Finance Bill

Clive Efford Excerpts

2nd reading
Monday 28th November 2022 Commons Chamber

[James Cartlidge]

The hon. Gentleman is right to raise further education. We also announced in the statement that there will be a review by Michael Barber looking at the many positive initiatives that the Government have in place for training and increasing technical and vocational skills—T-levels, for example. We want to see maximum support for such schemes, so we will be reviewing them to ensure that we deliver them as effectively as possible. He makes an important point.

I turn to the measures on personal taxation. We know that difficult decisions are needed to ensure that the tax system supports strong public finances. To begin with, we are asking those with the broadest shoulders to carry the most weight. The Government are therefore reducing the threshold at which the 45p rate becomes payable from £150,000 to £125,140.

[Clive Efford (Eltham) (Lab)]

What consideration have the Government given to taxation of those who benefited during covid? The National Audit Office states that the Government invested £368 billion in the economy through furlough and various other pieces of support, but the people who received that money passed it on. Far from trickling down, the money has trickled up. During covid, the number of billionaires and millionaires increased to record levels in the UK. They have clearly benefited extraordinarily well from Government investment. Why are we not following the money?

[James Cartlidge]

The hon. Gentleman makes an interesting point. I, for one, would never resent the fact that someone is successful in life, particularly because of starting a business, working hard, investing in this country and creating wealth. We should always celebrate that. He says, however, that the money and expenditure during covid did not trickle down. On the contrary, speaking from my experience out in my constituency, businesses still express to me their gratitude for the grants and loans, for the £400 billion of support that we put in place that helped to carry the country through the pandemic—

[Clive Efford]

rose—

[James Cartlidge]

I will finish this point; the hon. Gentleman is welcome to come back at me on it. He will recall the estimates at the start of the pandemic that unemployment would be 2 million higher than it turned out to be. That is an entire depression’s-worth of unemployment that we saved through our measures, and he should be grateful.

[Clive Efford]

I absolutely agree with everything that the Minister just said, but the truth is that the money paid to people in furlough and to small businesses was passed on. That money was used to repay loans, to pay rent and to pay the lease. People have paid their mortgages. The people who received that money at the end of the day were those who were already wealthy, as the figures show. We should follow the money. We should not squeeze those people until the pips squeak, but we should make them pay their fair share.

[James Cartlidge]

By any objective assessment, that enormous support helped our country through one of the toughest challenges that we have ever faced—the biggest crisis outside war in recent memory. We have, of course, moved straight into another one. Across the House, there is recognition that the £400 billion of extra support that we put in place has benefited the country.

The hon. Gentleman talks about business costs. Of course, businesses had costs that we had to help them with, but to protect public health, steps were taken to close parts of the economy. We faced an extraordinary contraction. To avoid that, the Government had to step in and, in so doing, we lost 2 million jobs fewer than were predicted to go.

[Clive Efford]

Will the Minister give way?

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Will the Minister give way?

--- Later in debate ---

[James Cartlidge]

The hon. Gentleman makes an interesting suggestion. He will not be surprised to hear that I do not announce new tax bands from the Dispatch Box on Second Reading of a Finance Bill. I can confirm, however, that those earning £150,000 or more will pay just over £1,200 more in tax every year. That is the precise figure.

For the final time, I give way to the hon. Member for Eltham.

[Clive Efford]

Any Government would have given the support that the Government gave at that time, so I accept everything that the Minister said about that, but where is the money now? There has been £368 billion paid into the economy. Who has it now? Who benefited from it? Should we not follow that money and make those with the broadest shoulders contribute?

[James Cartlidge]

The furlough scheme, on its own, protected 11.5 million jobs. Does the hon. Gentleman seriously think that the Government should expand some extraordinary array of resource to find out what those 11.5 million people did with the money that kept them in work when they could have been looking at unemployment, and we could have been facing the most staggering economic depression in our history? We avoided that and, instead, we reduced unemployment by 2 million more than was expected. We avoided that cut in jobs, which would have been absolutely devastating for communities across the country, and we should all be grateful.

--- Later in debate ---

[Clive Efford (Eltham) (Lab)]

I was struck by a quote I read a while back of the head of the Institute for Public Policy Research centre for economic justice, as it sums up the problem we face as a country:

“There is a massive structural flaw in the economy that whatever the economic shock the wealthier get wealthier. If we’re going to get the whole economy into recovery, and leave no one and nowhere behind, we need to change this. Societies that are so unequal are bad for everyone and policymakers need to address this dangerous gap, or risk people losing trust in our economy and democracy.”

At the core of that problem is the way we treat wealth in our taxation system. In an earlier intervention on the Minister I mentioned that the National Audit Office says that the total the Government invested in the economy during covid was £368 billion, which is roughly equivalent to £5,600 per head. Whichever Government had been in office at the time would have done something similar; they would have introduced a furlough scheme and helped businesses. That happened under the last Labour Government when there were crises: we stepped in on foot and mouth and the banking crisis, so forms of assistance were put in place. I therefore accept the assistance that the Government put in place, and I am not arguing about it, but it is ridiculous for the Government to argue that that money was paid and is now in the bank accounts of the people who received money during furlough or of the businesses who received assistance. It was paid to those individuals and businesses and it was used, and it has therefore moved on in the economy. That is £368 billion that has gone into the economy, and my question is: where is it now?

Most analyses of what happened in covid that are worth reading find that the wealthiest did extremely well during covid, so my question to the Government—and I would ask this of any Government—is this: what do we do about that? These people were already wealthy and now they are getting even more wealthy, which will drive the inequality the Government themselves say they want to deal with through levelling up.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making an excellent speech. Is he, like me, thinking about all the people who wrongly profited from selling personal protective equipment to the Government and the lack of proper assessment of some of those offers of help and the lack of proper procurement processes being followed? Does he agree that many ordinary members of the public and NHS staff found that quite wrong?

[Clive Efford]

My hon. Friend’s intervention speaks for itself and I absolutely agree; that is an example of where this Government go wrong by treating the wealthy differently from others.

During covid, the number of millionaires and billionaires grew; we have the highest number of billionaires ever in The Times rich list and their combined income during that period grew by one fifth. So we can clearly see that inequality has been turbocharged by the money the Government put into the economy. I do not criticise the Government for putting that money in, but I do ask: where is that money now, where are the people who have benefitted most from it, and should they not, with their broad shoulders, bear more of the burden?

We have consistently had low growth over the last 12 years under Conservative Governments. The Resolution Foundation’s recent report “Stagnation Nation?” found that in each decade from the 1970s real wages rose by an average of 33% until 2007, but that that fell to below zero in the 2010s. So today average household incomes are 16% lower in the UK than in Germany and 9% lower than in France, having been higher than both in 2007. Under the Conservatives there has been a consistent shift of wealth from average household incomes to the wealthiest in the country. The policies they have pursued have been driving inequality, and my point is that until we reform how the taxation system deals with wealth we will not address that growing divide between those at the bottom and those at the top. This Finance Bill completely fails to address that problem.