Finance Bill

Graham Stuart Excerpts

Monday 1st July 2013 Commons Chamber

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

The Government have previously declared that we are “all in this together”, and I want to develop that theme. I am sure the Exchequer Secretary will be listening intently. They have insisted that those with the broadest shoulders should bear the greatest burden, but in Work and Pensions questions earlier, we heard that some Opposition Members are somewhat sceptical about that claim. Although the Government have also consistently told us that their priority is to cut the deficit by what they describe as “fair and reasonable means”, in politics it is actions, not mere words, that show priorities. The same Government, in tough times and against the backdrop of falling living standards—borrowing up last year, growth continuing to flatline and drastic cuts being made to benefits for hard-working families—have decided to give millionaires a tax cut. [Interruption.] I hear the hon. Member for Beverley and Holderness (Mr Stuart) call out that that is nonsense. I am more than willing to take an intervention from him should he wish to justify the tax cut for millionaires.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

I am delighted to intervene on the hon. Lady. She will be aware that the art of taxation is to extract the maximum amount of money with the minimum amount of hissing. Is she aware of the principle that a lower tax rate can often lead to a higher tax take, and does she think it might apply in this case, thus meaning that millionaires pay more, not less?

[Cathy Jamieson]

It will be no surprise to the hon. Gentleman that I do not agree with his point.

[Mr Stuart]

Is the hon. Lady aware of that principle?

[Cathy Jamieson]

I am aware of that point of principle and I will come to it in due course, because it is an issue to consider.

--- Later in debate ---

[Cathy Jamieson]

I am glad that the hon. Gentleman recognises the points that I have made. He will, of course, be aware of some of the discussion that took place in Committee on the Finance Bill and the Financial Services (Banking Reform) Bill. It is unfortunate that the Government chose not to accept our amendments to those Bills, and so far we have not seen legislation to enact the change that he mentions. I look forward with interest to further debates on that subject at a later date.

[Mr Graham Stuart]

The hon. Lady is making a powerful speech, but she has mentioned what makes the public angry. I think what makes the public angry is when they see members of a party opposing in principle, and expressing great moral outrage about, the bedroom tax—the spare room subsidy—or the 50p tax rate and then refusing to answer a straightforward question about whether they would reverse one or both of them. It is not good enough, and it is no wonder that the public think politicians are slippery and cannot be trusted.

[Cathy Jamieson]

The hon. Gentleman started by trying to pay me some sort of compliment, saying that I was making a powerful speech, but I simply do not accept his assertion that what outrages the public is politicians standing up to make passionate speeches on their behalf. The points that I am making are the very ones that have been made by my constituents, by the constituents of my hon. Friends and—I am sure—by many of the hon. Gentleman’s own constituents.

It is not good enough for Government Members simply to sit there and say, “What is the Labour party going to do two years from now?” when they are taking no responsibility whatever for what they are doing at the moment. It is a responsible position for us as the Opposition to say, “We understand that there will be an overall spending limit; that will be our starting point, but that does not mean that we have committed to it as an end point, and it does not mean that we are committed to doing exactly what the Government would do.” I am sure that as we move forward, a number of initiatives will be developed and outlined in greater detail.

--- Later in debate ---

[Cathy Jamieson]

My hon. Friend has made her point extremely succinctly and has put on the record why we feel that the future jobs fund was not only important but a successful initiative. I say again to Government Members who think that the proposal has no impact on the lives of ordinary people that all those who went through the future jobs fund programmes and who worked on them say that the fund was a valuable way of getting young people back into work. People in my area would certainly have liked it to continue.

Let me come back to the points about the new clause. As I said, the Government should be tackling tax avoidance—we will debate that further later—but that does not mean that we should compensate the wealthiest at the expense of those on middle and low incomes. I would have hoped, in the light of everything the Government proclaimed around the time of the spending review about fairness and ensuring that growth came back into the economy, that even at this stage they might have dropped the plan for a millionaires tax cut. That is a forlorn hope, however.

The decision to create that tax cut goes to the heart of the coalition’s political vision and beliefs—and by that I mean both sides of the coalition. We face a period of national upheaval at a time when resources are stretched. The Government criticise the Opposition when we take responsible decisions to think about the way forward while failing to explain their positions. At a time when resources are stretched, when people up and down the country are working harder and harder than ever before for less in their pockets and when public services are being cut so drastically, it is even more crucial that our Government should be a uniting force rather than a dividing one. In that context, I must ask again why on earth this is the time for a tax cut for the richest.

