Income Tax

Debate between Lord Newby and Lord Wrigglesworth

Wednesday 19th November 2014 Lords Chamber

[Lord Newby]

My Lords, I remind the noble Lord, and the House, that growth in the UK is the highest among the G7 countries; that unemployment has fallen by 324,000 in the past year; and that the other piece of news today, which he omitted to mention, is that the gender pay gap has fallen to an all-time low.

[Lord Wrigglesworth (LD)]

Does my noble friend not agree that the most important point is that 3 million people at the bottom of the earnings pile, including 1.8 million women, have been taken out of income tax completely? At the same time, the Revenue’s take has increased by some £5.1 billion over the past year. Is that not a classic example of a stronger economy and a fairer society?

[Lord Newby]

It is, my Lords.

Income Tax: Top Rate

Debate between Lord Newby and Lord Wrigglesworth

Tuesday 15th July 2014 Lords Chamber

[Lord Newby]

My Lords, it is a very considerable sum of money, but we are taking steps across a range of areas to tackle evasion and avoidance, whether by individuals or firms. There is a measure in this year’s Budget specifically designed to get tax upfront from individuals who are engaged in schemes that might subsequently be found to be avoiding tax. That will generate a considerable amount of income. A number of other measures that we have taken are bringing in hundreds of millions of pounds from people who previously were able to avoid taxes.

[Lord Wrigglesworth (LD)]

Does my noble friend not agree that if we want a fairer tax system, it also means that we need to ensure that the broadest backs bear the greatest burdens when we are facing difficulties?

[Lord Newby]

Yes, my Lords, and that is why the Government have taken a raft of measures which will ensure that those with the broadest backs pay very much more than the additional amount of income tax that they might have paid had the rate remained at 50%. For example, we have increased higher rate capital gains tax, raised the stamp duty on higher value homes and reduced the cost of pensions tax relief. These measures, taken with other measures, mean that the additional amount being paid by high earners was more than £1 billion last year and will be more than £2 billion this year and more than £4 billion next year. This is real cash coming into the Exchequer as a result of measures we have taken to hit those who otherwise were avoiding tax.

Economy: Interest Rates

Debate between Lord Newby and Lord Wrigglesworth

Wednesday 18th June 2014 Lords Chamber

[Lord Newby]

My Lords, I did not actually say that. As the noble Lord is aware, the level of inflation at the moment is at a low of 1.5%. The Governor of the Bank of England has made it clear, through the work in reviewing forward guidance, that interest rates will rise when the Bank believes that excess capacity in the economy is being used up and where the forward outlook is for higher inflation over a two-year period, which is the remit of the MPC. The Bank has made it very clear, though, that any increase in interest rates, whenever it takes place, will be gradual, and that any new equilibrium rate of interest that is reached is likely to be significantly less than the 5% that obtained before the financial crash.

[Lord Wrigglesworth (LD)]

Does my noble friend not agree that it is useful to set the current rate of interest in context? For instance, if one looks at the period during which the noble Lord, Lord Barnett, was Chief Secretary to the Treasury, the median rate was something like 10%, and rose to even 15%. Is it not quite an achievement to retain a level of interest rates below 3%, and should we make sure that people do not fear a rise, exaggerate it and damage economic growth?

[Lord Newby]

My Lords, that is an important point. As I said in answer to the earlier question, any increase in interest rates is likely to be gradual and to reach a new equilibrium that is lower than it was in the past. It is worth saying that mortgage payments are at a historically low level in terms of proportion of income, and that rates would have to rise by 4% to get to the 2007 proportion of income. Nobody, I think, whether it is the Bank of England or independent experts, has suggested that interest rates are likely to rise by that much in the foreseeable future.

Banks: Payment Protection Insurance

Debate between Lord Newby and Lord Wrigglesworth

Monday 13th January 2014 Lords Chamber

[Lord Newby]

My Lords, I can assure the noble Lord that the FCA is taking this matter seriously and I am sure that someone would be happy to meet him to discuss this in more detail. The FCA is already looking at this general area as part of the thematic review it is currently undertaking into PPI complaint handling.

[Lord Wrigglesworth (LD)]

My Lords, does my noble friend not agree that the breathtaking scale of the PPI scandal is matched only by the volume of telephone calls that have been received by many people throughout the country, offering to help, and taking a slice of the proceeds that are then obtained? Will the Government look into this to see whether another scandal is not under way?

[Lord Newby]

My Lords, I think that all Members of your Lordships’ House will have had such telephone calls. I can reassure the noble Lord that the Government have acted in this area. During last year’s passage of the banking reform Act, we gave the claims management regulator the power to impose penalties on claims management companies which make speculative claims. We are also giving the regulator more enforcement staff and requiring claims management companies to pay for this extra effort.