Finance (No. 2) Bill

Debate between Lord Jackson of Peterborough and Cathy Jamieson

Thursday 18th April 2013 Commons Chamber

[Cathy Jamieson]

I am interested to hear that the hon. Gentleman has some sympathy with our proposal—I suspect that we might not have the same agreement over some of the other issues up for debate today. He raises important issues. That is why, through new clause 2, we want to ensure that a report would be produced. We are calling on the Government to do that now, rather than put it off into the future. The Government could put in place monitoring measures now; that would allow for a temporary VAT cut, which would help stimulate the economy.

Borrowing to pay for the cost of economic failure has risen—it is now forecast to be £245 billion more than planned at the time of the spending review. That, of course, excludes the one-off transfers of the Royal Mail pension fund and asset purchase facilities. The Government are not going to balance the books by 2015 as the Prime Minister promised. National debt as a percentage of GDP is not now forecast to start falling until 2017-18. It is important to remember that, as it breaks one of the Government’s own fiscal rules.

As this week’s labour market statistics show, halfway through a Parliament, Britain is still being scarred by rising unemployment, an issue raised in earlier debates by many hon. Members, who brought attention to what was happening in their constituencies in the real world.

Not only are more people unemployed than at the election, but the number is rising. Earlier, my hon. Friend the Member for Newcastle upon Tyne North referred to the rising numbers: 70,000 more people are on the dole now than last month; long-term unemployment has risen yet again; and, most damagingly of all, the next generation is paying the brutal price, with youth unemployment up yet again, by 20,000.

People are no longer giving the Chancellor the benefit of the doubt. I think I said that about this time during last year’s debate; I felt that at that stage the public were beginning to lose confidence in the Chancellor’s economic strategy. This week, we have to take note of what the International Monetary Fund’s chief economist said:

“In the face of very weak private demand, it may be time to consider adjusting the original fiscal consolidation plan”.

[Mr Stewart Jackson (Peterborough) (Con)]

I am following the hon. Lady’s speech with interest and read the new clause with greater interest. She really has not addressed the issue raised by the hon. Member for Dundee East (Stewart Hosie). The new clause represents a spending commitment. Given that she is not able to specify what “strong growth” means, how will she fill the fiscal gap? Will she increase another tax, and if so which one? Alternatively, which departmental budget would be cut to pay for the measure?

[Cathy Jamieson]

I thank the hon. Gentleman for his intervention. We argue that the new clause would be part of a package of measures. We have heard about other initiatives that could be brought forward, and it is important to recognise that others in industry and business are also saying that one way to stimulate the economy would be to introduce at least a temporary cut in VAT. There are serious questions to be asked about the other issues, but if we could get unanimity about this issue, it might be possible for the Government to consider it and bring forward further proposals.

In the Budget, the Government had the opportunity to change course, make the necessary changes and kick-start the economy. Sadly, however, more and more commentators are reflecting that all we got was more of the same from the downgraded Chancellor. As a result, the cost of living for people up and down the country is rising day by day. The economy is flatlining, inflation remains high and food bills are rising. Energy bills are soaring, thanks to the Government’s failure to break the stranglehold of the big six energy companies. The Office for Budget Responsibility’s most recent figures show that people will be worse off in 2015 than when the Government came to office.

The reality for people is that real wages are now £17,000 a year smaller than they were in 2010. To add to that hardship, any benefit that hard-working people might have received from the Government’s much trumpeted rise in the personal allowance has been uniformly swept aside by the raft of tax and benefit changes that the Government have made since 2010. Those changes mean that families will be an average of £891 worse off in the new financial year, according to the analysis of figures made by the independent Institute for Fiscal Studies—even more money out of the pockets of hard-working people up and down the country.

The truth is that even if those tax and benefit changes had never happened, any benefit from the rise of the personal allowance would have been wiped out by the Government’s 2011 VAT rise from 17.5% to 20% alone. Research from the TUC confirms that by the time of the next election, families of all incomes will lose more from the VAT rise than they will gain from the increase in the personal allowance and the changes to national insurance, with low-paid workers losing up to four times more per year from the Government’s increase in VAT than they will gain from the raising of the personal tax allowance to £10,000.

--- Later in debate ---

[Mr Jackson]

rose—

[Cathy Jamieson]

I want to make a bit more progress. I come back to the point raised by the hon. Member for Tiverton and Honiton about times being hard and the idea that somehow the problem is to clear up the mess left behind, as he described it. People out there in the real world are getting tired of hearing that same old mantra. The Government have responsibility for what is happening now. They have to take responsibility for policy decisions taken in Budgets that impact on the lives of ordinary people.

I go back to the research from the TUC. Some Government Members may look sceptical about it, but I assure them that many ordinary people in my constituency and those of my hon. Friends recognise the value of the work that the TUC and trade unions are doing in standing up for those finding that their individual and collective incomes are being affected.

The TUC research considers the impact of direct and indirect tax changes over the Parliament. It shows that a household with an average weekly income of £195.92, the lowest income band for working people, will gain £1.09 a week—that figure is underlined, so I have not made an error—from the above-inflation rise in the personal allowance by 2015. However, and importantly, the same family will lose £4.26 a week through the increase in VAT, which went up in January 2011, leaving them with a total annual loss of £164.84 as a result of the Government’s tax policy.

