Jacob Rees-Mogg
Main Page: Jacob Rees-Mogg (Conservative - North East Somerset)Department Debates - View all Jacob Rees-Mogg's debates with the HM Treasury
(12 years ago)
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Rachel Reeves
Between 1997 and 2007 this country’s debt ratio fell from 42.5% to 36% of GDP, so the debt burden fell; in 2007, our debt-to-GDP ratio was lower than when we came to power in 1997.
What hope did the Chief Secretary and the Chancellor offer in this Budget for the future of our economy? The answer is precious little. The Government’s own Office for Budget Responsibility predicts another year of low growth ahead; it predicts just 0.8% growth in 2012, followed by 2% growth in 2013. That is well below what was promised when the Government took office. According to this morning’s forecasts from the Ernst and Young ITEM—Independent Treasury Economic Model—club, even those dire outlooks now seem optimistic. Ernst and Young predicts just 0.4% growth for 2012, followed by 1.5% growth the year after. Meanwhile, on any prediction, including the Government’s, we will still have at least 2 million unemployed people by the end of this Parliament.
Even those figures conceal deeper failures and more disturbing trends. Some may remember the Chancellor’s promise of a new economic model for Britain, based on lower levels of borrowing, and higher levels of saving and investment. In reality, the promised renaissance of business investment has been repeatedly postponed. An 8% increase in investment was promised for 2011, but investment actually fell by 2%. A further 10% increase was predicted for this year, but an increase of less than 1% is now forecast. The role of investment in driving growth for future years has been significantly revised down, too. Ernst and Young said this morning that business spending
“has picked up nicely in the US”
but that UK plcs remain “extremely reluctant” to invest. It continues:
“Consequently, the economy is bleeding cash into company coffers at an alarming rate…This haemorrhage is sapping the strength of the economy, keeping it on the critical list.”
They are not my words, but those of the Ernst and Young ITEM club.
Meanwhile, figures from the OBR reveal that the Government have increasingly become reliant on household consumption for their growth forecasts. That consumption is not being financed by growth in real disposable incomes, which, as I said, have stagnated and which the OBR confirms are set to stagnate for at least another two years. The household consumption growth is being funded by a fall in savings every year from now until 2016 and by a rise in total personal debt of almost 50% over the next few years; it will reach a staggering total of £2.12 trillion by the end of this Parliament.
Jacob Rees-Mogg (North East Somerset) (Con)
If the hon. Lady is so doubtful about an increase in consumption leading to economic growth, why does she advocate a cut in VAT, which would serve only one purpose: to increase consumption growth?
Rachel Reeves
The point I am making is that the consumption growth forecast for this Parliament is being funded by increased indebtedness. A VAT reduction would boost the spending power of households without their having to take on extra debt. With incomes stagnating and, in many cases, falling, many families are resorting to taking on more debt because they cannot afford to make ends meet—that is the point I am making. That is why a reduction in VAT would help put money into the pockets of ordinary families, who are struggling so much with rising gas, electricity, train, bus and petrol prices.
Mr Christopher Chope (Christchurch) (Con)
It is a pleasure to follow the right hon. Member for Knowsley (Mr Howarth). So far, this has been a low-key debate, but I suspect that when the people directly affected by the Bill receive their tax demands, they will write to us in large numbers.
I will concentrate my remarks on clause 8 and schedule 1, which relate to the higher rate child benefit charge. I raised this issue in an Adjournment debate. I am grateful to the Exchequer Secretary, whom I am pleased to see in his place, as the Government have given some ground and have responded to some of the concerns expressed in that debate and more widely, but I remain concerned that we will find ourselves with a lot of aggrieved constituents who will not be persuaded that the proposals in the Bill are fair and equitable.
