Capital Gains Tax (Rates)

Edward Leigh Excerpts

Monday 28th June 2010 Commons Chamber

[Mr Edward Leigh (Gainsborough) (Con)]

I welcome this Budget because I believe that it is an honest Budget. I have now sat through nearly 30 Budgets, and it is often a profoundly depressing experience, because there is great excitement during the Budget statement only for us to receive a let-down the next day when we actually start to read the Red Book. There is a lot of difficulty and pain in this Budget, but what you see is what you get. What we heard on Budget day was the essence of this Budget, which is the need to try to resolve the desperate financial crisis in which we find ourselves, with a potential debt of £20,000 on every man, woman and child, and £1 out of every £4 spent being borrowed.

I accept that there are many things in the Budget that many of us do not like. Does anybody in this Chamber like a VAT rate of 20%? We are in the desperate position of having to impose that rate on everything that we buy, apart from essentials—I am not sure why newspapers are zero-rated, considering all the rubbish that they put out, but it applies to some useful things like food—because we are faced with this financial crisis. However, contrary to what the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) said, the pain is shared. I agree that a VAT rise is regressive, and we did not want to do it, but we have increased personal allowances, and in doing so ensured that is not the rich who benefit.

I pay tribute to my right hon. Friend the Secretary of State. Who has done more than him to try to raise people out of the poverty and unemployment trap? Who has done more than he in setting up the Centre for Social Justice? Who has done more than he to visit all these areas and try to create a benefit and tax system that encourages people into self-reliance, self-help and self-belief, and does not trap them in sink estates without a job and without hope for the future? He has been working on this problem for more than a decade. Now, at last, he has a chance to put some of his ideas into action, and we welcome him to the Front Bench.

[Mr Anderson]

I understand the long and proud record that the Secretary of State has in this House. Does the hon. Gentleman understand, however, that some Labour Members have not just been there for 10 years, but have lived this? We lived this same experiment in the 1980s and we saw the devastating impact on the people we represent—the people who had to pay for the failure of the Government at that time, when unemployment was not a price worth paying in the areas where I and many other Labour Members come from.

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[Mr Leigh]

Nobody doubts the hon. Gentleman’s commitment to relieving poverty, but does he think that the system that we have at the moment is perfect? Of course it is not. We are trying to create a fairer system in which there are real opportunities to create a society where people are given incentives to climb out of unemployment, despair and poverty. That is what this Budget is trying to do.

It is right to speak for the poor, but it is also right to speak for the many people who earn and who are creating jobs. Rightly, this will affect everybody earning more than £50,000—by the way, everybody in this Chamber will be £1,500 a year worse off—so it is not simply the case that only the poor are paying for this. Everybody, all the way up the income tax scale, is having to pay for our difficulties and helping us to climb out of this mess. Everybody in this nation is having to pay, and that is absolutely right. I also like the fact that this Budget is starting to create the conditions in which we can have a fairer tax system in which there is less churning of money and less of a deep unemployment and poverty trap. By all means let us raise personal allowances, and let us then try to move towards a flatter and fairer rate of taxation.

I will finish shortly, as each of us has very little time. First, let me make a point about much of the work that I was trying to do in the last Parliament to try to get efficiency in Government. We still have not got there. Does anybody think that we would have got into this mess if we had had a better Budget system? We need a triple lock. The Budget process that we have in this House is still not transparent enough. In the last Parliament, I tried to persuade the Liaison Committee that we should have a powerful Budget committee—a committee of this House—to which a Government Department should go when proposing to increase legislation. We should look at that and debate it in an open forum, not just have one minute per amendment, which is what we get with the Finance Bill. Does anybody think that our Budget process is, for example, as good or as powerful as the congressional one, whereby the President proposes and Congress disposes, and there are hundreds of hours of meetings?

We already have a good audit process—one of the best in the world—in the shape of the Public Accounts Committee, but we do not have the equivalent of the PAC inside Government. Frankly, the Treasury has not been strong enough in resisting waste, inefficiency and incompetence in Government spending. The Treasury has been overwhelmed, and the process is largely paper-based. We need a kind of star chamber—a PAC—so that when my right hon. Friend the Secretary of State or any other Minister come up with a proposal, they have to go before it, in private, to justify that proposal and to be hounded by senior Members saying, “Is this spending efficient? Is it properly piloted? Above all, are we reducing complexity in Government?”

Some of us think that complexity is so inherent in Government, with the civil service having this relentless itch always to try to control and regulate, that there is no way out of this, but I do not believe that. I believe that we can create a social security system which, although simpler, is fairer and provides more incentives. I believe that we can strip away whole areas of complexity. It will be a mighty task, but I believe, given all my right hon. Friend’s experience and all the work he has done, that nobody is better placed to carry out that work over the next five years.

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[Mr Leigh]

The worst statistic of all is that last year, of the 85,000 children in receipt of free school meals, whom we should be helping more, only 45 got into Oxbridge, which is fewer than those who came from just one school—that attended by the Leader of the Opposition. That is the true demerit of what we have been creating in the past 13 years.

[Mr Jackson]

My hon. Friend is absolutely right to draw the House’s attention to that statistic. Likewise, the number of children who go from care into higher education is also a shameful figure. I therefore strongly endorse the ambition of my right hon. Friend the Secretary of State for Work and Pensions to tackle the deep-rooted causes of poverty in this country, and to tackle the twin aims of lessening the scale of social breakdown and improving the quality of life of the poorest in our society. If our Government achieve nothing less, they will have served our country in achieving that.

In my constituency, where we have recently suffered job losses, and where we also have low skill levels, lower-than-average pay and high welfare dependency, the problems are real and they are about people, not statistics. Hundreds of children in Peterborough live in dysfunctional families, their parents on welfare benefits. Those children lack ambition, a focus and, often, a moral framework, going without anything other than peremptory familial love and experiencing, through no fault of their own, an inevitable poverty of imagination, as well as, too often, material poverty. Dedicated teachers, nursery staff, health professionals and members of the extended family, such as grandparents, are often forced to assume a role in loco parentis. I believe that we have a moral duty to those children to do something about the situation, even if not to their often indolent and feckless parents.