The Government try to talk a good game, but as I said at the outset, reality does not match their rhetoric. They do not seem to understand the need for a one nation approach to politics and they are not able to encourage a sense of national mission, no matter how much they talk about being “all in it together”. This Government will go down in history as the most divisive.

[Mr Graham Stuart]

I am grateful to the hon. Lady, who is being most generous in giving way. She said earlier that this matter is about action, not words, and has just said that it is about reality, not rhetoric. She is making an impassioned speech, but will she explain why she did not vote against the 50p tax rate and why, in addition, she is not committed to reversing the measure? Why, after the faux outrage over the spare room subsidy, is she not committed to reversing that either? People outside will think that this has a stench of hypocrisy about it.

[Cathy Jamieson]

The reality for my constituents and those of Labour Members is that they want to know why the Government made the change in the first place. They want to see action taken in the future, but there are two years until the general election—we will lay out how we intend to take things forward in good time for that—and I respectfully suggest to Government Members that we do not know exactly what sort of mess we will be left with. We see no responsibility taken by the Government for the situation that the economy is in at the moment and what has happened on their watch—

--- Later in debate ---

[Sir Edward Leigh]

That is an absurd argument. I watched the Brazil match yesterday—did the hon. Lady? Millions of our constituents were watching it and enjoying it. I agree that these people are ludicrously overpaid, but they are men of 21 who have an amazing skill. What does it matter if they earn £1,000, £2,000, £3,000 or £100,000 a week or a month? It is none of our business; it does not matter. To claim that my argument is defeated because a few millionaires earn ridiculous sums of money and because there are footballers’ wives is such a ludicrous argument economically that it is barely worth answering.

[Mr Graham Stuart]

I am grateful to my hon. Friend for giving way; he is being most generous. I must correct him on one thing, if he meant income tax when he said that 25% was being paid by 5% of taxpayers. In fact, 40% of the Government’s largest single receipt—income tax—is paid by 5%, and that includes footballers, rock stars and entrepreneurs, all of whom left this country in the 1970s, leaving us all poorer. The hon. Member for Worsley and Eccles South (Barbara Keeley) and other Opposition Members are lurching to the left and want to send them out of this country again. That would impoverish all of us, but most of all the low-income people in our constituencies who rely on receipts from such people.

[Sir Edward Leigh]

I had better stop now, because others want to get in.

--- Later in debate ---

[Chris Evans (Islwyn) (Lab/Co-op)]

It is always a joy to follow the hon. Member for Gainsborough (Sir Edward Leigh). In a different life, when I worked for my predecessor, he was the Chairman of the Public Accounts Committee and I spent many a happy afternoon at the back of the room listening to him pontificating and taking on the tax dodgers and anyone else the National Audit Office thought was a little bit dodgy. I miss those days.

The more time I spend in this House and the more I listen to Government Members, the more I sense that all we do is talk about history and hark back to the past. Government Members like to talk about 13 years of Labour “misrule” and 18 golden years of Tory Government. The one conclusion that I have come to from studying economics at A-level and from listening to many hon. and right hon. Members speak in this House is that it is not possible to run the economy like a scientific discipline. It is not like that.

Hon. Members have mentioned the Laffer curve, which was meant to be the wonderful idea of its time. In 1980, a future US President—he was about to become vice-president at that time—said that trickle-down economics was voodoo economics. He was right then and he is right now. The hon. Member for Gainsborough gave the Labour party some advice and I want to do the same for his party. The Conservative party is still in the grip of an economic theory that failed.

I do not want to talk about history, even though I am an historian myself. I do not want to go back to the ’80s—there is no point in talking about that. It is a moot argument. I want to talk about the future, but in 1989 and 1990 we had the worst recession ever. That followed the recession in 1981, which, at the time, was the worst recession that we had had. Trickle-down economics is based on the mad belief that a tax cut for the very rich will somehow trickle down through society. It has never worked. Quite simply, that is common sense.