For example, a single parent earning £60,000 a year will lose all their child benefit, whereas next door there may be two people each earning £40,000 and they will retain their child benefit. Constituents say to me—perhaps this happens to you, too, Madam Deputy Speaker—that they resent the fact that the house next door is almost identical to theirs and yet is in a different band for community charge or, as it is now called—[Interruption.] It is not the poll tax; it is the council tax. If they resent a difference of £100 or £200 in their council tax compared with that of their next-door neighbour, how resentful will they be when they find that they are losing child benefit, which could run into thousands of pounds per annum, as a result of being a single-income family earning more than £60,000, whereas the people next door, who are earning a lot more, are retaining their child benefit? Obviously, such people would not have the same costs associated with earning their income as a single parent family, who would normally have to rely on child care to enable them to make their income high enough to pay the full amount—more than £60,000. So I do not see how this new system will ever be fair or be seen to be fair by the people who will be affected by it.
Today the Government are launching their consultation paper on plain packaging for tobacco products. Some wags are saying that that is promoted by the Treasury, because it will give the Treasury more room on the back of the fag packet to write down its latest policy announcements. I do not know whether or not that is correct, but the proposals in clause 8 and schedule 1 smack of policies conceived if not on the back of a fag packet, certainly on the back of an envelope. We know now that the proposal to take child benefit away from higher-rate tax payers was made at the Conservative party conference in 2010, at very short notice. It was then decided by the Chancellor that it would not be possible to take child benefit away from those with children aged between 16 and 18.
Jacob Rees-Mogg
Does my hon. Friend agree that, in principle, it is right that we should not tax people highly then to give them back universal benefits? Does he agree that we want to get away from a system where everyone gets benefits and then has to pay more tax just to get them?
Mr Chope
I agree with my hon. Friend that there is a lot to be said for simplification and stopping the churning effect. The late Lord Joseph was a great campaigner on these issues, and other Conservatives in the past have campaigned to simplify the tax system, which is the avowed intent of this Government. I also think it right to recognise in the tax system that when people have equivalent incomes, those with children have higher costs than those without children. If we are to recognise families in the tax system, one way is to have what used to be a child allowance, which is now incorporated into the child benefit.
If parents have higher costs, why should they start to pay tax at the same level of income as somebody who is not a parent and does not have those higher costs? That is where I disagree with the Government on this policy, which I do not think is fair or consistent. When it has been justified by the Prime Minister, the Chancellor of the Exchequer and the Exchequer Secretary, they have argued that it is wrong that people who earn £20,000 or £30,000 a year pay for the child benefit of people like my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). The answer to that is that neither my hon. Friend nor other people are being subsidised in that way by other taxpayers, because, as the Exchequer Secretary confirmed in a written answer to me just before the recess, somebody would have to have 10 children and be on the threshold of higher-rate tax before they started to receive more child benefit than they were paying out in tax. The Government deploy a specious argument when they say that someone on £20,000 or £30,000 a year is paying for my hon. Friend’s child benefit.
Stephen Williams
Yes. I welcome my hon. Friend’s intervention. When I met representatives of the Federation of Small Businesses, they were particularly keen that that measure should be introduced in the Budget and they are no doubt very pleased that the Government have responded to their representations and those made by hon. Members, such as my hon. Friend, on its behalf.
The anti-avoidance measures in the Budget and the Bill are also very much welcomed by the Liberal Democrats, particularly the consultation on introducing a general anti-avoidance and anti-abuse role based on the paper prepared for the Treasury by Graham Aaronson. We will need to wait until the next Finance Bill to see how that pans out. There are also specific anti-avoidance measures in the Bill, such as those to tackle the use of envelope schemes by corporate bodies and unincorporated bodies to acquire properties while avoiding stamp duty. That abuse was overlooked for far too long by the previous Administration and I am delighted that the coalition Government are tackling it head on.
Other more controversial potential abuses are being tackled in the Bill through the limits on tax reliefs that individuals are able to claim. Before the Budget, the Deputy Prime Minister talked about a tycoon tax. Across the Atlantic, President Obama has been talking about a minimum rate of tax, such as 30%, that US citizens should be expected to pay, and Warren Buffett has been making very similar points. We have many reliefs available in our tax code in this country to encourage enterprise, such as the enterprise management incentive scheme, the enterprise investment scheme and the venture capital schemes of which, in my life before 2005, I used to help many businesses and entrepreneurs to take advantage.
