Living Standards
Debate between Hugh Bayley and David Gauke(12 years, 9 months ago)
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Mr Gauke
The figures for the last quarter for which figures are available show that there were more than 1.1 million jobs—[Interruption.] That is not a net number; it is the gross number of people moving into employment. We are not going to do anything for employment in this country if we undermine credibility, or if we see our interest rates driven up because we lack credibility because our policies do not hang together. That is what Labour is advocating, but it would be bad news for private and public sector employees.
Hugh Bayley
Does the Minister not recall that, at the time the coalition came to power, interest rates were extremely low and had been for a long time? Our policy at the time of the banking crisis did not therefore create high interest rates. Will he also remind us what the national debt was at the time of the election? I think that it was between £700 billion and £800 billion, whereas it is now more than £1 trillion for the first time in our history, and that is because of this Government’s poor economic growth.
Mr Gauke
There is so much wrong with that that I do not know where to start. Perhaps I will begin by pointing out that, at the last general election, our interest rates were at more or less the same level as those of Italy and Spain, yet there is now an enormous difference between us. I am afraid that the hon. Gentleman is wrong.
Finance Bill
Debate between Hugh Bayley and David Gauke(14 years, 5 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
We have had nine and a half hours of debate, we have heard many speeches from Labour Members—to be precise, I should perhaps say that we have heard one speech many times—and we have heard not one word of apology. We debate this Bill in the context of a crisis in our public finances, yet we do not see the two right hon. Members most responsible for that here: the shadow Chancellor and the right honourable—and absent—Member for Kirkcaldy and Cowdenbeath (Mr Brown). Over the past few years, few contributions have been made by Labour Members on Finance Bills; usually we heard a contribution from the then Member for Wolverhampton South West, Rob Marris, who is a well-respected figure. We heard many speeches from Labour Members today, but I must say that although the quantity has increased, the quality has deteriorated. There was one exception: the hon. Member for Scunthorpe (Nic Dakin) made a fine maiden speech.
We also heard three other excellent maiden speeches. One was made by my hon. Friend the Member for Weaver Vale (Graham Evans), who pointed out that we do not help the poor by piling up debt. Another was made by my hon. Friend the Member for Ipswich (Ben Gummer). I was particularly delighted to hear that, because I grew up in that town and I remember that even in the days of substantial Conservative majorities it was a Labour-held seat. That goes to show what a fantastic effort he has put in there. I was also delighted to hear the maiden speech of my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay), whom I have known for nearly 20 years. I also wish to thank my right hon. Friend the Member for Wokingham (Mr Redwood), the hon. Members for Solihull (Lorely Burt) and for St Ives (Andrew George), and my hon. Friends the Members for North East Somerset (Jacob Rees-Mogg) and for Dover (Charlie Elphicke), for their contributions.
We debate this Finance Bill in the context of a need for a further fiscal tightening. This country is borrowing more than at any time in our peacetime history. We have seen real turmoil in the markets, with concerns about sovereign debt contagion and with Spain, Portugal and Greece having their credit ratings downgraded. We have seen the independent Office for Budget Responsibility downgrade our predecessors’ less than independent growth forecasts and increase the estimate of the structural deficit.
May I respond to the point about Sir Alan Budd by saying that the hon. Member for Wallasey (Ms Eagle) may find that if she spoke to her colleague—or perhaps former colleague—Lord Myners, she would find that in response to his freedom of information request we sent him a copy of Alan Budd’s contract, which makes it clear that it was a three-month contract? It also has to be said that in providing credibility for the public finances, he achieved more in three months than the Labour party achieved in 13 years.
It was imperative that the new Government moved further and faster in reducing our deficit and putting the public finances on a firmer footing. What were the risks if we did not do that? At best we would have had a substantial structural deficit at the end of the Parliament, and we would have paid more than £70 billion a year in debt interest. At worst, we ran a risk of the UK being swept up in a sovereign debt crisis, of a downgrading in our credit rating, of a loss of confidence by international investors, of interest rates having to rise in response, and as a consequence, of any recovery being choked off as credit became more expensive and less available. This was a risk that the coalition Government were not prepared to run, even if others were. It was necessary and overdue that we had a Government who were willing to take decisive action, to get a grip of the situation, and to set out a clear and credible path out of this inherited mess. That is what we have done.
Mr Gauke
The hon. Gentleman had nine and a half hours to take part in this debate. I am not going to give way to him now.
It is right that we should focus our attention on spending cuts. That is the best way of ensuring a successful fiscal consolidation; none the less, it was also necessary to raise taxes. Our challenge was to do so in a way that was fair and enhanced the competitiveness of the UK economy, so that we could encourage the necessary private sector growth.
We will open Britain up for business by creating a more competitive system of corporation tax. We will reduce the main rate from 28% today to just 24% over four years. Rather than putting the small profits rate up, as our predecessors planned to do, we will reduce it to 20%. That proposal has been widely welcomed by business groups such as the CBI, the British Chambers of Commerce and the Institute of Directors.
For the first time we have set out the distributional impact of all the Government’s tax and benefit changes that will affect the public over the next two years. It is clear that we have ensured that every part of society will make a contribution to reducing the deficit while protecting the most vulnerable. Even with some tough decisions, we have ensured that child poverty will not increase in the next two years, through a significant above-inflation increase in child tax credit.
We have not heard proposals from the Opposition about how they would raise more tax. To be fair, one or two Opposition Members, even former members of the Government, said, “We should have raised more from the bank levy,” somewhat forgetting that when the Labour party was in government it refused to introduce a bank levy.
I know that there is sincere concern on both sides of the House that those who are materially deprived may have to pay disproportionately more in tax as a consequence of the change in VAT, but I urge all hon. Members to look at the academic debate on this matter. If they want to see a correlation between material deprivation and income, the best way of looking at it is to look at the expenditure basis. The fact is that income distribution will always reflect the fact that there are groups in society with volatile incomes who are not as materially deprived as others, but who will from time to time earn less and at other times earn more. As a consequence—