Finance (No. 2) Bill

Debate between David Gauke and Julie Hilling

Wednesday 25th March 2015 Commons Chamber

[Mr Gauke]

Well, there we go. I am struck by the fact that the Leader of the Opposition was very reluctant to say that earlier, but I am pleased that he has been bounced into providing that clarification. [Interruption.] I noticed that he did not answer questions earlier today. [Interruption.] Indeed, he will never have the chance to answer questions at Prime Minister’s Question Time.

[Julie Hilling (Bolton West) (Lab)]

It has taken me five years to learn that Prime Minister’s questions is about the Leader of the Opposition and us asking questions and the Prime Minister not answering them. It is not Leader of the Opposition’s questions; it is Prime Minister’s questions. We do not answer questions; the Government are supposed to.

[Mr Gauke]

I notice that the hon. Lady does not answer questions. I am glad we finally got some clarification on that point, but as I say, I do not think the right hon. Member for Doncaster North (Edward Miliband) will ever have the opportunity to answer Prime Minister’s questions.

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[Mr Gauke]

We have retained the confidence of the markets, and we have retained very low long-term interest rates. When we came to power, we were on a par with the likes of Spain and Italy; now, we are seen very much as a safe haven. The UK’s fiscal credibility has been maintained, and it would not have been had we stuck to Labour’s plans, even with a significant increase in the jobs tax.

[Julie Hilling]

Does the Minister not see that raising VAT and cutting benefits hits the most vulnerable in society? Does he think it is right that children in this country should lose weight over school summer holidays because their parents do not have enough money to feed them, that people are dependent on food banks, and that we have had people starve to death because of benefit cuts? Is that the way this country should be in this day and age?

[Mr Gauke]

Under this Government, child poverty has fallen, and pensioner poverty is at a lower level than it has ever been. Only today, we have seen numbers showing that there are 600,000 fewer workless households than there were in 2010. If we wish to deal with poverty, and we certainly do, the best way is to have a job-creating, growing economy, and that is precisely what the long-term economic plan is delivering.

To be fair to the hon. Member for Swansea West (Geraint Davies), he says that he would cut VAT, but I am not hearing that from Labour Front Benchers. I must remind Labour Members that, with a handful of exceptions, none of them voted against the increase in VAT in 2010. I note that one of the handful of exceptions is sitting on the Opposition Benches, but Labour Members did not vote against it.

Oral Answers to Questions

Debate between David Gauke and Julie Hilling

Tuesday 5th November 2013 Commons Chamber

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

Disposable income increased last year at the fastest pace since 2009. In March, the Office for Budget Responsibility forecast that real household disposable income growth would accelerate each year from 2014 to 2017, reaching 2.3% in 2017. The best way to raise living standards is to stick to the Government’s economic plan and deliver a recovery that works for all. Britain is back on the path to prosperity, the economy is growing, the deficit is falling and jobs are being created.

[Julie Hilling]

I do not understand how the Minister and the Chancellor can think that their economic policies are a success. After three wasted and damaging years of flatlining, working people are on average £1,500 a year worse off. Is it not clear that his plan has failed hard-working families?

[Mr Gauke]

It has not failed the people of Bolton West, where unemployment has fallen by 1,800 in the past year.

National Insurance Contributions Bill

Debate between David Gauke and Julie Hilling

Monday 4th November 2013 Commons Chamber

[Julie Hilling (Bolton West) (Lab)]

I thank the Minister for giving way. Has he considered the fact that there are only a few Labour Members here because, to our relief, he has, in the end, listened to what we have been asking for and included a great deal of it in the Bill? I congratulate him on listening to us, and therefore on introducing the Bill.

[Mr Gauke]

That, too, is a theory, but I am not sure that it is necessarily persuasive. When we fought the previous general election, the Labour Government’s big policy for deficit reduction, among a pretty thin set of policies, was a big increase in national insurance contributions. We have already reversed the worst effects of that, and the Bill is a further measure that will help businesses up and down the country to create jobs.

The hon. Member for Bolton West is referring to one element of Labour’s five-point plan, which we do not hear much about any more, but there were serious problems with Labour’s proposal; this one is very different from that. It was a much more targeted scheme aimed at smaller employers taking on new employees, which raised all sorts of practical questions about how to define a new employee and how to prevent there being perverse incentives. I put it to the House that that scheme was neither workable nor likely to achieve its objectives. I suspect that we shall return to that issue.

Finance Bill

Debate between David Gauke and Julie Hilling

Tuesday 3rd July 2012 Commons Chamber

[Mr Gauke]

VAT is charged on all beverages. Typical sports drinks which are consumed primarily to rehydrate or quench thirst are already taxed accordingly at the standard rate, but some sports drinks companies have won court rulings that their products are not beverages because of their nutritional content and because they are not designed to quench thirst. The changes that we are introducing will ensure that all sports drinks are subject to the same VAT treatment whether they are consumed for rehydration or for nutritional purposes, because they are targeted at much the same group, and we think it only right to apply the same approach to consumers. The argument for the zero-rating of food is that it should apply to everyday essentials, but it is difficult to apply that argument to sports and nutritional drinks.

