Finance (No. 2) Bill

Debate between David Gauke and Stephen Pound

Wednesday 25th March 2015 Commons Chamber

[Mr Gauke]

My hon. Friend makes a very good point. I confess that I am a little young to remember the 1959 election, but some hon. Members will recall it.

[Stephen Pound (Ealing North) (Lab)]

Thank you.

[Mr Gauke]

I am looking at the hon. Gentleman. He may recall, as a very young lad, the 1959 general election.

[Stephen Pound]

indicated assent.

[Mr Gauke]

He does. I am sure he was a very young man at the time. Under a great deal of pressure, Hugh Gaitskell ruled out all sorts of tax increases and at the same time made all sorts of promises about public spending. The British people rumbled the Labour party in 1959 and did not believe that that was a credible position. As a consequence, they returned a Conservative Government with an even bigger majority. Labour Members might want to be a bit careful about drawing parallels with 1959.

--- Later in debate ---

[Mr Gauke]

The Government have a very good record in delivering jobs—sustainable jobs—in this country.

[Stephen Pound]

rose—

[Mr Gauke]

I will give way to the hon. Gentleman, who will no doubt enlighten the House about the 1959 general election.

[Stephen Pound]

I would be delighted to do so. I campaigned against Sir Oswald Mosley in Kensington North—admittedly, I was only 11 years old, but I did a fairly good job. He did not win.

I put it to the Minister that, in 1959, the Conservative party was very different—it was a much more consensual, nay Butskellite, Conservative party. One thing the Conservatives stood on was house building. They had a proud record. Does the Minister believe that the Bill will help house building in this country?

[Mr Gauke]

I share the view that we need to build more houses in this country, but I am pleased that last year housing starts were at a record high for seven years or so, that planning permissions are going up, and that we have reformed planning law to enable more houses to be built. In the Budget last week, there were details of 20 housing zones that could support something like 45,000 homes. That is consistent with a desire to ensure greater opportunity for people to acquire their own home.

It is also worth pointing out that in last week’s Budget we introduced Help to Buy individual savings accounts, which will enable people to acquire deposits so that they can enter the housing market. In terms of continuity, I would not necessarily be proud of everything connected with the Conservative Government of the 1950s. I absolutely think we need to do more to get more people into the housing market, and this Government are delivering on that and we are definitely moving in the right direction.

National Insurance Contributions Bill

Debate between David Gauke and Stephen Pound

Tuesday 23rd November 2010 Commons Chamber

[Mr Gauke]

The hon. Gentleman brings me on to the second part, to do with the national insurance holiday, which applies on a regional basis. If I can develop my arguments, I will turn in some detail to the precise point that he has set out.

[Stephen Pound (Ealing North) (Lab)]

rose—

[Mr Gauke]

I will give way to the hon. Gentleman, but before I do, may I congratulate him on his long-delayed but much-deserved promotion to the Labour Front Bench?

[Stephen Pound]

That is extremely generous of the Minister. All I can say is that if he was surprised, imagine how I felt.

The Minister just gave the figure for receipts following on from the increase in VAT. Are his figures based on current patterns of consumption or on an anticipated level of consumption? Most economists would say that the VAT increase will depress demand and reduce consumption.

[Mr Gauke]

The sums are based on the assessment made by the independent Office for Budget Responsibility at the time of the Budget. I hope that that provides some clarification to the hon. Gentleman.

Part 1 of the Bill provides for changes, which the previous Government announced in two instalments, to national insurance contributions from next April. Initially, a 0.5% increase in rates was announced in the 2008 pre-Budget report. That was then changed to a 1% increase in the pre-Budget report of the following year.

I am sure that Members will remember that reversing the most significant impacts of those rate rises was a key issue at the general election. The Federation of Small Businesses said that the policy would cost 57,000 jobs. Thirty business leaders supported our campaign to reverse the policy. When the letter from those 30 business leaders—many other business leaders followed shortly—was published, Tony Blair apparently considered that for Labour the game was up. Thankfully, he was right, and we now have in place a Government who are determined to bring down the deficit but also to put in place conditions favourable to private sector-led growth.

In June, we announced our plan to reverse the most damaging aspects of Labour’s jobs tax. There was a choice how best to do this—for example, we could have cancelled the rate and threshold rises—but we have chosen the option that best protects low earners. In the emergency Budget, my right hon. Friend the Chancellor confirmed that national insurance contribution rates would rise by 1%, that the personal allowance would increase by £1,000 from next April, and that the employer national insurance contribution threshold would rise by £21 a week plus indexation. The reform of employer national insurance contributions is exactly as set out in the 2010 Conservative party manifesto.

The Bill sets out how these rises will apply to the main rates of class 1 national insurance contributions. The employer rate will rise from 12.8% to 13.8% and the employee main rate will rise from 11% to 12%. The 1% increase will also apply to class 1A and 1B contributions that are paid on benefits in kind and pay-as-you-earn settlement agreements. The same 1% rise will apply to class 4 contributions paid by the self-employed, which will rise from 8% to 9%. Taking into account the increase in the personal allowances and employer threshold, the net effect of these changes will reverse the damaging £6 billion-a-year net increase in the cost of labour planned by Labour Members. Our package of measures entirely reverses this increase.

Compared with the plans that this Government inherited, no changes are being made to the rates. More than £3 billion a year is being returned to employers through the threshold increase, and even more to individuals through the increase in the personal allowance. Our actions will mean that some 880,000 low earners in the UK will be taken out of income tax altogether.