National Insurance Contributions (Rate Ceilings) Bill
Lord Jackson of Peterborough Excerpts(8 years, 8 months ago)
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Stewart Hosie
My hon. Friend is right. Harking back to 2009 and the Fiscal Responsibility Bill, the then Chancellor made great play of legislation to bring down the debt and deficit, and what was the sanction should he fail? “We would just change the targets,” he said. I suspect the current situation is rather similar, and I may come to what the current Chancellor said about that particular legislation shortly.
Mr Stewart Jackson (Peterborough) (Con)
The hon. Gentleman must be vying for the 2015 Caledonian brass neck award. On the arc of prosperity of Iceland, Ireland and Scotland, if we are talking about black holes, would he care to enlighten the House about the £8 billion black hole predicated on the dwindling price of oil, which means that if the Scottish people had made a different decision the country and the constituency he represents would be bankrupt?
Stewart Hosie
The £1.5 trillion black hole, which is the UK national debt, is of rather more significance than any cyclical deficit any country may have, but then I suspect the hon. Gentleman probably knew that already.
Returning to the scope of the Bill, it is important that the Minister says what will happen should the yield forecasts be less than planned. That is important for his Government, too, because their rationale, as stated in their manifesto, was focused on
“reducing wasteful spending, making savings in welfare and continuing to crack down on tax evasion and aggressive avoidance.”
That allowed them to commit to no increases in VAT, income tax or NICs. They argued:
“Tax rises on working people would harm our economy, reduce living standards and cost jobs.”
I have no problem with tackling genuinely wasteful spending, such as Trident, or clamping down on tax evasion, but it is this Government’s attack on welfare which is harming the economy, reducing standards of living and threatening the growth needed to ensure the forecast yield from NICs is maintained in the way the Red Book forecasts suggest.
Finance Bill
Lord Jackson of Peterborough Excerpts(8 years, 8 months ago)
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Caroline Lucas
I am grateful to the hon. Gentleman for his intervention, and of course he is absolutely right; long gone are the days of hugging huskies and we are now in the days of “green crap”—even, ridiculously, when there are strong economic arguments for pursuing green policies. The idea that that is somehow against the interests of business is completely belied by the fact that so many businesses are crying out for a change in direction on the part of this Government.
Mr Stewart Jackson (Peterborough) (Con)
I am listening to the hon. Lady’s comments, which are always passionate, well made and eloquent. Does she not agree that the industry is complicit in the problems she alludes to because it has gone for the easy win of developing on agricultural and green-belt land, rather than doing the more difficult thing, which is developing on previously developed land? That is why people have been resistant in communities to solar energy projects such as those in my constituency.
Caroline Lucas
I do not agree with the hon. Gentleman’s comments. There are some cases where renewables are being sited in areas where there is opposition, but those are a minority. I assure him that if he thinks there is going to be much popular objection to renewables, he should just wait until his constituents and others see the impact of fracking. That is when he is going to see an awful lot more opposition to the energy choices that this Government are making.
The fact is that the renewable energy industry is a fantastic advantage to our economy. It does some brilliant things, and it does so despite Government policy, not because of it. It is now absolutely at risk of not being able to get away from the subsidies. It does not need subsidies for much longer and has always understood that there will be digression. [Interruption.] From a sedentary position, the hon. Member for Daventry (Chris Heaton-Harris) is suggesting that this industry is surviving only because of subsidies. Nothing could be further from the truth. The subsidies are coming down. There is digression, but it has to happen in a planned way. It is not justifiable, or even reasonable, to expect an industry to not know what kind of economic situation it is working in from one year to the next. This Government keep changing the goalposts on an almost monthly basis. The renewable energy industry and the solar industry know that digression will happen and that subsidies will be withdrawn, but it must be to a predetermined timetable. When that timetable keeps changing, it is incredibly difficult for business to adapt.
Compare that with what is happening to the nuclear industry. The nuclear industry will have subsidies for decades to come. It is already 50 years old, and yet Hinkley Point C could not even begin to be built were it not for the fact that it has massive subsidies, which are hugely bigger than anything that the renewable energy industry could ever dream of. I will not hear suggestions that the renewable energy industry is somehow greedy when it comes to subsidies; absolutely nothing could be further from the truth.
Tax Credits (Working Families)
Lord Jackson of Peterborough Excerpts(8 years, 10 months ago)
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Stephen Timms (East Ham) (Lab)
We have had a good debate. I begin by congratulating my hon. Friends the Members for Bradford West (Naz Shah) and for Blackburn (Kate Hollern), and the hon. Member for North Ayrshire and Arran (Patricia Gibson), on their excellent maiden speeches and their contrasting reflections on their predecessors. The House looks forward to hearing much more from them in the years ahead.
The Minister said at the beginning that he wants the Government to be a Government for working people. That is a laudable ambition, but they are failing. My hon. Friend the Member for Sheffield, Brightside and Hillsborough (Harry Harpham) is right that working people feel uncertainty and insecurity. Working families are deeply worried about what the Government have in store. They have suffered a long squeeze on their incomes, and they are worried about a fragile recovery and what the future holds for their grandchildren and children. Their insecurity has been heightened by the prospect of deep cuts to the tax credits that they rely on, and which it appears the Chancellor will announce in the Budget tomorrow. Working families will pay the price for the decision of the Prime Minister and his Chancellor to promise big reductions in social security spending before the election without having worked out a plan to deliver them. The announcements tomorrow will not be about making work pay—in this instance, that is baloney—but about making working families pay.
The Opposition welcome new concern from Conservative Members about low pay—we have heard a good deal in the debate about the living wage and the need for more secure, high-skilled and high-productivity jobs to support that. We all want a higher-productivity, higher-wage economy, but that requires a change of direction in the management of the economy. For example, it would mean delivering infrastructure, not just second or third announcements of future projects, or announcing and then cancelling them, as has happened in the past couple of weeks. It would mean high-quality training and apprenticeships for young people, not just rehashing old courses.
What the Chancellor must not do—it appears that this is exactly what he plans to do—is make working families much worse off by cutting their tax credits long before any increase in their pay. In millions of working families, people work hard but rely on tax credits for the family budget, as was acknowledged by Conservative as well as Opposition Members. It is high time to tackle low pay, but the Government should not attack the low paid, which is exactly what cutting tax credits will do. It will be an attack on working families on low and median incomes.
It would be fantasy to claim—I am glad nobody did so in the debate—that cutting tax credits will in itself lead to higher pay. Research has shown that the introduction of tax credits did not push pay down, and the drastic cuts now envisaged will not push pay up. Raising the personal tax allowance is not the answer—60% of tax credit claimants earn too little to pay income tax. Only about 1% of the cost of the planned personal allowance rises will actually be spent on lifting lower earners out of tax.