[Mr Graham Stuart]

I just want to make a simple point. Every time the tax rate for the richest was cut under the previous Conservative Government, the amount paid by the top 10% went up in cash terms and in relation to what was paid by the rest of the population. In other words, every time the tax rate was reduced, the amount that the rich paid went up and the percentage of the overall pot that they paid went up. How does the hon. Gentleman explain that trickle-down effect?

--- Later in debate ---

[Mr Graham Stuart]

The hon. Gentleman is being generous in giving way. I hope that he tells his constituents the truth about where the Government have concentrated their efforts to lower tax. The main effort has gone into lifting the tax threshold. Does he support the fact that, under this Government, people can earn up to £10,000 and not pay any income tax, because the Government are determined to try to make work pay?

[Chris Evans]

Surprisingly, I agree with the hon. Gentleman on his last comment—work does pay. At the end of the day, we can have any Government scheme we want to bring people out of poverty, but there is only one way out, and that is work. The only way out of the current difficulty is for people in work to pay their taxes. If there are even more cuts to the public sector, there will be even more people out of work and the welfare bill will go up, defeating the object of the exercise. It will lead to a high welfare bill, which will have to be paid for, and a low tax yield because of people being out of work.

I say to the hon. Gentleman that we have to wake up to the fact that the social benefits that we want to enjoy will come only from businesses being successful. We must do all we can to ensure that we have a fair, simple and transparent tax regime. How can we stimulate the economy when it seems that those in the middle are being squeezed?

The hon. Gentleman asks whether I talk to my constituents. I do, and those in social housing or council housing are concerned about the so-called bedroom tax. Some 80% of social tenants in Caerphilly county borough are in two or three-bedroom houses. That is not their fault, because no one-bedroom flats or houses are being built. After the war, when Aneurin Bevan invested in social housing, he invested in family homes so that people could bring up children and go to work.

We have heard from the Government, and from hon. Members today, about how much the cut in tax from 50p to 45p will raise. Everybody seems to be able to predict the future—every Government Member who has spoken today has done so, and even the Exchequer Secretary will be guilty of it. They seem to think that they are some sort of latter-day seer, guru or wise man who can see that in future, it will be wonderful under the Tories whereas it would be terrible under the Labour party. However, we do not know what is next. We might be lucky—we might find gas, or we might find oil off the Pembrokeshire coast or more oil in the North sea, which will stimulate the economy. On the other hand, we might have another financial crisis. We do not know. When we talk about what the tax cut will raise, we are basically licking our finger, putting it in the air and wondering which way the wind is going to blow.

To get back to the new clause, it is important that we have a review of the tax cut.

--- Later in debate ---

[Mr Gauke]

I entirely agree with my hon. Friend. The challenge for any sensible Government has got to be how to ensure both that the wealthiest pay a fair share and that we encourage a spirit and culture of entrepreneurialism. The 50p rate simply failed to deliver that.

[Mr Graham Stuart]

My hon. Friend is giving a thoughtful economic analysis, but he perhaps misunderstands where the Opposition are coming from, because I do not think they are particularly interested in the economics. The fact is that their position is now so desperate that they have their 36% strategy, they are entirely paid for by the union movement, and their desire now is to lurch to the left. They do not care if they get less money; what they want to do is appeal to a core vote which they hope will be enough to return them to power because of the invidious and unfair electoral system we have. That is what is going on, which is why we waste our time when we talk about entrepreneurialism or the benefits to public services, because they are not really interested.

[Mr Gauke]

My hon. Friend takes a sceptical view of the Opposition, and events may well turn out to justify it. I want to take a more charitable view, however—although perhaps it is, in fact, a different form of scepticism or cynicism. My view is that they are not really serious about the 50p rate at all; much though they talk about it, they will not, in truth, pursue this policy because they know it is so damaging and that it does not do anything to raise revenue. That is why, despite repeated questions earlier, the hon. Member for Kilmarnock and Loudoun, who does like to be straightforward with the House, refused to say whether Labour would support a 50p rate after the next general election. She makes the argument that Labour will have to delay and wait to see what the state of the economy is, but given that we know this does not raise any substantial amount of revenue, it cannot be dependent on the state of the public finances; instead, it is a matter of political calculation. I hope my hon. Friend is wrong and that the Opposition are trying to edge away from a position that they saw as populist but which, in truth, is economically incoherent.