Cost of Living

Debate between Catherine McKinnell and Robert Halfon

Tuesday 14th May 2013 Commons Chamber

[Catherine McKinnell]

My hon. Friend makes a powerful point. Another point to remember is the disproportionate impact that this Government’s tax and benefit changes have had on the lowest earners—and on the middle earners, too.

Let me get back to members of the Conservative party. Linda Pailing, for example, the deputy chair of Harlow Conservative party—I see the hon. Member for Harlow (Robert Halfon) in his place—put it very starkly, targeting her criticism squarely at the Prime Minister. She said:

“The national swing took us down and that is purely to do with what Cameron and his cronies are doing with the national party. The voters are disillusioned with Cameron himself. They don’t like the fact that he didn’t keep the 50p tax. This has really grated and people feel here that he is not working for them, he is working for his friends.”

I could not have put it better myself.

There could have been some acceptance of the Government’s approach—at least among their own supporters—if the 50p tax cut policy had boosted confidence and stimulated economic growth, which is the only thing that could turn the situation round for those feeling the squeeze, yet it has done precisely the opposite. The approach has not only failed to address the lack of confidence in the economy but compounded the lack of confidence in this Government. What kind of right-minded Chancellor or Prime Minister would turn a blind eye to the suffering of the vulnerable and those struggling to make ends meet, slap on a VAT hike and impose a bedroom tax, cuts to tax credits and in-work support while dishing out tax cuts to those who need them least.

[Robert Halfon (Harlow) (Con)]

Will the hon. Lady acknowledge that this Government have taken 3,000 low- income people in Harlow out of tax altogether and cut taxes for 40,000 low-income Harlow residents? Why did she and her party vote against those tax cuts for lower earners?

[Catherine McKinnell]

I anticipated Members raising the issue of personal allowances, but the fact is that the Institute for Fiscal Studies has clearly shown that the overall impact of the Government’s changes to tax, credits and benefits has left the very people for whom the change to personal allowances was supposed to help worse off. People will be worse off under this Government in 2015, too.

Then comes the ultimate betrayer of the Government’s true intentions. First, someone claims Britons have never had it so good, completely downplaying the impact of the recession on those hard hit. Then, after resigning on the back of it, this person is reinstated and can now be heard extolling the virtues of starting a business in a recession on the basis that

“labour can be cheaper and higher quality, meaning that return on investment can be greater”.

I was both alarmed and enlightened to read the report in The Daily Telegraph of a leaked discussion between pollsters and the Government’s key advisers. When asked what kept them awake at night, those advisers replied “Nothing” at first, and then admitted that it was their kids’ school fees that bothered them most. If that is the main issue affecting the lives of the Government’s key advisers, that is quite indicative. Lord Young’s comments, cited above, are quite startling, showing him to be revelling in the strain that the jobs and wages squeeze is putting on people’s finances. There are 2.5 million people out of work at the moment, and nearly 1 million young people out of work, with 500,000 out of work for two years or more. That is the highest number since the end of the last Tory Government in May 1997. Since 2010, the number of unemployed people has risen. Lord Young should reflect more on that.

Taxation (Living Wage)

Debate between Catherine McKinnell and Robert Halfon

Tuesday 22nd January 2013 Westminster Hall

[Catherine McKinnell]

My right hon. Friend raises an important point, and I will come to the Government’s approach to procurement in the private sector as the ripple of understanding of the benefits that the living wage can bring spreads to employers throughout the supply chain.

[Robert Halfon]

The hon. Lady mentioned some companies that have supported the living wage. That is all well and good, but they are big corporate companies that can afford to pay it. The issue for me is that smaller companies will find it much harder to afford to implement it. Surely the best way to help the lower paid is what the coalition is doing—cutting tax for low earners and taking 2 million lower income people out of tax all together. Is that not a much more effective way of helping the lower paid?

[Catherine McKinnell]

As I have said, the impact of the Government’s changes and the raising of the personal tax allowance have provided some help for those on the lowest wages, but the real impact has been detrimental. The figures from the Institute for Fiscal Studies show clearly that a family with one working earner will be worse off, on average, by £534 by 2016 because of all the tax and benefit changes that have been pushed through. I take on board the hon. Gentleman’s point, but the Government’s policies are hitting lower paid workers, not helping them.

[Robert Halfon]

I thank the hon. Lady for being so generous. She is right if she takes the benefits changes by themselves, but if she then looks at the lower tax for lower earners, the council tax freeze and other measures the Government have introduced, lower income workers will not be worse off in the way she describes.

Fuel Duty

Debate between Catherine McKinnell and Robert Halfon

Monday 12th November 2012 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

It is an honour to follow the hon. Member for Witham (Priti Patel) and her characteristically warm-hearted contribution to the debate.

This has been an important and much-needed debate. Members on both sides of the House have shown the strength of feeling that is out there on our roads against the extra burden that this fuel duty rise would place on families and businesses, at a time when prices are still rising faster than wages. Households that are already suffering from the Government’s failed economic policies cannot afford to be hit by an extra 3p per litre, especially with fuel duty already 15p more per litre than it was at the general election.