Tax credits recognise the needs of children in a household in a way that wages never can. The hon. Member for South Suffolk (James Cartlidge) suggested that tax credits provided a ceiling on earnings. That is completely untrue. That is not how the system works at all. In fact, tax credits have been by far the most effective move we have ever made in Britain to make work pay. They were introduced by the Labour Government alongside the boost to pay of the national minimum wage, improved and expanded childcare with Sure Start, and groundbreaking welfare-to-work support with the new deal.
The combination was a huge success, boosting employment by making work pay, supporting the incomes of large numbers of working families, and reducing child poverty in large part by making it worth the while of many more lone parents to be in work. The lone parent employment rate was less than 45% in 1997. Today, it is nearly 65%. Researchers have shown that that transformation was largely thanks to tax credits. The benefits have gone much wider. My hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) opened the debate. In an excellent speech, she drew attention to what the Financial Times said recently, which is that the system of financial support we have in Britain for low-income working families is a key reason for our high rate of employment.
The flagship reform of this Government, universal credit, aims to build on the success of tax credits. We have always supported the principle of universal credit and we still want it to succeed. It is a good idea. The Government, however, have utterly failed to deliver it. Five years after it was announced, less than 1% of claimants are receiving it and 99% are still on the old benefits. In 2011, we were told it would take six years to deliver universal credit. Today, we are told it will take another six years. Now, before it has even properly begun, the Chancellor wants to make drastic cuts in support for working families that would hole universal credit below the waterline.
Will the Minister tell us whether he understands the crucial difference between reforming welfare and labour markets to get people into work and make work pay, and taking an axe to social security and to employment support? These cuts will store up far greater costs if they send into reverse the progress of decades in raising employment rates and reducing child poverty. We will welcome any credible plans to tackle low pay. We have championed the living wage. As my hon. Friend the Member for Edmonton (Kate Osamor) pointed out, the coalition Government presided over a 45% rise in the number of people paid less than the living wage,
Mr Stewart Jackson (Peterborough) (Con)
There is consensus on the living wage. I personally hope that there will be fiscal incentives in the Budget, and in future, to persuade employers to look at that. Does the right hon. Gentleman agree that unless the issue of working tax credits is reviewed, we will be continuing the practice of de facto subsidising large employers to underpay their staff?
Stephen Timms
If he had been present during the debate, the hon. Gentleman would have heard a lot of agreement that raising levels of pay is a good thing. That is the right way to reduce the cost of tax credits; not taking an axe to them now in the hope that pay will go up at some point in the future. Calculation of the living wage assumes that families receive tax credits. Those who calculate the living wage say that if families did not receive tax credits, the living wage would have to go up by another 25%.
Working people need a long-term plan to back businesses that commit to paying the living wage—I agree with the hon. Member for Peterborough (Mr Jackson) on the importance of that—and share with them the Exchequer savings, as we have proposed with our “make work pay” contracts. We need to give the Low Pay Commission the remit and the powers to tackle low pay across the country, as proposed in the report by Alan Buckle, the former deputy chair of KPMG. We need economic and industrial policies to support more high-skill, high-productivity jobs created by innovative competitive businesses of the future. Belated conversion to the cause of tackling low pay must not be an excuse for Ministers cutting away the vital support on which so many working families rely. As my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) pointed out to the Prime Minister two weeks ago, not a single family will be helped into work and not a single worker will see their earnings rise simply as a result of cutting tax credits. Ministers should be tackling low pay, but they must not attack the low paid.
The Government promised to eradicate the deficit in one Parliament and failed completely to do so, but working families must not be made to pay the price for that failure. Can the Minister assure us that any action taken to tackle low pay or in other ways to support the finances of working families will make up for the losses arising from tax credit cuts? I fear he cannot. He will not be forgiven for a shabby raid on the incomes and security of working families simply to get the Prime Minister and the Chancellor out of a hole. I hope that Members on both sides of the House will join us in supporting this important motion tonight.
Greece
Lord Jackson of Peterborough Excerpts(8 years, 10 months ago)
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Mr Osborne
It is fair to say that Greece’s membership of the European Union, as opposed to membership of the eurozone, was an important step in that country’s transition from fascist dictatorship to democracy and in entrenching that democracy, and I think that view is broadly held by the Greek people, whatever their views about the current financial situation or their membership of the euro. I repeat that whatever happens we stand alongside Greece as an important member of the family of European nations.
Mr Stewart Jackson (Peterborough) (Con)
Almost 20 years ago a number of us predicted the disastrous consequences that would be visited on small countries as a result of monetary convergence and the single currency, and so it has come to pass this week with Greece, which it seems is being smashed on the altar of German monetary policy. With that in mind, will the Chancellor give the House an undertaking that proposals for further future financial convergence—a single EU-wide corporation tax rate, which would damage the British economy—will never see the light of day?
Mr Osborne
I will tell my hon. Friend what I have to say about that: we are not going to sign up to some European corporation tax rate.
Future Government Spending
Lord Jackson of Peterborough Excerpts(9 years, 2 months ago)
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Mr Gauke
My hon. Friend is absolutely right. Indeed, as a distinguished Chair of the Public Accounts Committee, he was heavily involved in identifying that wasteful spending. One of this Government’s achievements is the measures we have introduced to reduce such wasteful spending. In particular, the efforts of the Minister for the Cabinet Office in pushing forward reform and identifying efficiency savings have reduced the cost of Whitehall strikingly.
Mr Stewart Jackson (Peterborough) (Con)
Is not it disingenuous—some might even say slightly dishonest—to pray in aid references to 35.2% of public expenditure, as opposed to GDP, as ideological extremism when we need look back only 12 years to the Blair-Brown Government to find a time when the percentage was 35.9%, which is almost indistinguishable? Is not that trying to hoodwink and fool the voters, and is not that pretty dishonest?
Mr Gauke
My hon. Friend makes an important point. The statistics he uses are absolutely right. With regard to public spending on services—I will turn to the detail in a moment—we are talking about returning to the levels of 2002-03, before the previous Government lost control of public spending.
Mr Gauke
It was an attempt to show how ridiculous the Labour party’s economic policy is when the only example it puts forward, apart from the 50p rate, which is likely to cost money, is increasing the cost of gun licences. I did not really expect the shadow Chief Secretary to take it seriously that that was the big policy. Does he disagree that the shadow Home Secretary has already claimed that that money will be spent on policing? It is going to be spent on policing, is it not? There was a time in debating these matters when the big argument from Labour Members, their big macro-economic analysis, was that we were going too far, too fast. Now it has come down to this. What have they got a few days away from a general election? They have a policy on gun licences—that is it. What has the great Labour party come to? Gun licences!
