Cost of Living

Debate between Albert Owen and Bob Russell

Wednesday 16th May 2012 Commons Chamber

[Sir Bob Russell (Colchester) (LD)]

The title of today’s Queen’s Speech debate is “Cost of Living”, yet at 10 o’clock this morning, only 10 Members had put their names down to speak, and the Whips were rushing around trying to get more people from all parts of the House to participate. That suggests to me, despite the Opposition amendment, that the serious financial situation facing millions of low-income and disadvantaged people is considered to be a lower priority than the subjects debated on other days when so many MPs wanted to speak that there had to be a time limit of as little as six minutes for each speaker.

The Chancellor’s decision to cut the top rate of income tax from 50p to 45p was a political error on a big scale, for it gave the impression that this Government are one who favour the rich at the expense of the poor. The notion that “we are all in it together” lacked credibility because of the Cabinet’s decision on that. It is the way the Chancellor tells them that is the problem. Regrettably, his announcement on the reduction from the 50p top rate completely overshadowed the good news that 20 million people would have lower taxes. In the context of the cost of living, that is wonderful news. The last Budget resulted in a tax cut of a further £220 on top of the £550 income tax cut already achieved since Labour lost the 2010 general election. That has to be good news, too, in the context of the cost of living. In my Colchester constituency, nearly 5,000 low-income people will, thanks to the coalition, be lifted out of paying any income tax. That is the second-highest number in any local authority area in Essex.

[Albert Owen]

The hon. Gentleman is right to say that the thresholds have raised and that some people are coming out of paying income tax. Does he not acknowledge, however, that his party and coalition colleagues voted in favour of VAT rises, which will wipe out any gain that the lower-paid will have had? The VAT has increased Budget on Budget.

[Sir Bob Russell]

If the hon. Gentleman checked the record, he would see that I voted against the VAT increase.

The headlines were all about the cut to the 50p top tax rate for those earning more than £150,000 a year. There are very few people in my constituency who get paid upwards of £3,000 a week. Thus, all the good things done to help those on low incomes—whether they be families or old-age pensioners—have been lost in the minds of many people because of the cut in the 50p tax rate.

Before the Opposition get excited, I must point out that, for all but the final few weeks of the last Government—and let us not forget how Labour left the country in a financial mess—the top rate of tax under new Labour was 40p for high earners, and that for almost 13 years. Our 45p rate is higher than the 40p rate levied by new Labour.

Let me remind the House of what I said on 11 May last year at Prime Minister’s Questions:

“The Labour Government took Britain to the brink of bankruptcy. The gap between rich and poor widened, and nearly 4 million children were left living below the poverty line. Last month, the coalition Government cut income tax, liberally helping millions of people, but I have to ask the Prime Minister this: if we are all in this together, what is he going to do about the obscenity of 1,000 multi-millionaires boosting their personal wealth by 18% in the past year?”



Responding, the Prime Minister said:

“One of the things we absolutely will do—and we have put in the money to make sure it happens—is crack down on the tax evasion that takes place so widely in our country. The Treasury has put money into that campaign to make sure it happens. The hon. Gentleman makes a good point.”

Well, I normally do. He continued:

“Because of our coalition Government, we have lifted 1 million people out of income tax and, at the same time over the past year, we see exports up, private sector jobs up, the economy growing and borrowing down—all radically different from what would have happened if we had listened to the recipe from the Labour Party.”—[Official Report, 11 May 2011; Vol. 527, c. 1158-9.]

In concluding today’s debate, will the Minister give us a progress report on what the Prime Minister said a year ago? Perhaps what is needed on both Front Benches are people with experience of the university of life, and the school of hard knocks.