[Julie Hilling (Bolton West) (Lab)]

I am desperately trying to understand what the Minister is saying will happen to sports and nutrition products. Is he saying that all drinks will now be subject to 20% VAT? What about other nutritional products that are not sold in liquid form?

[Mr Gauke]

Let me try to be helpful to the hon. Lady—not for the first time during our deliberations, I hope. We propose that drinks aimed at the sports nutrition market will be standard rated. We are not applying the same approach to meal-replacement drinks. There is a clear distinction between them, as one is more closely aligned to food than to sports drinks.

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[Julie Hilling]

I thank the hon. Gentleman for that intervention. Clearly, I do not believe that £30 million is anywhere near the sum needed to compensate. Of course, the Government have also said that those people will get lottery and Government grants, but hang on a minute: is that not just taking with one hand and paying back with another? The change has been a huge blow to many communities that have been working for years and years to raise enough money to rescue old buildings and convert them for use by the whole community, only to now have to find another 20%.

The Government have tried to say that we should not worry too much about the heritage tax as it is really about charging millionaires who live in listed buildings and who get their indoor swimming pool tax-free, but there is no evidence for that. They conclude on the basis of a review of 105 applications that the majority of the work covered by the relief is

“not necessary for heritage purposes”,

but as nearly 30,000 listed building applications are made a year, that does not seem to me to be good evidence. From a sample of 12,049 applications, only 34 were for swimming pools. Perhaps we could deal with the problem in a slightly different way rather than imposing the heritage tax on all buildings. Indeed, 50% of those who live in listed buildings are in socio-economic groups C1, C2, D and E—supervisory, clerical, junior management, administrative, skilled workers, semi-skilled workers and unskilled workers. People in those groups are not usually millionaires.

That implementation of VAT will not raise a great deal of money in the scheme of things, but will be another blow to the construction industry and run the risk of more of our heritage buildings going to rack and ruin. Of course, once VAT is put on something it can never be returned to zero.

Skip taxes seem to have been introduced and then withdrawn. I think they probably have been withdrawn—who would know? The Government seem to be introducing a self-storage tax, however. Self-storage is often used by people in transition, such as those who are selling or buying houses or those whose homes are undergoing renovation. It is also used by people who have downgraded or moved to a different community and therefore have to live in much smaller accommodation. It is usually in a prime location so that customers can come and go as they choose, changing their winter wardrobe for their summer wardrobe or taking goods in or out of storage. Removals and storage providers have storage facilities as an ancillary part of the business and are therefore frequently in more remote places, as the location of the property does not need to attract customers. One reason for putting VAT on self-storage was to level the playing field for removal companies, even though they have different purposes. The effect will be that ordinary people will be hit again. Businesses that use self-storage to store documents and so on will be able to reclaim the VAT, but the ordinary person will not.

I think we still have a hairdressers tax. That will mean that self-employed hairdressers who rent a chair in a small salon will have no choice other than to register for VAT and decide whether to charge their customers VAT at 20% or to absorb the cost themselves. Of course, that will particularly hit females aged between 16 and 46—the very people whom the Government say they want to encourage to be entrepreneurs, start up their own businesses and pay into society.

The situation with sports nutrition is another unholy mess. If I have got this right—I hope that the Minister will correct me if I have not—sports drinks will become VAT-able, but sports nutrition products will not. If the Minister wants to intervene, I am happy for him to do so.

[Mr Gauke]

indicated dissent.

[Julie Hilling]

Does that mean that it will be exempt if a liquid product is made into a solid and people are just advised to drink water with it? What about weight-management products? More than 20% of the products in the sports nutrition category are for weight management. If they are slimming products, they are zero-rated, but they could also be considered to be sports nutrition products. We could have a bizarre situation in which men and women who exercise hard, follow a balanced diet and use sports nutrition products to help them get into shape would pay VAT, whereas those who skip meals, sit on the sofa and take magic slimming products would not.

It seems odd that we are making that tax change in Olympic year, when we are encouraging people to get fit, but it is typical of this Budget. It is a shambles that will create more anomalies than it will resolve. With all the U-turns—even though we welcome some of them—it is still totally confusing. Even after listening to the Minister this afternoon and spending many weeks on the Bill Committee, I am still not clear what the Budget says.

Secondly, the Budget rewards millionaires and punishes ordinary people. It punishes the squeezed middle and the battered base, which my hon. Friend the Member for Gateshead (Ian Mearns) frequently mentions. The VAT changes all hurt people who lead ordinary lives. They all hit hard-pressed businesses and do absolutely nothing for jobs and growth. The millionaires still get their tax cut, but they are not paying the tax that is due. If the rest of us decided not to pay our taxes, could we have a tax cut too? Or does that apply only to the very rich, who can also avoid their tax by paying accountants a great deal of money?