Mr Stewart Jackson
Perhaps the Minister can help me out. The Labour party had a top tax rate of 40% for 155 of its 156 weeks in office, which apparently was the epitome of social justice. Why does he think Labour is attacking us for having a 45% rate, which brings in more money but is suddenly seen as feathering the nest for the rich?
Mr Gauke
My hon. Friend is absolutely right. The problem with the 50p policy is that it is not an effective way to raise revenue. Our record is very clear: we have been very effective at getting more money out of the wealthy. As we see from the IFS analysis today, the wealthiest have made the biggest contribution. What we are left with is a symbolic gesture, not a tax policy.
Mr Stewart Jackson (Peterborough) (Con)
What a pathetic, facile motion the Opposition have brought forward for their last Opposition day debate during this Government. They could have introduced a proper costed programme. As my hon. Friend the Member for Wolverhampton South West (Paul Uppal) has said, they could have apologised for the huge number of errors they made in government. All elections, including the one in 63 days’ time, are about hope versus fear. From them we hear fear and smear, but we have a policy of hope, because we have turned around the economy following the disastrous economic legacy left by the Labour party.
Mr Jackson
Absolutely. In more than two hours, we have not heard anything, except in relation to gun licences and, of course, the recycled bankers’ bonuses.
What a contrast between the Opposition and the Labour party on the cusp of the election on 1 May 1997, when I was a candidate and lost by the not inconsiderable majority of 19,500 in Brent South. No wonder Labour MPs are depressed when they are sober and catatonic when drunk, quite frankly, because they know there is an acute contrast between that historic election and now. The Labour Government led by Tony Blair was ambitious, and their programme was thoughtful, forward looking, positive, generous and optimistic. Tony Blair is now persona non grata in the Labour party, and it now has a core vote strategy, with a mean-spirited, peevish, insular, dreary collection of bungs to special interest groups, and smears and caricatures aimed at the Conservative party.
What is more, Labour policy does not stand up to any form of scrutiny. We have heard about the utilities price freeze—a disastrous policy that has damaged the industry and, perversely, will damage the interests of consumers. Wither Labour’s cost of living crisis? Today, the IFS says that prices are being outstripped by wages for the first time since 2007. There is no more cost of living crisis because wages are growing at 2.1% against a retail prices index of 0.9%. On fuel, council tax, food, beer duty and children’s air passenger duty, the Government have made efforts to reduce the cost of living of ordinary families. We have driven up the personal allowance, and we are committed to drive it up to £12,500 in the next Parliament.
Mr Jackson
No, I will not give way at present.
As we have already heard, the 45p tax rate has raised more income for public services than was ever done by the 50p rate, which was put in place for cynical political reasons. We will not take any lectures from the party that abolished the 10p tax rate for the poorest working families. What sticks in my craw is the moral superiority of the Labour party in this debate. In 2011, 1,200 people in my constituency had been parked on out-of-work benefits—incapacity benefit or invalidity benefit—for more than 10 years during a period of economic growth. Some 5.2 million were parked on out-of-work benefits when the economy was growing quarter by quarter during the 13 years of the Labour Government. We will not take any lectures or moral indignation from the hon. Member for West Dunbartonshire (Gemma Doyle) and other Labour Members.
The top 1% of taxpayers are paying 25% of income taxes. We have driven up employment levels. More women than ever are working. Some 30.9 million people are working, despite the ludicrous prognostications of people such as David Blanchflower, who told us that 5 million people would be unemployed, and the right hon. Member for Morley and Outwood (Ed Balls), who said that we could not cut expenditure and have growth in private sector jobs—complete and utter nonsense. In my constituency, unemployment has gone down by almost 60% and youth unemployment by almost 66%.
Stephen Mosley
Under the last Government, almost 1 million young people were out of work. Through apprenticeships and job opportunities, those people now have opportunities and hope for the future. They are the people who are benefiting from this Government. Does my hon. Friend agree?
Mr Jackson
I absolutely agree. My hon. Friend has put forward the strong views of his constituents in Chester for the past five years, and I expect him to be handsomely re-elected.
What I find depressing is the pernicious smear and myth that we are going back to the 1930s, when there was no NHS. That is a lie. It is disingenuous to make that point. First, the figures were not even collected until 1956. Secondly, the economy is at least 10 times bigger than it ever was in the 1930s. As I made clear in an earlier intervention, expenditure as a proportion of GDP is more or less the same as it was in 2002—the fifth year of a Labour Government.
I will not dwell on Labour’s record on the economy, other than to say that we had a record decline in manufacturing—that is for the benefit of the hon. Member for Blaydon (Mr Anderson)—we had disastrous school results, youth unemployment doubled, a quarter of all public expenditure was borrowed by the end of Labour’s rule and there was a structural deficit when the economy was growing. While we are at it, inequality grew between 1997 and 2010. The gap between the poorest 10% and the richest 10% grew wider during the time of the Labour Government.
What a contrast that is to what we have done. We have capped benefits, focused on capital investment, driven up the number of apprenticeships, created 760,000 new jobs, increased the state pension and come up with a properly costed plan for our future. I am proud of the work that this Government have done, given the appalling financial inheritance they were encumbered by in May 2010.
Let us have a little humility from Labour Members. The reason they have zero credibility with electors on the deficit and the management of the economy is that they do not believe they did anything wrong. That is normal for a party that won 258 seats, even though if we had got the same number of votes, we would have got fewer than 200 seats because of the boundaries. They think, “One more heave. More spending and more borrowing is absolutely fine.”
However, the election of a Labour Government is an existential threat to the health and prospects of the economy and my constituency, and to the mortgages, jobs, pensions, savings and businesses of my constituents. Higher mortgage rates, higher unemployment, higher prices, more debt and borrowing, punishing middle-class earners, punishing aspiring wealth creators, same old class envy, same old spiteful prejudice, same old economic failure, same old Labour—on 7 May, the British people just won’t risk it.
Bankers’ Bonuses and the Banking Industry
Lord Jackson of Peterborough Excerpts(9 years, 2 months ago)
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Mr Jackson
Is not this debate a displacement activity for a party that does not have any coherent narrative to deal with jobs, growth and the economy? Is it not reckless of Her Majesty’s Opposition to keep recycling the tax on bankers’ bonuses—10 times over—without ever having to account for where that money will actually go?
Andrea Leadsom
My hon. Friend is exactly right that the Opposition are simply trying to recycle something as a distraction. I am truly delighted that the motion gives me the opportunity to set out the wide-ranging measures that this Government have taken to sort out the appalling legacy of the Labour party on banks and remuneration. We have taken an extraordinarily wide-ranging set of measures to sort out a mess left, once again, by a Labour Government.
