Finance (No. 4) Bill

Lord Evans of Rainow Excerpts

Thursday 19th April 2012 Commons Chamber

[Graham Evans (Weaver Vale) (Con)]

I pay tribute to my hon. Friends the Members for Stourbridge (Margot James) and for Ipswich (Ben Gummer), who have eloquently made many of the points that I intended to make. I do not want to repeat them.

First and foremost, the Bill makes it clear that the Government are sticking to the plan to deal with the mess left by Labour and eliminate the structural deficit. That is essential for market confidence in the future of our economy and wealth creation.

Secondly, the Bill is clearly on the side of working people and pensioners. It is pro-business and helps people who want to do better for themselves and their families. It cuts tax for 24 million ordinary families across the country, including 2.5 million in the north-west. Thanks to the Budget, most basic rate taxpayers will keep an extra £220 of their salary every year. That represents the largest real personal tax cut for people on average earnings in more than a decade. I appreciate that £220 might not seem like that much to the Labour leader, sat in his multi-million pound home in Primrose Hill, but for people struggling to get by in Cheshire, £220 is a real help. The Bill therefore helps working people.

[Mark Garnier (Wyre Forest) (Con)]

Does my hon. Friend agree that over the period of the changes to the tax-free allowance, the total contribution will be more than £500 for the average individual?

[Graham Evans]

I am most grateful to my hon. Friend for making that good point, with which I agree. It is a good Budget for working people on basic rate tax.

[Sheila Gilmore]

Does the hon. Gentleman accept that, particularly for families with children, the decreases in tax credits and other benefits more than outweigh the increase in the personal allowance?

[Graham Evans]

As a father of three young children, I realise that we are all in this together, and we need to make those sacrifices. The Government’s maximum benefit cap of £26,000 is all to do with that.

[Brandon Lewis]

Following on from the intervention about growth and families, since the Budget one company in Great Yarmouth has made an acquisition and an investment of hundreds of millions of pounds that will create more jobs. Another company, Seajacks, has received investment from a Japanese company of hundreds of millions of pounds, which will allow expansion and create more jobs, which will help those families who need that money and families of pensioners. Does my hon. Friend agree that that sort of work in the Budget, which facilitates such growth, will move our country forward and ensure that we get out of the mess that we inherited from the previous Government?

[Graham Evans]

Absolutely; I am most grateful to my hon. Friend for that contribution. At the end of the day, the Budget tells the world that this country is open for business because private sector investment and wealth creation through businesses such as those that my hon. Friend mentioned are critical to the success of the whole nation, not just young people and hard-working families, but pensioners.

Thanks to measures such as the clamp-down on tax loopholes, the very rich will pay more. There is an ideological divide: the Labour party wants the rich to pay symbolically higher rates of tax; the Budget ensures that the rich actually pay more tax. Her Majesty’s Revenue and Customs and the independent Office for Budget Responsibility agree that the 50% rate raises next to nothing. Indeed, having a higher income tax rate than communist China indirectly reduces tax revenues as it fundamentally undermines the competitiveness of the UK economy, discouraging inward investment and risking a brain drain of our brightest talent.

[Kate Green (Stretford and Urmston) (Lab)]

The hon. Gentleman’s comparison with communist China is completely spurious when we look at what remains of a western capitalist economy, but does he accept that it is widely agreed, including by the OBR, that the calculations on the amount raised by the reduction of the 50p rate to 45p are highly speculative?

[Graham Evans]

The hon. Lady makes a valuable point. I have huge respect for her and for everything she has done on child poverty, but if the 50% tax rate was so important to right hon. and hon. Members of the Opposition, why did the Labour Government introduce it only a month before a general election? Why did they not introduce it in 1997, 1998, 1999 or any of those 13 years? They left it until their last month.

[Brandon Lewis]

Bearing in mind what the hon. Member for Stretford and Urmston (Kate Green) said, was my hon. Friend as surprised as I was yesterday when we voted on a Labour new clause that would have cut the rate to 40%?

[Graham Evans]

My hon. Friend makes a good point, which the Prime Minister made yesterday at the Dispatch Box.

[David Mowat]

A number of Labour Members have mentioned bravery in respect of Government Members and some Budget measures. I was not a Member of the House before the last election, but perhaps Opposition Members who were could tell us whether they lobbied the Chancellor for a 45% or a 50% tax rate during the 12 years of the Labour Government, in which the disparity between rich and poor in this country rose to the highest level ever.

[Graham Evans]

I am grateful to my hon. Friend for making that point on the disparity between rich and poor under the Labour Government.

I accept the point made by the hon. Member for Stretford and Urmston (Kate Green), but bringing the UK’s top rate of tax in line with other international competitors such as Italy, France and Germany, and cutting corporation tax to the lowest level in the G7, will send out a powerful message that enterprise and aspiration are valued in this country. In the spirit of the Leader of the Opposition’s recent Occupy-style hyperbole, I want the 1% to come and occupy and therefore pay tax and create jobs in the UK.