Many on the Government Benches may say, “Well, that is not a huge amount.” I repeat what I have said in previous debates: it may not be a huge amount for someone with a decent job and income—I include all of us here in that—but it is a huge amount for those trying to have a reasonable standard of living and ensure that their families have food on the table and that their kids have clothes.

[Andrew Gwynne (Denton and Reddish) (Lab)]

rose—

[Mr Jackson]

rose—

[Cathy Jamieson]

I give way first to the hon. Gentleman and then to my hon. Friend.

[Mr Jackson]

The hon. Lady is being most generous in giving way. Surely it is churlish of her not to concede that most independent specialists, such as the Institute for Fiscal Studies, have said that as a result of the fiscal changes since 2010 the biggest impact has been felt among the richest 10% of earners in the country. Is it not fair to put that on the record, too?

[Cathy Jamieson]

I hope I am not being churlish in hoping that the hon. Gentleman will understand that most of those independent commentators also point to what is happening to those on the lowest incomes. Opposition Members feel strongly that those people are taking a disproportionate share. It is not a case of, “We’re all in it together.” When ordinary people see millionaires and those on the highest incomes getting a tax break or a tax cut, it seems unfair to them that their wages or incomes are hit hard by the Government’s policies.

Finance (No. 4) Bill

Debate between Lord Jackson of Peterborough and Cathy Jamieson

Thursday 19th April 2012 Commons Chamber

[Cathy Jamieson]

With respect to the hon. Gentleman—he said he had some sympathy with my points, so I do not want to be entirely negative in response—we will not solve the complexities of the taxation system by adding even more complexities that are unfair to families and will affect children negatively.

Let me put one final issue on the record. People who are not in work and who receive child benefit for a child under 12 receive national insurance credits to enable them to build up entitlement to state pensions. The Government’s original announcement led to concerns about the impact on future pension entitlements of women, in particular, if families stopped claiming child benefit. The Government said from the outset that no one would miss out on national insurance credits as a result of the child benefit changes, but it is unclear how they proposed to ensure that. Under the latest proposals, people who are entitled to child benefit and families affected by this charge may elect not to receive it, but a claim for child benefit will still need to be made in order to receive national insurance credits. Information published by HMRC confirms that.

I am extremely conscious of the time so I will not say anything more, other than that I think that everybody should listen carefully to the debate and to the points that have been made. When Members consider how to vote, they should consider both the principles involved of support for families with children as well as the layers of complexity and confusion there will be if the proposal goes through.

[Mr Stewart Jackson]

I had not intended to speak in this debate so I shall keep my remarks brief. I do not have at my fingertips the comprehensive figures that my hon. Friend the Member for Christchurch (Mr Chope) gave; he made some cogent and powerful points. From my point of view it is always a very risky endeavour when a political idea is fleshed out to become a fiscal policy of any Government. The remarks made just after the general election at the Conservative party conference were really an aspiration that is now being turned into a policy. I believe that this policy is a fiscal time bomb that will blow up in the faces of this Government. I also believe that what we are doing—[Interruption.]

Remuneration of EU Staff

Debate between Lord Jackson of Peterborough and Cathy Jamieson

Tuesday 21st February 2012 Commons Chamber

[Cathy Jamieson]

The hon. Gentleman makes a useful point that I will address in greater detail later.

Being somewhat older than the Minister, I can recall the days when the so-called Eurocrats were high on the hit list of public anger, as salaries and conditions in European institutions were perceived to be far more generous than those enjoyed at home. Some of the most highly paid officials might be relieved that they are no longer the focus of that anger as bankers and others have taken over. However, the subject of EU salaries and pensions remains important. As the European Scrutiny Committee has highlighted, it is clear that this subject needs greater clarity and resolution. As we have heard, the Commission took the Council to the Court over EU salaries and pensions in 2009, and only last month it announced its intention to do so again. In advance of today’s debate, I asked the House of Commons Library about the costs involved in the last case. I was told:

“There is no straightforward way of getting a figure for the costs borne by the Council in Case C-40/10.”

I was also told that the Library had attempted to obtain information, but the Court had said that

“replying would be a massive undertaking that will require all sorts of cost allocation analyses (within the Commission’s legal service and the European Court of Justice), at great expense to European taxpayers”.

The Court might be unable to tell us exactly how much that wrangling cost, but it is clear that any legal fight will have come at great expense to the taxpayer. The questions that taxpayers will no doubt ask is whether that ping-pong between the Commission and the Council is really the best way to resolve such matters, and I was pleased to hear the Minister refer to that. However, taxpayers will want to know exactly what the Government have done in the past year to push for reform so that we are not faced with this annual tit for tat and ongoing uncertainty.

The second area of major concern for the European Scrutiny Committee was the Commission’s decision not to provide for an alternative salary adjustment in its 2011 report and the basis on which that decision was taken. Members of the Scrutiny Committee amplified their concerns in the conclusions of their report of 2 November by describing the assessment required of the Commission in considering the exception clause as appearing to be a one-sided exercise.

