Taxation (Living Wage)

Debate between George Eustice and Robert Halfon

Tuesday 22nd January 2013 Westminster Hall

[Robert Halfon]

Of course, if businesses want to pay their employees a living wage, that is all well and good; I would be delighted at that and would have no problem with it whatever.

My hope is that once the threshold reaches £10,000, we will consider bringing back the 10p rate for the lower-paid. Some Liberal Democrats disagree; they have suggested that the best way to help families is to raise the personal allowance even further, to something like £12,500 a year. I absolutely agree the coalition should fulfil its £10,000 commitment, but it would be unwise to raise the personal allowance even further. Everyone should feel that they have a stake in the state, and they should have some stake in the tax system even if they pay only a small amount, because they need to realise that public services are not free and that there is no magic money tree. My fear is that the Liberal Democrats want to pay for their policy, which will cost £14 billion if applied to everyone, by dragging even more workers into the 40p band. That is what has happened historically. The problem is that we will soon have families with not very high wages paying a marginal rate of 40p, and that will include police officers, shop owners, managers and senior nurses in the national health service.

[George Eustice (Camborne and Redruth) (Con)]

That point goes right to the heart of my hon. Friend’s argument. The aim of this policy should be to encourage people on low incomes to take higher-paid work, to work longer hours and to start the transition up the income scale. That is why he is right that we need to introduce a 10p tax rate in the interim; otherwise, people will go straight from their tax-free allowance to being taxed on any income above that. Does he agree that, in an era where there is downward pressure on many benefits, some of which affects the working poor, the 10p tax rate could be a good counterbalance, so that people keep their income in the first place?

[Robert Halfon]

My hon. Friend is exactly right. What he is saying is that we will create a hand-back society, where we give people back their own money, rather than just a handout society, which recycles benefits through the tax system.

Taxing the people I describe at the 40p rate is a brake on aspiration, and it has hit single-worker families the hardest. We started this Parliament with about 3 million workers paying the 40p rate, and the number will be closer to 5 million by 2015. We should not add further to that figure, as my hon. Friend says. Restoring the 10p band is more affordable than raising the personal allowance to £12,500. Most low-income workers would still have a stake in the tax system, and it would avoid dragging more families into the 40p band. That is why I support it over the Liberal Democrat proposals.

The fundamental point is, as the Government say, that we lost £7 billion when the high tax rate went up to 50p. If we get more revenue from having a 45p tax rate, the moral thing to do will be to put those extra billions towards funding the 10p tax rate.

Of all the things the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) did, the one that genuinely amazed me was that he scrapped the 10p band, given what the Labour party stood for. I accept that he introduced it in the first place, but when I watched him scrap it, I genuinely could not understand why he was doing it. Overnight, the change crushed working people with a £232 tax rise. Why should the Government not set themselves the goal of reversing that unpopular decision? There is a strong case for doing so. As I said, tax credits are flawed; small firms cannot afford the living wage; a flat tax is not going to happen and is unfair; we do not want to drag any more families into the 40p band; and everyone should have some stake in the tax system.

I suggest to my hon. Friend the Minister that the policy would be popular, that it would be a symbol of the Government’s economic mission and that it would help to tackle the desperate stagnation in incomes that Britain has suffered in the past 10 years.

Parliamentary Voting System and Constituencies Bill

Debate between George Eustice and Robert Halfon

Monday 6th September 2010 Commons Chamber

[George Eustice]

That is an interesting proposition and it may be one of the issues that is examined in Committee. Those who advocate proportional representation are at least making an intellectually honest case, whereas there is no strong intellectual case for AV. It is a system that is less proportional and one in which some people have votes counted twice, whereas other people have only one of their votes counted. How can that be more fair?

[Robert Halfon]

Although I understand the merits of first past the post, does my hon. Friend agree that the one flaw in it is that there are constituencies where no candidate gets a majority of the vote? What does he think of the French system, which retains first past the post but has a second run-off ballot for the top two a week later, making sure that in each constituency the winner has a majority of the vote?

[George Eustice]

My hon. Friend raises an interesting point. I personally favour the system that we have; it has stood the test of time, and we should stay with it. The system that is used in the French presidential elections might work in a presidential situation where there are just two candidates nationally, but not in the same way when spread more widely.