Mr Bain
I was here for four months of the previous Parliament, when a tax on bankers’ bonuses brought in £3.4 billion in revenue and we introduced a 50p top rate of tax for people earning £150,000 a year or more. The next Parliament should reintroduce that to ensure that the wealthiest in society make a fairer contribution to getting our deficit down, and so that we bring back opportunities for young people who have been denied them during this Parliament.
Mr Stewart Jackson
I admire the hon. Gentleman’s sincerity, but his argument would carry more weight were it not for the fact that under the previous Government—run by the party of which he is a member and supports—during a period of economic growth 5.2 million people were left on out-of-work benefits and youth unemployment doubled. The gap between the richest and poorest 10% widened. That is his Government’s record, and it ill behoves him to lecture our Government who have done a lot to address those key issues.
Mr Bain
The Government whom the previous Labour Government replaced were content to leave a wages structure in place in this country in which security guards earned less than £1 an hour. That inequality had to be tackled, and that gap reduced during the previous Parliament. People will want to hear during this debate about the next Parliament, and about our vision for the future of a high-skill, higher wage, higher investment economy. I believe that the Labour party has the more convincing vision.
Mr Bain
I agree with my hon. Friend. In this country people want targets for abolishing long-term youth and adult unemployment, not targets in jobcentres for sanctions. We see that in our constituency offices when people arrive in a desperate state having been sanctioned because of edicts from the office of the Secretary of State for Work and Pensions.
The vision of a different economy was picked up by the OECD yesterday in its report. It stated that future growth and rises in living standards in this country will come only if our economy sees increases in productivity, exports and levels of investment. We must improve our skills record and, importantly, sort out more secure and long-term pathways to finance for business and industry in this country—real structural reform for our banks must happen in the next Parliament.
A high-skill, high-investment, higher-wage economy cannot be built when thousands of people are locked outside the labour market for long periods, with skills going to waste and promise left unfulfilled. In 10 weeks’ time—10 weeks tomorrow—my constituents and the rest of the country will go to the polling stations in the hope that change is on the way with a new Government. However, the House does not have to wait that long. By passing the motion today, it can send a powerful message to the Chancellor that a Budget that will command support in the country in a few weeks’ time must have the purpose of abolishing the scourge of long-term unemployment that is so destructive of long-term income prospects, and corrosive of the human spirit.
The House should do more. We must restore fairness to our taxation system and reintroduce that tax on highly paid financiers who have pocketed some of the biggest gains from this Government over the past five years. With the 50p tax cut, for the last few years they have had a Government who have been on their side. Now the British people, who are meeting the burden of high long-term unemployment costs through our social security system, need a new Government who are on their side instead.
With as much as £34 billion a year in taxes going uncollected under this Government, we need policies that maximise revenues and encourage excluded parts of our society back into the labour market. Sweden’s equivalent of the jobs guarantee policy was first introduced in 1983 under a social democratic Government, and it helped balance the books there in the mid-1990s while restoring the right to work to thousands of people. That jobs guarantee was followed in Norway, Finland and Denmark. We should match that ambition in this country by having more people in work and paying into the system, and becoming better off and improving our public finances at the same time.
With bonuses paid by the financial sector since the onset of the financial crisis in 2007 having reached £100 billion this year, and with a few at the top pocketing the biggest gains, the case for asking for a greater contribution from those people—given the taxpayer assistance that has been provided to the banks and financial sector since 2008—is unanswerable. With the Office for Budget Responsibility having revised down by £48 billion at the autumn statement the levels of revenue from income tax and national insurance from the next financial year until 2018-19, the case for more people being in work, and for the super-rich to pay their fair share, makes best economic sense. That is why it is right to increase the clawback period for bonuses paid to people guilty of misconduct in the financial sector from seven years to 10 years, and—crucially—to introduce penalties in law for breaches of the general anti-abuse rule on avoidance.
As the High Pay Centre has shown in recent months, the link between company performance and executive remuneration and bonuses at the very top is tenuous at best. Reform of corporate governance so as to have an employee representative on remuneration committees would help secure greater accountability over what highly rewarded executives receive, and the wider commercial and social obligations that they should have in mind.
Too often, pay structures reward failure when instead there must be a greater relationship with long-term performance. That can be dealt with by the Financial Conduct Authority and greater legal transparency on bonuses, and secured by reform of the laws and corporate governance. Through the taxation system, we in this House can do a great deal more to discourage irresponsibility in the financial sector, and secure justice for the disadvantaged by raising £1.5 billion to £2 billion through a repeat of the bank bonus tax, to fund the jobs guarantee policy that will help so many long-term and young unemployed people. But as has also come up in this debate, we also need to deal with the structural reforms in the banking system which are needed to restore proper channels of finance to small and medium businesses.
A British investment bank, constructed for the purpose and capitalised by some of the revenues we can expect from 3G and 4G licences in the future, is the best way to deal with the gap in the British economy and ensure stable finance for small businesses. As the OECD pointed out yesterday, ensuring consistent lending for businesses is vital for future growth, and policies such as funding for lending have not bridged the gap. They have not delivered the necessary impetus to net lending and the next Parliament and Government need to be much more ambitious on that front.
Mr Stewart Jackson
The hon. Gentleman is elucidating another straw man, which was articulated by the shadow Minister—that we somehow have a crisis in lending. The fact is that businesses of all sizes hold unprecedented levels of cash reserves and they will spend if we have a benign macro-economic policy framework. That is not what is being offered by his party, so any accusations of missing lending targets obscures the bigger picture.
Mr Bain
I am citing evidence—I hope that the hon. Gentleman has been listening carefully—from the OECD and Bank of England reports that net lending to business has continued to fall. The OECD said yesterday that weak lending is a structural problem in the British economy. He might think that I am raising a straw man, but I hope that he is not accusing those organisations of doing so. It is their argument that this Government have left unsolved that structural weakness in the past five years. Tougher action is needed in the next Parliament to secure stable finance for our businesses, because that is how we will get the jobs and growth that will generate the tax revenues and lower the deficit.
Oral Answers to Questions
Lord Jackson of Peterborough Excerpts(9 years, 5 months ago)
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Danny Alexander
I will set the record straight. The record shows that under the previous Labour Government the Crown dependencies and these bodies did not make any progress on registers of beneficial ownership. Progress is being substantially made now because of the lead this Government showed at the G8. By the way, these same places have also now agreed to the automatic exchange of tax information, to make sure that for the first time—this is something the Government of the hon. Lady’s party never did—we can get tax from people who are trying to hide it in these jurisdictions.