There are different opinions on Europe across the political parties, and indeed within them, but there is one thing that I am sure we can agree on: times are now tough across Europe. GDP fell throughout Europe at the end of the previous quarter, unemployment in the eurozone is at a record high and we continue to face uncertainty surrounding the eurozone crisis. In reality, apart from those at the very top, people in work in both the public and private sectors are already experiencing those tough times, and families are bearing the brunt. Every day we hear that small business are struggling, and they consistently report that they cannot get the finance that they need or, indeed, previously had. It is becoming harder and harder for people to buy their first home, with the deposits required now out of reach for many young people starting out in family life.

Yet, despite that wider economic climate, the Commission did not deem the general economic outlook in Europe to be an “extraordinary situation” as defined by the European Court of Justice. Try to explain that to the low-paid couple who are set to lose about £4,000 in working tax credits when they hear that a highly paid official could gain an extra £4,000 under the proposals.

If we are not in an extraordinary economic situation, what would make for one? We have to question why it is deemed correct to ask hundreds of thousands of public sector workers in the UK and throughout Europe to take the hit and to face a cap in their pay and an uncertain future, while no similar restraint is shown by the EU institutions.

Another part of the problem is that, owing to the structure of the current arrangement, annual adjustments are implemented across the board irrespective of salary levels, meaning that a high earner who is already on £200,000 will receive thousands of pounds more under the proposals.

The Opposition have made it clear that financial discipline in the public and private sector must be accompanied by fairness, and in terms of salary scales, just as at home, we must be tougher on those at the top to help protect those at the bottom. Have the Government made representations on that point during any part of the negotiations?

I agree with the European Scrutiny Committee that the process smacks of being one-sided, and it could be argued that the Commission’s conclusion that we do not face extraordinary times has made a mockery of the exception clause, so urgent reform is clearly needed.

That brings me to my next point, and the Committee’s third area of concern: the Government’s action and representations on the issue. We hear a lot from the Government, as we have again today, about them taking a tough position on EU administrative expenditure and wanting to see real budgetary restraint in the EU over the coming years. They spell that out in their memorandum on the subject, and they go on to express dissatisfaction with the substance and procedure of the salary and pension adjustment proposals, making the point that the formal proposals were first circulated only on 24 November 2011 but required Council approval by the end of the year.

Again today, although we have heard a great deal about the facts of the situation, we have not heard in detail how the Government intend that tough position to manifest itself, or who exactly they are going to be tough on. The fear and worry for many will be that this is just another example of talk but not necessarily action on Europe by the Government, so I should like to hear from the Minister how the Government expect to take the lead in talks on reform at a time when the UK’s political capital in Europe is at its lowest in a generation.

In recent months we have seen how the Prime Minister’s actions have left Britain somewhat isolated in Europe, because leading up to last December’s summit he did not appear to put any real effort into alliance building.

[Mr Stewart Jackson (Peterborough) (Con)]

The hon. Lady’s argument would gain more conviction were it not for the record of the Government whom she supported, because those issues, particularly the structural issues in terms of the European Union institutions, did not begin in May 2010. Does she think that the process she supports was improved by a previous Prime Minister giving away a huge rebate?

[Cathy Jamieson]

I have listened closely to the hon. Gentleman, but his party is now in government and it has to take responsibility for what has happened in the past year. I absolutely understand that past decisions have implications for the issue before us, but I want to focus on where we go in the future and what this Government have done in the past year. My concern is that, apart from trips to Berlin and Paris, for example, neither the Prime Minister nor the Foreign Secretary travelled to the EU’s capitals before they went to Brussels. Britain was singled out for criticism by the Foreign Minister of Poland, a country that was one of our potential allies. If we want to change things in Europe, surely we must build alliances rather than destroy them.

--- Later in debate ---

[Cathy Jamieson]

If the hon. Gentleman had been listening carefully, he would have realised that I am saying nothing of the sort. I am saying that in an era when we have to compete in a global economy, we must ensure that our voice is heard. We therefore have to take our seat at whatever table there is to put the interests of the UK forward. Where we have shared goals, such as in climate change negotiations, tackling cross-border crime and dealing with human trafficking, working together surely makes global agreements more likely. We need a mature and positive approach to Europe from the Government.

[Mr Stewart Jackson]

Will the hon. Lady give way?

[Cathy Jamieson]

I am almost finished, but I will take an intervention on that point.

[Mr Jackson]

The hon. Lady is being very generous. I am rather confused by her position. Can we infer from her comments that if the Leader of the Opposition had been Prime Minister on 9 December 2011 he would have signed the treaty, or would he have followed the lead of the Prime Minister and vetoed it?

[Cathy Jamieson]

The hon. Gentleman will have heard the Leader of the Labour party say on numerous occasions that he would not have walked out of the negotiations. There was no treaty on the table at that time.

I want to move on, because this point is important. As I have said, we need a mature and positive approach to Europe from the Government. When we get the opportunity to work on a cross-party basis, we should do so. We should engage in Europe and build alliances so that when important issues come up, such as those that we are debating, we have credibility and influence among our European neighbours.