[Graeme Morrice]

The hon. Gentleman said a few moments ago that reducing the top rate from 50p to 45p raises next to nothing. We had a discourse on this in Committee yesterday, and in Prime Minister’s questions, when the Prime Minister said something similar to what the hon. Gentleman says. However, in fact, the official HMRC book confirms that the loss to the Treasury will be up to £3 billion. Should we not use that money to finance the deficit and avoid having to make draconian cuts on our pensioners?

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[Graham Evans]

I am not sure about those figures, but I would go back to my original point: if the 50% tax were so important to the hon. Gentleman and his colleagues, why did Labour not introduce it 13 years ago?

[Stephen Williams]

Perhaps I can help my hon. Friend with his rhetorical question. Apart from Mr Williams in the Chair, the Minister and me, and the delightful Labour Whip, the hon. Member for West Ham (Lyn Brown), everyone in the Chamber happens to be from the 2010 intake and probably did not witness members of the Labour Government cheering when they produced tax cuts for the super-rich—they reduced their capital gains and income taxes while at the same time raising tax for the poorest by abolishing the 10p rate. Therefore, in fact, the pressure was all in the opposite direction.

[Graham Evans]

I am grateful for the hon. Gentleman’s astuteness in recognising that most hon. Members in the Chamber are relatively new. He raises a good point, but I want to go back to the one made by the hon. Member for Livingston (Graeme Morrice). My hon. Friend the Member for Stourbridge made the point that the top 1% richest people in the country now contribute 30% of tax to the UK Exchequer. In 1976, when Denis Healey, the famous Labour Chancellor, said he would squeeze the rich until the pips squeak, the top 1% richest people in the country contributed only 11%. So the 1% now contribute significantly more. I would be interested to hear how much more the hon. Gentleman feels they should contribute.

The Bill contains a raft of additional measures, some of which have been mentioned, to promote growth, especially in the north of England. There are far too many to list but I will point out a few that as a northern Member I especially welcome. Enterprise loans to help young people to set up and grow their own businesses are a great idea to foster ambition and creativity among the next generation. I firmly believe that what matters is not where someone comes from or went to school but where they are going, and there is no better way for young people to get on than starting up their own business, working for themselves, employing other people, growing that business and contributing to wealth creation.

The introduction of an above-the-line research and development tax credit is a simple but important move. It will help British businesses to stay competitive in the long run and send out the message that we back innovation. I am fortunate to have Daresbury science and innovation campus in my constituency. It is an internationally outstanding campus with more than 100 outstanding start-up businesses. I hope that they will be the Googles, Amazons and Microsofts of the future which are born in this country.

There are also excellent measures to help make the UK the technology capital of Europe, including a new £100 million fund to support investment in new university research facilities; £60 million of investment in the UK centre for aerodynamics; the allocation of £100 million for ultra-fast broadband in 10 of our biggest cities, including Manchester; £50 million to fund ultra-fast broadband in 10 smaller cities; and the extension of mobile coverage to 60,000 rural homes along 10 key roads.

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[The Temporary Chair (Hywel Williams)]

That is a very good point.

[Graham Evans]

Thank you, Mr Williams. I say to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) that, as I alluded earlier, many of these points have been raised by other hon. Members on both sides of the House. I will soon bring my speech to an end. I hope he will forgive me.

There is even more support coming business’s way in my neck of the woods with £4.3 million extra for Cheshire and Warrington local enterprise partnerships. In addition, the Budget confirms a further £130 million for investment in the northern hub rail project, which will work well alongside High Speed 2. Furthermore, the new city deals, which will decentralise power and bring even more investment directly up to Manchester and Liverpool, are excellent news for those great cities and my constituents who commute to them in huge numbers each morning.

[Lyn Brown]

Will the hon. Gentleman give way?

[Graham Evans]

I have given away several times. I am bringing my speech to a conclusion.

Finally, I welcome the Chancellor’s announcement that people will now receive a personal tax statement detailing exactly how much tax they have paid and what it has been spent on by the Government. This is a great move for transparency. I know that Labour are nervous about what will happen when people see, in black and white, how much of their taxes go on paying interest on the last Government’s debt.

This is an excellent Bill. It is a radical and reforming Bill. It comes from a Government firmly on the side of business, working people and pensioners, and it tells the world that Britain is open for business.

[Katy Clark]

Thank you, Mr Williams, for giving me the opportunity to follow on from that Second Reading speech by the hon. Member for Weaver Vale (Graham Evans). I will resist the temptation of talking about the Budget because I had that opportunity in Monday’s Second Reading debate.