My hon. Friend the Member for Ynys Môn (Albert Owen) well summed up as hypothetical nonsense Conservative Members’ attempts to distract from their failure to support the motion by suggesting that were Labour in government the fuel duty might be 10p per litre more. Labour Members have been calling for a temporary VAT cut to take 3p per litre off the price of fuel immediately, but with the Government refusing to act, we are now calling on Members to support the motion to delay this extra tax that will hit families and businesses, slowing growth even further.

A clampdown on tax avoidance by employment agencies and umbrella companies would raise more than enough money to delay this rise until April. It would also bring an end to the exploitation of workers under those schemes, who are often left worse off as agencies pocket the extra profit from avoiding tax, leaving employees at risk of being pursued for that tax in later years.

There have been many excellent contributions to this debate, as well as some not so excellent. Many Members, especially those from rural communities, have raised concerns about the impact that the increase in fuel duty will have on them, and I mention in particular my hon. Friends the Members for Inverclyde (Mr McKenzie) and for Airdrie and Shotts (Pamela Nash). The hon. Member for Waveney (Peter Aldous) made a well-considered and reasonable contribution to the debate, but unfortunately failed to explain why he will not support the motion tonight. The hon. Member for Harlow (Robert Halfon) has long campaigned on this issue. He concluded his characteristically well-considered speech by saying that he is proud to support the Government tonight as the Chancellor is in “serious listening mode”, but that he hopes they will not let us down. Well, many of our constituents are sitting at home tonight, hoping that the Government will not let them down. Our economy has just emerged from a double-dip recession—a recession, I must add, that was made in Downing street. That emergence is welcome but there is no room for complacency. Our recovery is still fragile and people are feeling the struggle.

In government, Labour either cut, froze or delayed planned fuel duty rises 13 times because we thought it was appropriate, and did so twice following the financial crisis because we recognised that in a fragile economic environment, a postponement would provide practical help to ordinary people and businesses feeling the squeeze. The Government claim that they are in strong “listening mode”—Members on the Government Benches certainly seem to have been given that reassurance.

[Robert Halfon]

I am grateful to the hon. Lady for her gracious remarks, but why did she and her colleagues vote against the Government when they cut fuel duty last year?

[Catherine McKinnell]

How will Government Members explain to their constituents why they have not voted for a freeze in fuel duty tonight, when the overwhelming consensus is that that is much needed by families and businesses up and down the country?

Let us hope the Chancellor is listening to the debate. The price of a litre of petrol is now £1.36, 5p more than when the Chancellor agreed to defer the duty increase in August and 15p more than at the general election. The tax on a tank of petrol in 2010 was £37.60, but it has now risen to £40.30. If we do not delay the 3p increase tonight—if hon. Members do not vote to freeze it—it will go up again in January to £42.20. A family could spend £200 a year more on fuel tax in 2013 than they spent in 2010. Families cannot afford that £200. The increase in VAT has cost a family with children £450 each year, pensioners are facing extra burdens after the granny tax, cuts in child tax credits will cost some families up to £545 a year, and cuts to working tax credits mean that those on low incomes will lose up to £3,870 a year if they cannot increase their hours at work. That is the impact of this Government’s polices on family budgets.

Small businesses, too, are struggling. The Government’s flagship project Merlin agreement with the banks has flopped and failed, and much-needed cash is simply not getting through to help businesses to expand and create jobs. Businesses need a break, and a freeze in fuel duty would provide it. That is why the Opposition have tabled the motion. We want to give the Government and Government Back Benchers the chance to join us and vote in favour of easing the burden for people up and down the country who will be hit by the fuel duty increase.

It is clear how the Opposition proposal could be paid for. The Government need to take urgent action to crack down on tax avoidance schemes by employment agencies and umbrella companies that classify part of their employees’ pay as a reimbursement for travel and subsistence expenses and claim back the tax relief. In most cases, employees do not see even a fraction of the extra profits that companies make as a result. In some cases, workers are not even aware that their pay is being manipulated in that way, but if they end up with too few national insurance contributions, they lose out. They could even be liable to repay the tax and national insurance and end up personally out of pocket if Her Majesty’s Revenue and Customs successfully challenges the scheme. HMRC’s figures forecast that the tax loss from such schemes in 2012-13 will be £650 million, but more recent estimates put the figure at more like £1 billion, as more companies jump on the bandwagon. Even a conservative estimate of what could be raised from clamping down on that one area of tax avoidance would more than cover the £350 million needed to pay for the fuel duty delay.

The Opposition understand that the rules exist, but enforcement has been lacking. The Government’s cuts to HMRC—an additional 10,000 jobs are set to be lost by 2015, and £2.1 billion has been taken out of its budget—have made the job even harder. It is essential that we take action. Companies that play fair and pay their tax properly and transparently are disadvantaged by those that cheat the system. The tax that should be paid and is avoided, or in some cases illegally evaded, is sorely needed to support our struggling economy.

The Government have lots of tough talk on tax avoidance but very little action. The Opposition motion calls on the Government to get a grip and clamp down on tax avoidance and to use the money where it is needed. Government Members know that that is what their constituents want and need. Nods and winks from the Chancellor will not fill their petrol tanks. Without a proper commitment from him, Members should support the motion tonight. If MPs unite today and vote for the motion, the Prime Minister and the Chancellor will have no choice but to see sense and give that reassurance to families, motorists and businesses that we are on their side.