Amendment of the Law

Baroness Bray of Coln Excerpts

Thursday 22nd March 2012 Commons Chamber

[Ed Balls]

I think we should leave people’s trust funds out of this. I will come back to that in a moment, but I will not press the Government on it.

The Chancellor took a reckless gamble on jobs and the economy, the Prime Minister and the Chancellor have taken a reckless gamble on NHS reform and police cuts, and now the Chancellor is taking a reckless gamble with the fairness of our tax system by handing out massive tax cuts to legitimate taxpayers in the hope—based on no evidence—that the cuts will pay for themselves by somehow bringing all the tax avoiders back into the fold. That is a fact.

[Angie Bray (Ealing Central and Acton) (Con)]

Will the right hon. Gentleman confirm that under the previous Labour Government the 50p tax rate applied for just 37 miserable days and that for the rest of the time their tax on the highest income earners was lower than under the coalition Government?

[Ed Balls]

In reply, let me quote what the Chancellor said in October 2010:

“The public must know that the burden is being fairly shared. That's why I said last year: we are all in this together. And I am clear…that those with the most, need to pay more. That is why… I have stuck with the 50p tax”—

the Chancellor of the Exchequer, Conservative party conference, October 2010. Eighteen months on, what has changed? The public still want the burden to be fairly shared, but far from keeping the top rate of tax, he is ditching it.

Let me read another quote. In October 2009, the Chancellor said:

“we could not even think of abolishing the 50p rate on the rich while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs. I think we can all agree that would be grossly unfair.”

We can all agree on that. What has changed? What is the truth? It was all a con. The mask has slipped. To 200,000 families struggling on less than £17,000 a year, he says, “I’m going to cut your tax credits to make you work harder”, but to the highest earners, he says, “I’m going to cut your taxes because if I don’t, you won’t work hard and pay your taxes.” That is it. To make the poor work harder, the Chancellor makes them poorer. To make the rich work harder, he makes them richer. Does that not tell us everything we need to know about the Chancellor? He is cutting tax credits for the poor, cutting child benefit in the middle, cutting tax help for pensioners and cutting taxes at the top. That is his priority.

--- Later in debate ---

[Jack Dromey]

I stand corrected, Mr Deputy Speaker.

This Government are oblivious to the consequences of their actions. I am proud to represent Birmingham, Erdington. It is a constituency that is rich in talent but it is one of the 12 poorest in Britain. I see what too many Conservative Members shut their eyes to, which is the pain being felt in such constituencies as a consequence of the Government’s actions. Let us take as an example the hard-working Castle Vale family who have two wonderful children and earn just over £20,000. They face a £253 cut to their tax credits in April. Let us consider the one in four young people in Kingstanding who are unemployed. They are desperate for a job, but the Budget offers them no hope. Alongside the victims of the shameful changes to housing benefit and the changes in the Welfare Reform Act 2012, there are 1,333 households in my constituency who are now facing the iniquitous consequences of the bedroom tax.

Grotesque unfairness runs through everything that this Government do. For example, let us contrast how Birmingham and Wokingham have been treated. High-need, high-unemployment Birmingham has had £313 million of cuts to its local budget over the past two years, resulting in every citizen in Birmingham losing £164. In leafy Wokingham, the figure is £19. Whether we are talking about police budgets, fire budgets or the voluntary sector, why have the Government got it in for cities such as Birmingham? They should be standing by such cities; at a time of rising unemployment, they need more help, not less.

Now we are to have regional pay. I declare an interest, in that I have led many national bargaining arrangements in the national health service, in local government and in the Ministry of Defence. I worked with some Conservative Members when they performed various ministerial duties in that regard. For example, I was chair of the MOD unions at a time when a Conservative Minister was chair for the Government side. Anyone who has experience of national bargaining knows that it is efficient, that it is increasingly flexible in its approach and, crucially, that it is fair. The Government’s proposal will say to nurses, teachers, doctors, firefighters and home carers in Birmingham that they are worth less than their counterparts in Surrey.

[Angie Bray]

Does the hon. Gentleman’s dislike of regional variations mean that he does not support his own party’s take on the possibility of regional benefits?

--- Later in debate ---

[Angie Bray (Ealing Central and Acton) (Con)]

A little over a year ago I stood here and drew the Chancellor’s attention to the level of debt hanging over the heads of every single voter in my constituency. The amount—the generous legacy the Labour Government bequeathed to the people of Ealing and Acton—was an astonishing £37,000. I asked the Treasury team for reassurance that they were committed to putting that right. The answer was a resounding yes. Yesterday, a year on, the Chancellor’s Budget reconfirmed that. By sticking to his original plan he is reducing the structural deficit every day and lessening the burden on my constituents, their children and their children’s children.

Many of my constituents own their own businesses locally. The Budget will encourage them because it sends out the crystal-clear message that the Government are behind them and back aspiration, new ideas and creativity. Now these businesses know that from next month their corporation tax bill will be reduced to 24% and that it will drop still further to 22% by 2014, and hopefully 20% thereafter. They know that London’s coffers will be boosted to the tune of £70 million by a new development fund to attract new business and jobs and that the national loan guarantee scheme will step up to the plate and make bank loans easier by making them cheaper.

When those measures are allied to the reduction in the top rate of income tax to 45% from next year, it is clear that the Government are serious about supporting enterprise and encouraging aspiration. Long-term measures such as those help to instil confidence and encourage businesses to take the bold decisions needed to thrive. Only by allowing them to thrive will we create the conditions for growth and go some way to addressing the related problems of getting more of our young people into work and improving our communities.

Young people in my constituency can be encouraged, too. The Chancellor announced the introduction of enterprise loans to help 18 to 24-year-olds to set up and grow their own businesses. They will get the opportunity to pitch their ideas before a panel and, if they have a viable business plan, get a cash injection of between £5,000 and £10,000 to help them start up. So often it is the young, creative, positive ideas people who are stymied by a wall of red tape when they try to start up on their own. In the long term, schemes such as that can go some way to bridging the gap between great ideas and the start of a great business.

Already in my constituency I know of a number of set-ups that could benefit from that kind of scheme. The Doughnut Factory in Acton is supported by a number of organisations, including Action Acton and the university of West London. It is a creative hub where local entrepreneurs can rent affordable office space. Many of the young people based there would be eager to pitch their plans. I spent a happy morning there meeting a group of young, enthusiastic students, all looking to start their own businesses, the very people that that scheme is aimed at helping. It is just the latest in a raft of hugely positive measures that the Government have already introduced to help young people: the upcoming youth contract, the Work programme, a dramatic increase in apprenticeship places and the national citizen service for 16-year-olds, which is now entering into its second year.

The real headline news from the Budget has to be the largest real increase in the personal tax allowance for 30 years. An additional 840,000 people will be lifted out of income tax, meaning that altogether the Government will have taken 2 million people on the lowest incomes out of tax altogether. The personal tax allowance will go up to over £9,000, and we are well on our way to our target of taking everyone earning up to £10,000 out of tax. Of course, even those earning above that stand to benefit as well. That will help a great many of my hard-working constituents. It is also part of the Government’s overall strategy, sitting alongside the benefit reforms that ensure that work always pays.

London has done well out of the Budget. The Chancellor announced vital cash for London rail; £15 million for Transport for London, specifically for cycle safety; accelerated broadband; more support for the enterprise zones—please can we have one in west London?—new funds to help young people into work; and £70 million for the Mayor to help London businesses grow. As I have said, London has done well out of this Budget. Enterprise and aspiration have done well out of this Budget. In tough times, this is the right Budget for the country.