Finance (No. 4) Bill

Iain McKenzie Excerpts

Thursday 19th April 2012 Commons Chamber

[Brandon Lewis]

I supported the Budget a couple of weeks ago and I still do now. It is important to look at it in its entirety, and at how it fits in with other things that are going on. At the moment, an increase in personal allowance is being put in place; it will rise by £1,100 in April 2013, taking it to £9,205 in total. That is the largest real personal tax cut for the median earner in more than a decade, from which 24 million people will benefit. It will give basic rate taxpayers a real cash gain. The Government are taking 2 million low-paid workers out of tax altogether.

Let me put that increase in local context as the Member of Parliament for Great Yarmouth. It lifts an additional 75,000 people in the east of England out of income tax altogether. That will have a dramatic impact on many low earners in my constituency, which is the 54th-most deprived local authority out of 326. The average earnings in Great Yarmouth are £21,900 per annum, compared with the national average of £26,100.

[Mr Iain McKenzie (Inverclyde) (Lab)]

Does the hon. Gentleman agree that to benefit from this increase in the tax threshold one first needs to have a job? That is what most of my constituents are asking for—a job.

[Brandon Lewis]

I thank the hon. Gentleman for that intervention, which gives me a chance to highlight the good news we had this week regarding the number of people in employment. In Great Yarmouth we saw not only an increase in employment this month, which is very welcome, but an increase in the number of young people in employment. That is a testament to the work the Government are doing, and also, I hope, a sign of the improvements that are coming. It is also a testament to the opportunities put in place through the previous Budget and the work of the Department for Work and Pensions, particularly on work experience and the Work programme, which is also having an impact.

In Great Yarmouth, we also have a particularly high number of part-time and seasonal workers due to the nature of the constituency and its tourism industry. The change in personal allowance is a huge help to that sector of the local work force. It puts extra money into the pockets of hard-working families across my constituency.

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[Katy Clark]

That was done as part of a range of measures. We have been talking about a package of measures today, and what we know is that pensioners will be disproportionately affected by the range of measures that this Government are steamrollering through. I will return to that later, but the hon. Gentleman’s point also highlights the fact that the changes proposed at that time treated everybody, of all ages, in the same way. In this debate we are trying to focus on the impact on pensioners of the freeze in what is an age-related benefit. We have heard a number of contributions that have highlighted how pensioners are struggling as a result of many of the Government’s policies, as well as the economic situation we are in, which the Government are not trying to alleviate.

My hon. Friend the Member for Leeds West (Rachel Reeves) put this debate in the bigger picture by highlighting the fact that the £3 billion that the Government will save as a result of the proposed change will be used to help some of the richest people in the country. The big picture is that the richest in this country are getting richer, at a time when the living standards of those on modest or low incomes are going down. We have heard a number of attacks on the last Labour Government in this debate, but the reality is that the figures show that the living standards of those on low, modest or middle incomes went up. There was also an increase in the living standards of the wealthiest in the country, but we are now seeing the living standards of ordinary people—people on low or modest incomes—plummeting, while at the same time we see huge and escalating increases in the incomes of rich individuals and many corporations.

[Mr McKenzie]

We hear much from Government Members about the message that this Budget is sending the world—that Britain is open for business, and so on. What message does my hon. Friend think the Budget is sending to our pensioners up and down the country, and particularly those on incomes that they have worked hard for, by setting money aside and preparing for their pensions?

[Katy Clark]

The word “dignity” has been used a number of times in this debate. It is an important word, particularly given the proposed change, which has been put forward at short notice. We have had debates about pensioner income over many years in this place. We have heard a number of proposals, from parties in all parts of the House, that would change the financial position of those reaching retirement. However, a common theme has been the importance of giving as much notice as possible of any change, particularly when dealing with people’s incomes in retirement, so that people can make the changes necessary to cope with the changing world.

One of the problems with the proposed change, which will come into effect in 2013-14, is that it represents not a minor or technical change, as many Government Members have said, but quite a substantial drop in income at short notice for people on modest or medium incomes. My hon. Friend the Member for Livingston (Graeme Morrice) highlighted the impact on those who turn 65 in 2013-14, who could lose £323 a year, which represents a significant amount, not a technical change. Therefore, to answer my hon. Friend the Member for Inverclyde (Mr McKenzie), people in those income brackets will be very disappointed by the change. That is one reason I have highlighted the fact that the measure was not in the manifesto. If the Government think that it is an important part of their long-term pension reform, it should have been in the manifesto. It should have been consulted on and thought through, and a great deal more notice should have been given to the individuals affected.

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[Nigel Mills]

I think my hon. Friend is suggesting that we should view the issue in the round—the issue, that is, of how we can encourage people to fund their own retirement and achieve the decent level of income that they want in a way that is not unaffordable for the taxpayer.

[Mr McKenzie]

I suspect that at the last election the hon. Gentleman did not tell his constituents that he would impose a granny tax on them, but that he did tell them that if the Conservatives were elected they would be a fair Government. Is it fair to impose this granny tax while also giving a tax benefit to millionaires? Will he go back to his constituents and tell them that this is a fair Government, therefore?