Capital Gains Tax (Rates)

Chris Williamson Excerpts

Wednesday 23rd June 2010 Commons Chamber

[Chris Williamson (Derby North) (Lab)]

I congratulate the hon. Members for Harrogate and Knaresborough (Andrew Jones) and for Carlisle (John Stevenson) on making their maiden speeches today.

A week before the general election, the Prime Minister said:

“The test of a government is how it looks after the most vulnerable, not just in good times but also in bad”.

On April fools’ day, he told BBC News that the Conservatives’ plans did not involve an increase in VAT, and when speaking on “The Andrew Marr Show”, the Prime Minister also said that

“any cabinet minister…who comes to me and says, “Here are my plans” and they involve frontline reductions, they’ll be sent straight back to their department to go away and think again.”

That prompts the question: why did he not ask the Chancellor to think again about his dreadful Budget—a Budget that will result in the quality of life of Britain’s most vulnerable people being sacrificed on the altar of Tory dogma, a Budget that will result in massive reductions in front-line services, and a Budget that will lead to a colossal increase in unemployment? It is less than seven weeks since the Prime Minister made those solemn pledges, but the Chancellor’s proposal to increase VAT is making a fool out of him.

We must not forget the Deputy Prime Minister either, who said that he wanted to “hardwire fairness” into society. However, increasing VAT does not hardwire fairness into society; on the contrary, it short-circuits fairness, because it hits the poorest families twice as hard as the richest. Britain’s richest families spend just 7% of their disposable income on VAT, while the poorest spend almost 14%. How fair is that? The truth is that it is not fair at all. Cutting tax credits, freezing child benefit, slashing housing allowances, cancelling the help in pregnancy grant and chopping free school meals are not fair either.

No doubt the Liberal Democrat members of the coalition Government will point to the increase in tax thresholds that they wrung out of the Chancellor as evidence of their influence. However, the sad fact is that the meagre increase that they secured will make little difference to low-paid workers and will be more than offset by the regressive measures that the Chancellor announced yesterday. Worse still, many of the workers who might benefit from the modest uplift in tax allowances will end up losing their jobs if the Liberal Democrats vote through the Budget.

Of course, the Prime Minister and the Chancellor insist on repeating their quasi-egalitarian mantra, “We’re all in this together.” Needless to say, it is nonsense, and it has overtones of the infamous scene in George Orwell’s “Animal Farm” when the animals realise that the pigs have changed the seven commandments to read:

“All animals are equal but some animals are more equal than others”—

or, to put it another way, “We’re all in this together, but if you’re poor, you’re in it a lot deeper than others,” such as the numerous millionaires who sit on the Government Benches.

Increased unemployment will force more people on to state benefits, which will put pressure on the size of the national deficit, which the Chancellor claims to be so concerned about. However, unless he has a damascene conversion, I suspect that he will respond to the failure of his economic prospectus by making even deeper cuts in welfare provision, as happened in the 1930s and 1980s. No doubt he will try to justify his failure by repeating his Orwellian mantra, but the reality is that it will not be his former Bullingdon club colleagues paying the price of that failure. No, it will be Britain’s poorest people, who will be in it up to their necks.

Of course, the Tories have form on that. I saw what they did in the 1980s to proud working-class communities in constituencies such as mine all over the country. They caused mass unemployment, slashed welfare provision, decimated front-line public services and did not stop cutting until they were thrown out of office in 1997. They even used another Orwellian ploy: to blame the unemployed for being out of work, labelling them as “scroungers”. Indeed, I see that the Prime Minister was at it again over the weekend when he talked about “welfare scroungers”. The Chancellor joined in the Orwellian chorus with his “Ministry of Truth” description of his Budget as a “progressive Budget”.

[Andrew Percy]

I have a quick question for the hon. Gentleman. Can he tell us whether unemployment in his constituency was higher or lower at the end of 13 years of a Labour Government?

[Chris Williamson]

Unemployment certainly fell in my constituency in the 13 years of the previous Labour Government. I will tell the hon. Gentleman this as well: thanks to the measures that they put in place, poverty was reduced in my constituency, people enjoyed the national minimum wage and were able to get health treatment far more quickly than previously, and children were not taught in overcrowded schools, so let us have no more lectures from him.

Let us never forget that everything that I have described has only been made possible by the vacillating Liberal Democrats, who say one thing then do another. Less than seven weeks ago, the Deputy Prime Minister said that his party represented a new kind of politics, with fresh ideas. What we got was a party supporting reactionary right-wing policies instead. Fewer than seven weeks ago, he was apparently opposed to the self-same right-wing policies that he now endorses. This is what he told his party conference on 23 September last year:

“We know what happens when you simply squeeze budgets, across the board, until the pips squeak. We know, because we lived through it before, under the Conservatives. We remember the tumble-down classrooms, the pensioners dying on hospital trolleys, the council houses falling into total disrepair. We remember, and we say: never again.”