Mr Stewart Jackson (Peterborough) (Con)
T2. My constituents in Peterborough who work at Thomas Cook and many families with young children will have been delighted by the announcement on children’s air passenger duty in last week’s autumn statement. Will the Exchequer Secretary give an undertaking that she will continue to monitor the impact of air passenger duty on tourism and the family budget and not rule out further cuts in the near future?
The Exchequer Secretary to the Treasury (Priti Patel)
I thank my hon. Friend for his question. The reductions in air passenger duty announced last week are to be welcomed not just by his constituents and by Thomas Cook but by hard-working families across the country. As with all other taxes, air passenger duty will be kept under review, taking into account our commitment to creating sustainable public finances alongside helping households and, of course, the tourism industry.
Oral Answers to Questions
Lord Jackson of Peterborough Excerpts(9 years, 6 months ago)
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Priti Patel
When it comes to the cost of living, Labour’s great recession is what made the country and the hon. Gentleman’s constituents a whole lot poorer. We now have record levels of employment, including a 9% increase in his constituency. Perhaps he would like to welcome that.
Mr Stewart Jackson (Peterborough) (Con)
There are a great many studies and much empirical evidence showing that the surest way to combat poverty is through work. Is it not a badge of pride for this Government that in four years we have reduced the number of people in households where no one works by 671,000?
Priti Patel
My hon. Friend is absolutely right. When it comes to tackling the country’s economic problems, we can improve living standards only by getting more people back into work. This Government have been reducing child poverty and ensuring that work pays.
Finance (No. 2) Bill
Lord Jackson of Peterborough Excerpts(10 years, 1 month ago)
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Catherine McKinnell
We know what the Chancellor thinks about this marriage tax allowance. He thinks that the idea is a turkey, both politically and economically. Indeed, an article in The Daily Telegraph went so far as to say—[Interruption.] I hear groans from those on the Government Benches. The article went so far as to say that the Chancellor
“loathes the idea. He is not a social conservative and hates the notion of bribing anyone down the aisle. He has made sure the marriage tax break will not come into effect until the very last weeks of this government—and it will be so small as to be unnoticeable. To resolve the impasse, Treasury officials were asked to see whether they could dump the agenda on to Iain Duncan Smith, so the Chancellor could wash his hands of it. But a tax cut has to come from the Treasury.”
Mr Stewart Jackson (Peterborough) (Con)
I am sure my right hon. Friend the Chancellor is touched by the hon. Lady’s warm support. Will she share with the House her thoughts on, and specifically answer, the question asked by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton)? Why did the Labour Government do nothing to support the institution of marriage in 13 years?
Catherine McKinnell
The answer lies in what I have already said; the Labour Government did a huge amount to support all families up and down this country, particularly families with children. Even the Chancellor seems to agree that £3.85 a week is not going to bribe anybody down the aisle or persuade anyone to stay in a marriage if they decide they are going to leave it. The question asked by the hon. Member for East Worthing and Shoreham (Tim Loughton) does not seem to acknowledge the fundamental issues with the Government’s proposal.
Catherine McKinnell
The tax system works on an individual basis and this proposal introduces incredible complexity to the tax system. I shall cover that in more detail and explain the cost implications. Government Members obviously think that the costs are worth it, but I would be very careful about the concept that all married couples will happily share all their money and any tax gain—although, admittedly, we are talking about £3.85 a week. That seems to be rolling the clock back somewhat and assuming a level of communication within households that I do not think it is the Government’s place to assume.
Women are more than £26 a week—a week—worse off in real terms since 2010, and after significant progress under Labour, when the gender pay gap fell by more than 7%, it is now rising again for the first time in five years. The gap between women’s median weekly earnings in the private sector and the public sector has increased between 2009-10 and 2012-13 from 28% to 31%. The same gap for men has decreased from 17% to 14%. At the same time, the cost of child care places, which we debated at length yesterday, has risen by an average of 30% on this Government’s watch, five times faster than pay.
Analysis by the House of Commons Library shows that the Chancellor’s tax and benefits strategy since 2010 has raised a net £3.047 billion, or 21%, from men and 79%, or just under £12 billion, from women. That includes the Budget 2010 tax credit cuts, which took £2.7 billion from women and only £750 million from men, the 2010 spending review, under which reductions in child care support through tax credits took £343 million from women but just £47 million from men, and the three-year child benefit freeze, which has taken £1.26 billion from women and £26 million from men. That, of course, contrasts with the £3 billion tax cut that was given to the top 1% of earners in this country, under which 85% of the gainers are men, and this marriage tax allowance, under which 84% of the gainers will be men. This issue goes to the heart of the clause and of why we are tabling our amendment.
Mr Stewart Jackson
The hon. Lady is being most generous in giving way. Why does she imagine that 80% of the population covered by the OECD have a tax system that rewards marriage, including countries such as France, Germany and the United States?
Catherine McKinnell
We must consider this clause in the context of the current situation. We know that families up and down the country—in fact, all households—are facing a cost of living crisis. We have had three years of a flatlining, stagnating economy and households up and down the country have been paying the price for that. We have a Government who are introducing measures that will benefit a small proportion of married couples—only one in six households with children—and under which 84% of the gainers will be men, when we know that those who have paid the bulk of the price so far for the deficit reduction strategy that the Government have been pursuing have been women. It is a question of priorities, and this Government seem to have them completely wrong.
Mr Stewart Jackson
For the avoidance of doubt, I will be voting against Labour’s amendment. Although the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) is a very engaging spokesman for her party, her speech was mischievous, disingenuous, mealy-mouthed, patronising, leftie drivel—typical middle-class, tofu-munching, Guardian-reading Labour nonsense that said, “We know best what’s good for working people, not you.”
The hon. Lady referred to our friends the Liberal Democrats. I am disappointed that more of them are not here. It is awfully hard to dislike the Liberal Democrats, but it is well worth the effort.
I am delighted that in clause 11 the Government have brought forward this very important change in the tax system, for which I have consistently campaigned since the last general election. We retain the bond of trust with the electors by introducing a proposal that we promised at that time to introduce by the 2015 general election.
Catherine McKinnell
I assure the hon. Gentleman that I do not eat tofu, although I do not think that those who do need to be quite so insulted. Are we to assume from his comments that he is wedded to this policy regardless of how inadequate its reach and implementation will be?
Mr Jackson
The hon. Lady’s comic timing is exemplary. I will develop my more detailed arguments, if she will allow me, given that she had the thick end of 46 minutes to develop her own. That is probably the record for an Opposition spokesman—or spokesperson—although I accept that it was on the Opposition’s amendment.