The Bill provides another relief, the seed enterprise investment relief, but all the reliefs available at the moment are capped. They are limited as regards both time and the amount that can be put into them, and therefore the amount of tax relief—whether it is on income tax or capital gains tax—that a wealthy individual might be able to obtain. That leaves various uncapped reliefs that are available under our tax code for income tax losses, loan interest and, of course, philanthropy, which is where a lot of the controversy has come about in recent weeks.
From the outset, it is right to say that the extension of restrictions and caps on reliefs, whether they are on gifts to charity or loss reliefs, is entirely logical. When restrictions are imposed on existing reliefs, such as gift aid, the Government and the Treasury must take greater care than when they are imposing reliefs from the outset for a new scheme, such as the seed scheme. The Government and the Chancellor have already said that they intend to work very closely with the charitable sector on the introduction of the restriction on gift aid, and I hope that that will lead to a measure that meets the Government’s objectives of protecting our tax base while ensuring that philanthropy can continue.
It is important, however, to say that, contrary to much of the coverage that we have read about and that constituents have written to us about, the restriction on reliefs is not the same as the abolition of reliefs. The phrase “charities tax”, which has been bandied around the Chamber this afternoon, has left hanging in the air the implication that the Government are somehow withdrawing tax relief from philanthropic activities altogether. That is simply not true. An individual will still be able to donate and receive tax relief on the higher of £50,000 or a quarter of their annual income. Some of us might dream of this, given the salaries that we are on, but if we had an annual income of £1 million, we could still donate £250,000 to charity while receiving full tax relief. I understand from figures that I have seen from the Charities Aid Foundation that the median donation that our constituents make is about £11 a year, so very few people will be affected by what the Government have proposed. It is right that such details should be closely considered by the Treasury and by all of us, as parliamentarians, to ensure that they work.
There are various things that the Government could do. The limits are annual and perhaps they could consider rolling up the annual limits. If you, Mr Deputy Speaker, were to win £1 million on the lottery, you would not be able to donate an amount to charity under the Bill’s provisions while getting tax relief and while, more importantly, the charity got the gift aid matching relief, too. That would be an absurd anomaly and I am sure that it was not intentional.
Jacob Rees-Mogg
My hon. Friend talks about someone winning £1 million on the national lottery but a £1 million win on the national lottery is not taxable; one ought not to get tax relief on a gain that is not taxable.
Stephen Williams
I am trying to think whether my hon. Friend has caught me out on a provision, but I am not sure that he has. The reason there has to be a £50,000 limit on relief is that most people who give large amounts of money do so out of their accumulated wealth and their asset base, which may have come from a lottery win or from an inheritance. It is likely to be a one-off event in their life when they receive a large amount of money and philanthropically decide to give much of it away. It would be absurd if the charity was not able to claim higher rate income tax relief if the individual who received that one-off legacy or windfall gain was not able to claim gift relief.
Charlie Elphicke
I am grateful to my hon. Friend for anticipating the next part of my speech, but let me first give some more examples.
Google revenues in the UK were £2.15 billion in 2010. Estimated UK profit was £700 million. How much tax should have been paid? Google should have paid around £180 million, but how much did it pay? It declared a loss of £22 million.
Charlie Elphicke
My hon. Friend makes a fair point. The companies would answer that they did pay the tax required by law, but my response is like the one given by their lordships in, I believe, the Aberdeen case some years ago. Their lordships said that a man is under no obligation to allow the taxman to put a greater shovel in his stores than he must by law, but my argument is that tax law should allow the taxman to put his shovel into stores so that people pay a fair and just share of taxation.
Jacob Rees-Mogg
Can we be clear that the problem is the law and not the avoidance—the avoidance is legal, but the law may be wrong?
Charlie Elphicke
The law requires change. The avoidance might be legal, but HMRC is understood to be investigating a number of those companies. Because of taxpayer confidentiality, we will not know for sure until such time as a case comes before a court.
