry Commission has taken a hit with the comprehensive spending review—a 25 per cent cut. I think about what it has done in recent years in timber production, biodiversity, conservation, access, climate change, health promotion; the list goes on and on. When I consider that the net cost last year to the Exchequer of the Forestry Commission in England—and it is only the Forestry Commission in England that the Treasury can actually touch—was a mere £10 million to deliver all those public benefits, I just wonder what the Treasury is up to.

Having yielded to temptation, I now take up the invitation of the Minister to take note of the spending review. The House will be pleased to hear that I am not going to deliver what I had originally planned because, quite frankly, there have been some brilliant contributions in this House this afternoon. Not all have come from this side, although they mainly have. They have also come from the Cross Benches; the noble Lords, Lord Skidelsky, Lord Low of Dalston and Lord Bilimoria, all made real, pertinent and thoughtful points. If the Minister believes that he can leave this debate with his case accepted he is, I am afraid, going to be disappointed.

We tend to think of the spending review as an economic issue, but it is as much, or perhaps more, to do with politics as it is with economics. I must credit the Government for the way they have managed to swamp the media and persuade them that there was no alternative to these cuts; that they had to be done, and done immediately; and that the Labour Government had left an unwholesome mess. That case has been refuted time and time again, but it needs repeating time and time again that this is an ideological battle. In this respect it divides both sides of the House. It is to do with the power and the size of the state. I know where we on this side stand, and I know where the majority of Members on the Conservative side stand. I am a bit unsure where the Liberals stand or whether they stand anywhere. They seem to be sitting on the fence yet again, and I am sure this causes a great deal of anguish to a number of Members.

Most honest and neutral people were horrified by the Chancellor’s announcement in the other House and the reaction of Conservative MPs. The bigger the cuts, the louder the cheers—and yet every one of those cuts will mean that tens of thousands of ordinary, decent citizens are going to lose their jobs. This will apply not only in the public sector but in the private sector because, as we have been reminded constantly today, roughly for every job lost in the public sector the multiplier effect means that a similar job will be lost in the private sector. That has never actually reached the airways or the pages of the newspapers; it has never been spelled out that we are talking about cuts not only in the public sector but in the private sector as well.

I have also noted the letters in the press—obviously co-ordinated—from business leaders saying that they will make up the losses. I should like to write to every one of these business leaders and say, “Tell us how many jobs you are going to create in addition over the next four years”. That is the only way in which can we judge them. We can judge the Government because it is a matter of public record, but they have called in their supporters from industry and they must be challenged.

I take the point greatly that we are risking the economy of this country. There has been talk that the Labour Government did not invest for dark days when it was sunny. What is investment in education and higher education? If this country is to survive and prosper—and I want it to do so—we shall have to get out and win markets. Although we are talking about a recession, the reality is that the economies of the world are bigger now than before the recession. There are opportunities for our exporters in the growth economies—China, Brazil, India and so on—and the pound is at a level at which we should be taking advantage of them. However, we will do that only if we use the skill, the ingenuity and the brains of our young people. I believe that one of the best capital investments that the previous Labour Government made was in the field of education. I could also refer to other fields.

I challenge the point about the level of indebtedness. The key yardstick is the size of the national debt against the size of the GDP; that is the way to judge it. If you read the British press, listen to the British radio or watch the British TV you would think that we were at the top of the league: that we were in the most difficult position. That is not the case. The top country—I think that a Member on the other side of the House referred to this—was Japan, with indebtedness of 225 per cent of GDP. Running down the list you find the United States at 93 per cent and France at 84 per cent. You have to go down to 12th position before you come to the United Kingdom at 77 per cent. That is far too high—I concede that straightaway—but it is only 2 per cent higher than the model that is always held up in Europe: that of Germany.

Of course the problem is difficult and real and the deficit needs to be decreased, but I would argue that to try to decrease the deficit through cutting public spending and reducing demand is not a very propitious way to move forward.