This has been a long time coming—
Mr Jackson
Indeed—47 minutes, as my hon. Friend says. However, it has definitely been worth waiting for.
In presenting a 10% partly transferable allowance, clause 11 may not yet be worth a huge amount, but it is of seminal importance in supporting marriage in the tax system. For the past 15 years, our tax system has been unusual in not recognising marriage, or indeed any other aspect of family responsibility. Our fiscal policy has been extraordinarily individualistic. Clause 11 changes that by inserting into our system of independent taxation the transferable allowance that former Chancellor Nigel Lawson, the architect of independent taxation, has argued it always should have had. I genuinely believe that qualifying the individualism of our current fiscal policy should be something we can all agree on, and that should appeal to Labour Members. The Opposition spokesperson failed on two occasions to answer the specific question of why, in 13 years in office, her party failed to support the institution of marriage in the tax system in any meaningful way. That is regrettable on her part, because it is disingenuous to say, “We disagree with the policy but, incidentally, this is how you can improve it.” It is churlish and mean-spirited from a party that claims to support the family in the tax system, and children as well.
Ian Swales
I can understand the hon. Gentleman’s passion on this issue, but what would he say to a couple in his constituency who are both earning the minimum wage and will not benefit from this policy?
Mr Jackson
I will come to the specifics later. However, my hon. Friend—I am pleased to call him that because we serve on the Public Accounts Committee together—will know that many of his constituents in Redcar on low wages have benefited from our personal allowance changes. Indeed, many of them have been taken out of tax altogether, as have people across the north-east of England. He will know, too, as will the Opposition spokesperson, that unemployment has significantly fallen in the north-east and there are now more jobs available than in 2010. [Interruption.] We will not take any lectures from Labour, which doubled youth unemployment between 1997 and 2010.
I would have hoped that Labour Members supported these proposals, particularly this clause, because they are progressive. The Institute for Fiscal Studies has produced a very helpful chart demonstrating how the provision will disproportionately benefit those in the lower half of the income distribution—a point astutely made by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton). This is not a provision for the middle classes, as Labour critics sometimes suggest. The truth is that the failure of our income tax system to have regard for marriage in recent years has been very odd, as the Prime Minister said in response to a question from the right hon. and learned Member for Camberwell and Peckham (Ms Harman) in June 2010:
“I simply do not understand why, when so many other European countries—I remember often being lectured when I was on the other side of the House about how we should follow European examples—recognise marriage in the tax system, we do not. I believe that we should bring forward proposals to recognise marriage in the tax system…We support so many other things in the tax system, including Christmas parties and parking bicycles at work, so why do we not recognise marriage?”—[Official Report, 2 June 2010; Vol. 510, c. 428.]
Steve McCabe
The difference is that the tax provisions on Christmas parties and parking bicycles are extended to all. This provision is for a very narrow segment of married people and those in civil partnerships; it is hardly an example of a general principle of marriage.
Mr Jackson
I do not think we all attend Christmas parties or cycle. [Interruption.] The more serious point, which I will elucidate further if the hon. Gentleman will generously allow me, is that there is demonstrable evidence that the institution of marriage has a positive net impact on society, cumulatively, particularly on children. There is nothing ignoble about using the tax system in a mature democracy to support behaviour that is good for society overall.
Mr Jackson
Not at the moment. I know the hon. Lady is very keen, and I am sure she will try to get in later.
Given the scale of the public benefits associated with marriage, it is not at all surprising that most people in the developed world live in countries that recognise marriage, as I said earlier in an intervention. There are numerous examples of this benefit that I could highlight, but given the constraints on time I will mention just a few. Regardless of socio-economic status and education, cohabiting couples are between two and two and a half times more likely to break up than equivalent married couples. Women and children are significantly more vulnerable to violence and neglect in cohabiting, rather than married, families. Three quarters of family breakdown in families with children under five comes from the separation of non-married parents. Children are 60% more likely to have contact with separated fathers if the parents were married. Separated fathers are more likely to contribute to their child’s maintenance if the parents were married. Growing up with married parents is associated with better physical health in adulthood and increased longevity. Children from broken homes are nine times more likely to become young offenders, accounting for 70% of all young offenders.
Kate Green
I respect the fact that the hon. Gentleman is being very careful with his use of words in saying that there is an association between marriage and some of the outcomes he describes. What he cannot demonstrate, however, is whether there is cause and effect, because we do not know whether there are other personal characteristics that make those couples more likely to be married and whether they also result in those beneficial outcomes.
Mr Jackson
I will not take issue with the hon. Lady’s intervention, because it is quite sensible. Nevertheless, the evidence-based data in support of marriage in the tax system have been accumulated over a very long period and are very clear. It is incumbent on the Government not to disregard that evidence, but to take account of it in formulating their fiscal policies.
The list goes on and the findings are put in context by the fact that the Relationships Foundation calculates that the costs of family breakdown amount to £44 billion per annum and that family breakdown outside marriage is the real driver. As the Centre for Social Justice has demonstrated, of every £7 spent as a result of the breakdown of young families, £1 is spent on divorce, £4 on unmarried dual-registered parents who separate, and £2 on sole-registered parents. That is why the Prime Minister was absolutely right to say in response to a question about how the policy could reduce the deficit:
“If we are going to get control of public spending in the long term in this country, we should target the causes of higher spending, one of which is family breakdown. We should do far more to recognise the importance of families, commitment and marriage”.—[Official Report, 2 June 2010; Vol. 510, c. 429.]
I am aware of the arguments that the relationship between marriage and better policy outcomes is merely a coincidence and that the real driver for those better outcomes has nothing to do with marriage and is based on other considerations, especially income. Those arguments simply do not make sense. Apart from anything else, the fact that the millennium cohort study demonstrates that the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples makes it plain that marriage is a significant, independent determinant of stability.
Sheila Gilmore
Will the hon. Gentleman consider the involvement of other variables? For example, those who are married are likely to be together for longer than those who are not and who split up, and the length of the relationship is likely to contribute to the stability of the children and their relationship with their parents.
Mr Jackson
I accept that, which is why I think it is unbecoming to focus on £3.85. We are not arguing that this is merely an issue of monetary transaction. It is about accepting that the inherent benefits of marriage are good for the individuals involved and, principally, their children, as well as for families, communities and society as a whole. We have the evidence.
Fiona Bruce (Congleton) (Con)
Is my hon. Friend aware of the work of Harry Benson of the Bristol Community Family Trust, who has found that during early parenthood the single biggest predictor of stability is whether parents are married, even when age, income, education, benefits and ethnic group are taken into account?
Mr Jackson
My hon. Friend makes a very strong point. I pay tribute to her for the work she has done in this area and I hope she will continue to do it. I look forward to hearing her contribution later.