In an interview with Jeremy Paxman on 12 April this year, the Deputy Prime Minister said:

“Do I think that these big cuts are merited or justified, at a time when the economy is struggling to get to its feet? Clearly not.”

That is what he said at that time.

Millions of people who rejected the Conservatives’ right-wing policy prospectus were seduced into voting for the Liberal Democrats by the Deputy Prime Minister’s rhetoric. People actually believed that the Liberal Democrats represented progressive values. How wrong they were. People now see that the reality is very different from the Deputy Prime Minister’s rhetoric. People see that he is now so determined to appease his Conservative masters that he is even prepared to sacrifice his own constituents by opposing a Government loan to Sheffield Forgemasters.

That is nothing new. The Liberal Democrats and their predecessors in the Liberal party have assisted the Conservatives into power in four out of the last seven general elections. It is thanks to the Liberal party splitting the centre-left vote in 1983 and 1987 that Margaret Thatcher was able to secure two landslide election victories. Then the Liberal Democrats did the same thing in 1992, forcing the country to endure another five years of Tory rule. The truth is that they are not a progressive party at all; they are merely a collection of self-indulgent political loners.

All the post-war progressive legislation has been introduced by Labour Governments often in the teeth of fierce opposition from the Tories and sometimes the Liberals, too. Examples include the NHS, the welfare state, comprehensive education, equal pay, civil partnerships, the national minimum wage, Sure Start, the ban on fox hunting, and the Open university, to name but a few.

[Guy Opperman (Hexham) (Con)]

Will the hon. Gentleman give way?

[Chris Williamson]

No, I do not have time.

Some of the country’s greatest progressive advances were brought about by Labour when the size of the national debt was far higher than it is today.

I heard Members of the coalition parties, including the Chancellor, eulogising the Canadian experience of cutting its deficit in the 1980s and arguing for the same approach to be adopted here, but their “Ministry of Truth” description of themselves as “compassionate Conservatives” imposing so-called caring cuts defies all reason. The reality of the Canadian experience saw increased homelessness, overcrowded classrooms, pension cuts and a drastic shortage of hospital beds. On one occasion, the Canadians even emptied a hospital and blew it up in a desperate attempt to save money. Is that really what the coalition parties mean by “caring cuts”?

By contrast, the US President has written to all G20 leaders begging them not to cut spending too quickly. Mr Obama says it is critical that

“the timing and pace of consolidation in each country suit the needs of the global economy”.

He adds:

“We must be flexible in adjusting the pace of consolidation and learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession.”

But the Chancellor just does not seem to get it. He is obsessed with implementing an approach that failed in the 1930s, failed in the 1980s, failed in the 1990s and is destined to fail again. He wants to implement an unfair budget that will hit the poorest hardest, undermine the economic recovery, destroy public services and increase unemployment.

David Blanchflower, one of Britain’s top economists, said today that he is

“now convinced that as a result of this reckless Budget the UK will suffer a double-dip recession or worse, not least because there is no room for interest-rate cuts, although lots of additional quantitative easing… from the Bank of England could soften the blow”.

Growth is the key to addressing the deficit, and the Budget is a wasted opportunity. The Chancellor has chosen to penalise the weak and the powerless, instead of making the rich and powerful individuals and institutions pay.

[Jessica Lee (Erewash) (Con)]

The lack of responsibility taken by Labour Members for the state of the country’s finances is breathtaking. The Labour Government left this country not with a small hole in the public finances, but with a yawning chasm, which this Government will have to sort out.

[Chris Williamson]

That irresponsibility is on the Government Benches, because David Blanchflower, an esteemed economist in this country who predicted the recession and who should be taken seriously, is now predicting a double-dip recession as a result of “this reckless Budget”. The hon. Lady ought to reflect on his words, rather than criticising Labour Members.

Rather than taking the appropriate steps against powerful individuals and institutions, to ensure that they pay a fairer contribution towards reducing the deficit, the Chancellor has chosen to penalise the weak and the powerless. The Budget has let down the great British public. I assure Government Members that it will come back to haunt them. We will certainly ensure that the British public know what this Government, and the Liberal Democrats in particular, have inflicted on them. When the next general election comes, the Liberal Democrats, who have been swallowed whole by the Conservative party in this Chamber, will live to regret the day that they put the Tories in power.