Finance (No. 4) Bill

Alun Cairns Excerpts

Thursday 19th April 2012 Commons Chamber

[Rachel Reeves]

It is a privilege to serve under your chairmanship, Ms Primarolo.

I rise to speak to the amendments and to oppose clause 4, which will freeze age-related allowances for those who are receiving them and abolish them for those who are approaching retirement. I hope that Members from all parts of the Committee will join us in our opposition this afternoon. Defeating the clause would prevent a real-terms increase in tax for millions of older people in this country, which will cost £83 a year for 4.4 million people on modest incomes and as a much as £322 for 360,000 people who will reach the age of 65 next year.

We are seeking to reverse the Government’s freezing and abolition of age-related allowance for three simple reasons: first, that tax increase adds to the financial pressure already felt by older people on modest incomes facing rising costs; secondly, it picks the pockets of pensioners to fund an irresponsible tax cut for millionaires; and thirdly, the way in which it has been introduced adds insult to injury, breaking a promise made by the Chancellor just a year ago and using the language of tax simplification to cover up what is clearly and simply a tax grab.

[Alun Cairns (Vale of Glamorgan) (Con)]

The hon. Lady is expressing opposition to the freezing of the age-related allowance. Did she express the same opposition when the last Chancellor did exactly the same in the Labour Government’s last Budget?

[Rachel Reeves]

This is a permanent freeze, and the allowance is being abolished entirely for people coming up to retirement next year, so it is very different from a one-year freeze.

[Alun Cairns]

Will the hon. Lady give way?

[Rachel Reeves]

I will make some progress.

For the reasons that I have given, pensioners from the National Pensioners Convention have come to Parliament today to lobby MPs to vote against the change. Let us take each issue in turn and consider who will be hit, because there has been some myth making by defenders of the granny tax about how only well-off pensioners will be affected. The truth is, those who will be hit have very modest incomes.

--- Later in debate ---

[Graeme Morrice]

I must confess that I have not shared that article from the Financial Times with my constituents, who, like me, are more avid readers of the West Lothian Courier. As we know, the increase in inflation, high fuel, energy and food prices and the VAT increase up to 20% have eroded any increases given to pensioners by the Government.

I am delighted to be able to tell the constituent whom I have just quoted and all the others who have contacted me about this issue that we on the Labour side of the Committee are trying our best to do exactly that today. In other words, we will do our job and kick this proposal out.

[Alun Cairns]

I am grateful to the hon. Gentleman for his generosity in giving way. There is an inconsistency between his actions and his standpoint at the last Budget brought in by the previous Chancellor, who froze the age allowance and the personal allowance. The hon. Gentleman is talking about the effect on pensioners on modest incomes, but at least on this occasion there was a significant increase in the personal allowance. When the previous Chancellor froze the age allowance, he also froze the personal allowance, so that tax affected people on lower incomes. Does the hon. Gentleman not accept that logically that position is inconsistent?

[Graeme Morrice]

I am grateful to the hon. Gentleman for his contribution, but I thought we were talking about the proposals in this Bill.

Although we are clear that the granny tax is not right and not fair, the coalition parties have been desperate to try to play down the significant impact of the measure. As we are aware, this is a £3 billion tax raid on our nation’s pensioners. Indeed, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) actually went as far as to insist that there is no granny tax at all. That will no doubt come as a great surprise to the 4.4 million pensioners who will be worse off as a result of the proposal, but it is typical of the increasingly desperate attempts by Liberal Democrats to distance themselves in the media from unpopular Government policies, before voting with the Tories to get those same measures through Parliament.

--- Later in debate ---

[Alun Cairns]

Does the hon. Lady accept that when the last Chancellor froze the age allowance and the personal allowance at the same time, pensioners on much lower incomes were affected?

[Katy Clark]

That was done as part of a range of measures. We have been talking about a package of measures today, and what we know is that pensioners will be disproportionately affected by the range of measures that this Government are steamrollering through. I will return to that later, but the hon. Gentleman’s point also highlights the fact that the changes proposed at that time treated everybody, of all ages, in the same way. In this debate we are trying to focus on the impact on pensioners of the freeze in what is an age-related benefit. We have heard a number of contributions that have highlighted how pensioners are struggling as a result of many of the Government’s policies, as well as the economic situation we are in, which the Government are not trying to alleviate.

My hon. Friend the Member for Leeds West (Rachel Reeves) put this debate in the bigger picture by highlighting the fact that the £3 billion that the Government will save as a result of the proposed change will be used to help some of the richest people in the country. The big picture is that the richest in this country are getting richer, at a time when the living standards of those on modest or low incomes are going down. We have heard a number of attacks on the last Labour Government in this debate, but the reality is that the figures show that the living standards of those on low, modest or middle incomes went up. There was also an increase in the living standards of the wealthiest in the country, but we are now seeing the living standards of ordinary people—people on low or modest incomes—plummeting, while at the same time we see huge and escalating increases in the incomes of rich individuals and many corporations.