Oral Answers to Questions

David Gauke Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

4. What recent estimate he has made of the effect on pensioners of plans to end age-related tax allowances.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The impacts of the reforms to age-related allowances were set out alongside Budget 2012. Half of those over the age of 65 pay no income tax, and nobody will pay more tax in 2013-14 than in 2012-13 as a result of these changes. The Government remain committed to supporting pensioners and have introduced the triple guarantee for the basic state pension, ensuring that it will increase each and every year by the highest of earnings, prices or 2.5%.

[Mr Clarke]

Will the Minister explain to my constituents why people with small occupational pensions are paying more while millionaires are paying less in tax?

[Mr Gauke]

The right hon. Gentleman will be aware that the policy announcements in the last Budget resulted in millionaires paying more in tax, not less. As far as this Government’s record on pensioners is concerned, let us not forget that the state pension is going up by £120 more compared with the Opposition party’s plans.

[Duncan Hames (Chippenham) (LD)]

For a long time, some pensioners, by virtue of having their personal allowance clawed back, have found themselves paying an effective rate of income tax far higher than many working people on a similar income. Will the Government’s policy of raising the personal allowance mean that that unfairness is eventually brought to an end?

[Mr Gauke]

I am pleased to say that my hon. Friend is right. Our policy will reduce complexity in the tax system and reduce the need for high marginal rates for pensioners through the taper system.

[Mr George Mudie (Leeds East) (Lab)]

5. What assessment he has made of the implications for his policies of the public sector net borrowing figures in the current fiscal year.

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[Mr Dominic Raab (Esher and Walton) (Con)]

8. What steps he is taking to simplify the tax system.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government are committed to simplifying the tax system. Since 2010 we have set up the Office of Tax Simplification and acted on a range of its recommendations. We have abolished 43 tax reliefs, and from April 2013 we will introduce a new cash basis for calculating tax, benefiting up to 3 million small self-employed businesses. Her Majesty’s Revenue and Customs is also improving tax administration for small businesses, as set out in its publication at the time of the 2012 Budget.

[Mr Raab]

I thank the Minister for that response. The 2020 Tax Commission found that UK tax administration costs were double those of Norway, triple those of Estonia, and almost five times higher than in Switzerland, so I welcome the Minister’s drive for simplification. What progress has been made on merging national insurance and income tax, and other areas affecting business, that could yield an estimated £5 billion each year for the British economy?

[Mr Gauke]

The Government are continuing to explore the potential of merging the operation of income tax and national insurance contributions. We also want to make the tax system as transparent as possible, and one of the steps we have taken is the introduction of personal tax statements that will make it clearer to taxpayers how much they are paying in both income tax and national insurance.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The Minister will be aware that his colleague the Chancellor presented the granny tax as a tax simplification in the Budget. Is the Minister confident that further measures of tax simplification will be more successful and less unpopular than the granny tax?

[Mr Gauke]

We believe that tax simplification is important. A simpler tax system makes it easier for taxpayers to see how much they are paying, easier for businesses to comply, and easier to tackle avoidance. It is something the Government believe in.

[Steve Brine (Winchester) (Con)]

9. What plans he has to maintain low market interest rates.

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[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government aim to provide a climate of economic stability that will benefit all businesses. That would not be possible without a credible plan to deal with Government debt, and a VAT increase is an important component of that plan.

[Chris Evans]

Since January this year, 42 retail businesses in Wales have gone to the wall. What message does the Minister have for Welsh business leaders who have called for a reduction in VAT to breath new life into the high street?

[Mr Gauke]

Retail sales growth has generally been positive over the past year. Let me underline this point: if the biggest problem faced by the economy at the moment is that we are not borrowing enough, that is, I am afraid, a very strange diagnosis.

[Charlie Elphicke (Dover) (Con)]

If the Government were to adopt that unfunded mandate and the other £200 billion of unfunded borrowing suggested by the Opposition, what would be the effect on interest rates and our national credit rating?

[Mr Gauke]

There is no doubt that such a policy would be taking an enormous risk with interest rates and our credibility. This Government are not prepared to take that risk.

[Naomi Long (Belfast East) (Alliance)]

11. If he will commission research to determine the effect of air passenger duty on UK holidaymakers, employment and economic growth.

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[Mr Marcus Jones (Nuneaton) (Con)]

T4. Small businesses in my constituency regularly raise with me the issue of the administration and service levels at Her Majesty’s Revenue and Customs. Those problems constantly add to the administrative burden of small businesses. What more can the Government do to make HMRC more efficient, in order to unburden our small businesses and let them get on with the day job?

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

My hon. Friend will be aware of the paper that HMRC produced at the time of the last Budget, in which it set out the ways in which we would reduce the administrative burden on small businesses, including cash accounting. He mentioned the difficulties in getting through to HMRC and the problems with the contact centres. HMRC is making further investments and employing an additional 1,000 people in order to improve the performance at its contact centres.

[Derek Twigg (Halton) (Lab)]

T7. The Chief Secretary to the Treasury was asked earlier about the cost of living, but he said nothing in his reply about what the Government were doing about rising food, transport and energy prices. Have he and his colleagues had discussions with the Energy Secretary about getting a grip on the energy companies and sorting out the soaring energy prices and the profits that the companies are making as a result?

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[Jenny Chapman (Darlington) (Lab)]

Will Ministers look urgently at the length of time it is taking to process tax credit applications? My constituents are being declined their tax credits simply because they are on fixed-term contracts that come to an end before the tax credit application is considered.

[Mr Gauke]

I certainly take the hon. Lady’s comments on board. It is our intention to deal with tax credit applications as swiftly as possible. We will look at individual cases, so if she wants to contact me or the permanent secretary at HMRC, either of us would be happy to take the case up.

[Nadine Dorries (Mid Bedfordshire) (Con)]

The Government are to invest £17 billion in phase 1 of HS2, which will transport someone from London to Birmingham 20 minutes quicker, yet there are students in my constituency today who cannot accept their place in Bedford college because of the lack of a local transport network, and constituents who cannot accept offers of work because they cannot get to the train stations via a bus network. Would it not be a better use of that investment to put it into regional transport networks so that people can get to work and to college?