Catherine McKinnell
Does not the hon. Gentleman’s argument highlight the inadequacy of the Government’s proposals, in that they benefit only a third of married couples and only one in six households with children? If they want to recognise marriage in the tax system, they should recognise marriage, not a certain type of marriage and a certain few married couples.
Mr Jackson
The hon. Lady is engaging in a certain degree of amnesia. When her party was in government, it took 7% out of this country’s gross domestic product during the financial crisis. It left us with a disastrous legacy of debt and a huge deficit, which meant that we had to take very difficult decisions. We have to lay the blame for that at her party’s door. That is why we cannot be more innovative in how we approach the tax system. We are, as always, constrained by the legacy of a disastrous Labour Government. Labour always leaves office with more people jobless and the country in trouble.
Mr Jackson
I will give way later, because I am sure the hon. Lady will not forget my comments.
The purpose of clause 11 is not to try to make people get married, but to remove the obstacles to those who wish to marry, which is different. Marriage should at the absolute minimum be a credible, accessible option for all eligible couples. However, the failure of our income tax system—unlike that accessed by the majority of people living in Europe—to recognise marriage means that the fiscal obstacle to marriage is a real concern. The size of the couple penalty in this country, as outlined by the Institute for Fiscal Studies, is deeply worrying.
Mr Jackson
No, I will not give way—not even to the hon. Lady.
As others have noted, the social policy charity Christian Action Research and Education conducted an annual international tax comparison for 2012—the latest year for which we have comparative data—which demonstrated that the burden on a one-earner married couple on an average wage was a significant 45% greater than the OECD average.
It is not acceptable that we should make the option of marriage inaccessible in this country, and so much more so than the OECD average. Clause 11 will take a vital first step in the direction of addressing that problem, but the limited nature of the partially transferrable allowance means that it will only begin to erode the incentive not to marry. We must go much further in the next Parliament to create a genuinely level playing field. Given the huge public policy benefits of marriage, there is a compelling case for a nudge to marry, although a level playing field would be a massive step forward.
Alison Seabeck
I am sorry, but how many people in this Chamber thought, “Oops! I can’t get married because I’ve got a fiscal obstacle in the way,” given that the average cost of a wedding is about £10,000?
Mr Jackson
I know that this debate is apposite because the hon. Lady recently tripped along the path of happy matrimony, on which I congratulate her, albeit belatedly. I am not sure whether the issue of £3.85 came into it for the right hon. Member for Greenwich and Woolwich (Mr Raynsford).
If I could move on before we dwell too long on the hon. Lady’s love life, I have read in many places that the provision discriminates against widows and widowers, people who leave abusive relationships and working couples. The hon. Member for Newcastle upon Tyne North regurgitated that argument earlier, but it completely misunderstands the policy.
First, if the widow or the widower was the homemaking spouse, their personal allowance would not die with their working spouse; it would automatically return to them so they could benefit if they re-entered the job market. Secondly, dual-earner couples already benefit from individual personal allowances, so they are already benefiting from both allowances. Thirdly, on those leaving abusive relationships—this is a very important issue and it would be remiss of the hon. Lady not to raise it—if a marriage ends, the homemaking spouse, who had previously transferred the tax allowance to their spouse in paid employment, would be required to take back their allowance because the marriage had ended. It would not be stolen from them by their former spouse.
If the argument is that this policy does nothing for widows and widowers, my response is that that is true of many policies. Most policies have a sharp focus: if we responded to every policy solution by saying, “What about those who won’t benefit?” the implication would be that we should introduce only polices that affect everyone equally. However, in the real world, where we often need specialist and focused policies, that is simply not possible. There is nothing to stop us bringing forward another policy specifically to help widows and widowers—I am sure that Treasury Ministers are listening on that issue—and public policy makes provision for them in other ways. Many widows and widowers were once in one-earner families and will therefore welcome clause 11 for family members who are now in such a position. In short, I warmly welcome clause 11.
On the current drafting, the failure to make provision for a tapered withdrawal of the 10% transferable allowance is an oversight that should be corrected for fairly obvious reasons. I very much hope that the Exchequer Secretary will put that right through a Government amendment on Report.
I congratulate the Prime Minister and Chancellor on introducing this seminal provision. I very much hope that the whole House will recognise its significance in qualifying the individualism of our tax system and reinserting some recognition of the importance of family responsibility. It is a first step that will help to make the option of marriage less inaccessible to those on average and below-average incomes, because it is about social equity as well. We must build on it in the next Parliament; and with a majority Conservative Government, we will.
Alison Seabeck
It is always interesting to follow the hon. Member for Peterborough (Mr Jackson). He and I have recently campaigned jointly on the future of our Land Registry offices, but I am afraid that we will be in different Lobbies this afternoon. I cannot agree with his assessment of the value of this tax change for a range of reasons.
Like many measures introduced by this Government, this one is disingenuous at best. It was brought forward to a fanfare of trumpets, after a great deal of pressure from Conservative Back Benchers, but it is basically unfair. I pick up a sense of that unfairness, which is driven through the tax system, when I do a street surgery every Saturday and in my postbag. That unfairness is what the public have the greatest problem with, whether in relation to the tax system or to other Government changes. It is also indicative of the problems we have seen in the House this week. We in this place do not read the public mood as well as we ought to at times, and this measure is yet another example of that problem.
Tim Loughton
My hon. Friend has done a great amount of work on this issue and there is a much bigger picture.
This policy is popular among the public. It is popular with a majority of Labour voters. It is even popular with an awful lot of Liberal Democrat voters, despite that party’s policy being against it. Last May, the Liberal Democrat Secretary of State for Business, Innovation and Skills attacked the “prejudice” directed at stay-at-home mothers. I am sure that he would have included stay-at-home fathers to be inclusive. It is deeply insulting to the many millions of married couples who have decided to make a lifelong commitment to each other that is recognised in law in front of their family and friends to suggest that we are discriminating in some way against other people.
Some 90% of young people aspire to get married. Some 75% of cohabiting couples under the age of 35 also aspire to get married. There are many forms of family in the 21st century and many people do a fantastic job of keeping their families together and bringing up children, often in difficult circumstances. However, as many of my hon. Friends have said, almost uniquely among the large OECD economies, the UK does not recognise the commitment and stability of marriage in the tax system until one partner dies. Worse still, one-earner married couples on an average wage with two children face a tax burden that is 45% greater than the OECD average, and that gap continues to widen.
To introduce such a recognition of marriage, particularly in the modest form suggested in the Bill, is not to disparage parents who find themselves single through no fault of their own, nor to undermine couples with two hard-working parents, all of whom rightly get help and support from the state in other forms and for whom we might need to do more. Uniquely, married couples, civil partners and same-sex marriage partners are discriminated against in our tax system.
