Finance (No. 2) Bill

Ashley Dalton Excerpts

2nd reading
Wednesday 29th March 2023 Commons Chamber

[Ashley Dalton (West Lancashire) (Lab)]

Over the past few weeks, Government Members have described the Opposition’s objections to this Bill, and to the Budget that came before it, as “the politics of envy.” Nothing could be further from the truth. It is not envy to understand that pension tax breaks for the very richest in society do nothing to provide the economic growth we all so desperately need. It is not envy to demand an economic strategy that prioritises growth and public services, and it is not envy to want good jobs and productivity across all of our communities. This is about tapping into the potential of our country to build the better Britain that we on the Labour Benches know is not only possible, but essential. It is about priorities.

This Government had an opportunity to unlock the massive potential of our country and target measures in a way that could drive growth, invest in public services, and facilitate jobs and employment in our key sectors. However, what they have again chosen to do is paper over the cracks of 13 years of economic failure. They have chosen to dress up a massive tax cut for the richest as some kind of economic freedom, when in fact it is one of the most regressive decisions they could have taken. They have chosen to vaguely manage ongoing decline, rather than take the bold and progressive steps required to unleash the potential of our economy and build a better Britain.

I am sure that Government Members will tell us that the plan is for inflation to come down and for financial growth, but all the evidence is to the contrary. Inflation was meant to come down this month, but it went up again. Rather than improving, growth forecasts have been downgraded, and the Office for Budget Responsibility tells us that wages will fall again this year in real terms. As for the Government’s plan to abolish the pensions lifetime allowance, apparently to keep doctors in the NHS, it is a blanket measure that benefits only the very richest, and one that the former Pensions Minister Sir Steve Webb believes will actually lead to people retiring earlier.

Let us have a look at this abolition of the pensions lifetime allowance. The Government are keen to dress it up as a “keep more of what you earn” idea, as though it is going to help struggling people to save for their futures, but that is absolute nonsense. It is a common misconception that the lifetime allowance stops people from saving more than the limit—it does not. As it stands, people can save more than the lifetime allowance in their pension pots, but over that allowance they will have to pay tax on it. At first glance, anyone might think that it is a great idea that they can now save more without being taxed, but who does the policy actually benefit? In 2019-20 there were over 41 million people of working age in the UK. How many of those were fortunate enough to be able to save enough money that they went over the allowance in that year? It was 8,510. If we filled The O2 arena, four of the people in there would go over the limit. This policy will benefit at most 1% of people. How do the Government justify a policy that helps so few and costs everyone else so much? Even if it did encourage people to stay in employment longer, the IFS says it will cost the taxpayer £100,000 for every job retained. There is no guarantee at all that those people will be retained in the key sectors where we desperately them, such as doctors.

Moreover, this policy allows somebody to hoard huge unlimited wealth in pension pots tax-free. On their death, they can pass those on without having to consider inheritance tax. When Government Members claim this policy is about letting working people keep more of what they earn, we know it is a sham. When they claim it is about retaining doctors, we know it is a sham. When they claim it is about growth, we know it is a sham, because despite this so-called tax cut, the tax burden on ordinary working people is up. Not only is it up; it is at its highest in more than 70 years, and that comes on top of stagnating wages, rising inflation and rocketing interest rates.

There was a chance to put in place an affordable, targeted scheme to keep doctors, but the Government did not. There was a chance to give control back to communities through devolution deals, but 90% of us have missed out on that. There was a chance to end non-dom status and spend the money on the NHS, but it was missed. That is because the Government are out of ideas, out of steam and out of touch. It is time for them to get out of the way so that Labour can get on with building the better Britain that we not only need, but that Opposition Members know we can be.