Mr Stewart Jackson
My hon. Friend is making a powerful and fluent case. He spoke about the popularity of the policy with Labour voters. Is it not also the case that significant polling evidence shows that young people across all classes, ethnicities and races support the institution of marriage and hope one day to be part of it?
Amendment of the Law
Lord Jackson of Peterborough Excerpts(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ed Balls
I will. We have said very clearly that we would take the winter fuel allowance away from the richest 5% of pensioners, which would be a saving. We would also invest in affordable housing to get the housing benefit bill down. I do not know whether the Chancellor gets to read the OBR report. I think that he should listen to what it says:
“The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment.”
People in employment are seeing their wages fall and are having to claim housing benefit. It is no wonder the welfare bill has gone up by £13 billion since 2010.
It was not supposed to be this way. We all remember what the Chancellor promised in 2010: he would make people better off, balance the books by 2015 and rebalance the economy for the future. We know that people are worse off. We also know, after three years of flatlining growth, that his commitment to balance the books in 2015 is in tatters. He does not expect a balanced budget in 2015, but a deficit of more than £75 billion. It is all in the OBR report. There will be £190 billion more in borrowing than he planned in 2010. The national debt is rising this year, next year and the year after.
Mr Jackson
I thank the right hon. Gentleman for his helpful suggestion, but I will ask my own question. As we are on the subject of history and mea culpas, would he like to apologise for running a structural deficit for the entire period of his Government’s administration?
Ed Balls
They do not want to hear this, so before I remind people of what the Education Secretary said, let me tell the House what was said yesterday about the cost of living, the Budget, and all those matters, by the outgoing Conservative hon. Member for Thurrock (Jackie Doyle-Price): “The biggest impediment”—[Interruption.] I really think that hon. Members, especially those with small majorities, should listen to what she said.
Ed Balls
I have read it, and I think maybe you should too, my son—[Interruption.] I think they should listen. The hon. Member for Thurrock stated:
“The biggest impediment that this Party has when trying to secure a majority at the next election is that on one key question we constantly perform badly. That is on the issue of whether the Party is in touch with ordinary people.”
That was before the poster. She said that
“while people are worrying about whether they are keeping their jobs, whether they will be able to afford the electricity bill and how much it costs to fill the car these days,”
all the Tories seem to be doing is “talking about Boris.” She went on:
“We need to stop talking about ourselves and talk about the things that really matter to people. Otherwise we will be seen as out of touch, and Labour’s message will resonate.”
It certainly will, Mr Deputy Speaker.
In the light of the advice from the hon. Member for Thurrock about the cost of living, let me remind Members what the Education Secretary said over a wine-fuelled dinner with his old boss, Rupert Murdoch. He said that Boris Johnson “has no gravitas”, that the Home Secretary “has no friends”, and that only Osborne is “fit to lead.” Only Osborne is fit to lead? How did the Education Secretary explain his comments? He said he was “tipsy”. Tipsy? He must have been completely legless.
Vince Cable
My understanding is that the employment rate, if the hon. Lady is talking about the total adult population in work, is now at its highest level ever—higher even than in the United States, which is famed for a flexible labour market.
I am surprised that Opposition Members feel that there are issues to pursue. [Interruption.] Somebody muttered “Immigration”. Last year, overwhelmingly the largest number—well over 90%—of jobs went to British workers. I do not know if they have studied those figures.
Mr Stewart Jackson
Does my right hon. Friend not think it disingenuous, given the Government’s inheritance of a 7% reduction in GDP presided over by the Labour party, for Opposition Members to categorise changes in personal allowances, which will affect 25 million people and take 3 million people out of tax altogether, as having nothing to do with the cost of living?
Vince Cable
Yes. I am delighted that the hon. Gentleman has raised that point, and I was going to dwell on it more later. It is a considerable achievement of this coalition that we have delivered, and indeed over-delivered, on the commitments I and my colleagues made before the previous general election. That helps people who are relatively low paid by lifting them out of tax, not just because they pay less tax but because it reduces the tax rate at the margin and provides a significant incentive to work.
Sajid Javid
What I will confirm is that people in this country have been hurt because of the great recession that took place as a result of the Labour party’s policies. It was the biggest decline in our GDP in more than 100 years.
I am sure Labour Members will acknowledge that the best way to get our country back up on its feet and to improve the living standards of everyone in the UK is to have a growing economy that creates jobs. That is exactly what yesterday’s Budget continued to do. It is part of our long-term economic plan to give economic security to families across Britain and, through our increase to the personal allowance, to put more money back in the pockets of hard-working people.
Yesterday’s Budget sent a very clear message to all those businesses that are driving our economic recovery that, if they want to invest in new machinery, then, through our extension and expansion of the annual investment allowance, which will give 99% of businesses a 100% allowance, this Government will support them; if they want to manufacture but are concerned about the cost of energy, then, by capping the carbon price support rate, this Government will support them; if they want to export to emerging markets, then, with higher lending at lower interest rates, this Government will support them; and, crucially, if they want to employ, then, not just through our employment allowance, which comes into force next month, but through our extension of the apprenticeship grant for employers—which my hon. Friend the Member for Gloucester (Richard Graham) has referred to—this Government will support them. Those are measures that will help businesses to invest, manufacture, export and employ. As such, I hope that everyone in this Chamber will support them.
Mr Stewart Jackson
On the subject of fairness, which I am sure my hon. Friend is alluding to, is he as pleased as I am that it is the Conservative party in a coalition Government that is tackling tax avoidance by reforming stamp duty in relation to shell companies with residential property? The Labour party did nothing about that in 13 years and it also increased pensions by 75p and cut expenditure.
Sajid Javid
My hon. Friend is absolutely right. It is under this Conservative-led Government that the rich are paying a higher proportion of tax than in each year the previous Government were in office.
Yesterday’s Budget also provided targeted support for some of those industries that are critical for our economy. It showed that we are supporting our construction sector by offering £500,000 to small house-building firms; that we are supporting our oil and gas sector by introducing a new allowance for ultra-high pressure, high-temperature fields, a measure that will increase investment and jobs; and that we are supporting our creative economy by introducing a theatre tax relief and extending our film tax credit, a measure that will build on the astronomical success of films such as “Gravity”. All those measures will put money and trust back into the hands of businesses, and give them the power to invest, expand and employ.
Yesterday’s Budget was all about trust—trust in the imagination and hard work of the British people to turn our economy around, and trust in the fiscal prudence of the British people to take their hard-earned pensions when they want, and to invest and spend them how they want.