Let us take the case of eBay. Tax of some £50 million should have been paid on UK profits before avoidance, but eBay actually paid £3.4 million. Facebook should have paid £14 million, but actually paid £400,000. That level of avoidance is unacceptable. This poisoned legacy—the total failure to reform our tax system—left to us by the previous Labour Government is unacceptable. I might, if I am generous, put it down to their obsession with pursuing the prawn cocktail circuit for so many years, in the fear that if they took on business and ensured that it paid its fair share of tax, they would be less friendly with business and have less credibility.
Jacob Rees-Mogg (North East Somerset) (Con)
It is a great pleasure to have this opportunity to speak in favour of the Finance Bill, which shows the wisdom of the Government on the key point of reducing the deficit. That was what the Government came into office to do. They set out a course to do that, and they are following it bravely and boldly. It is the essential part of the policy the Government are pursuing.
Nia Griffith
Why, therefore, has £150 billion had to be borrowed, and how can the hon. Gentleman measure that as a success?
Jacob Rees-Mogg
Very simply, because £150 billion extra has not got to be borrowed. Forecasts of what may happen are fundamentally unreliable. In a large economy, no efforts to forecast a small percentage of growth that there may or may not be have been successful. In the history of economic forecasts both in this country and across the world, there is one thing of which we can always be certain: that they are wrong and that the outcome will be different. This extra £150 billion that is proposed is based on a theoretical level of growth that was never going to be achieved, and that was never able to be achieved.
Owen Smith
Does the hon. Gentleman therefore agree that it is equally uncertain that the revenue to be lost as a result of the change in the 50p rate will be just £100 million, as his Treasury colleagues contend?
Jacob Rees-Mogg
I am grateful to the hon. Gentleman for making that point, because I think the reduction from 50p to 45p will, in fact, raise revenue. I think the estimates are far too unambitious and that, actually, there will be an opportunity for the Government to go further in future. I am extremely encouraged that the Treasury is producing reports on what is the best level of higher rate tax.
On that point, the Government have yet again been right, brave and bold. It is, of course, marginally politically embarrassing in an age of austerity, when we are all in it together, to cut the higher rate of tax, but it is right to do so if that raises more tax for the country—it is right if that allows the Government to spend on the priorities that both they and the British people have. Yes, there may be unpleasant headlines and we may be mobbed up by the hon. Ladies and hon. Gentlemen on the Opposition Benches, but it was the right thing to do. Time will show that the 45p rate will end up raising more revenue, because rich people can leave the country and not pay tax, can decline drawing dividends from their companies and not pay tax, and can postpone taking revenue and not pay tax. It has been shown time and again that reducing rates results in higher rates of total income. The Government were right to introduce this measure, therefore.
Matthew Hancock (West Suffolk) (Con)
Does my hon. Friend agree that those who do not look at these dynamic effects of tax changes will always over-estimate the amount that a tax rise will generate, and therefore will always leave the nation’s finances in a mess, as amply demonstrated by the Labour party’s record?
Jacob Rees-Mogg
My hon. Friend is absolutely spot-on, because every single socialist Government this country has ever had have always left the country in a financial mess, as they believe that by squeezing the rich until the pips squeak they can get more revenue, when history shows that they cannot.
The success of the Government’s fiscal plan is shown day in, day out by the bond market. Interest rates on our 10-year gilts are just about 2%. When we look abroad—when we look to the continent—we see how quickly those rates can deteriorate for countries in which the markets lose confidence. The greatest tribute to this Government’s economic policy is what has been happening in the bond market.
We must thank our Liberal friends for another great measure in this Finance Bill: the raising of thresholds. That has, quite rightly, been adopted by Conservatives. It is sensible that people should not pay tax when they are on benefits. The higher the threshold can be raised so that we avoid this merry-go-round of tax and benefits, the better.
Claire Perry (Devizes) (Con)
I thank my hon. Friend for making that point about thresholds. Does he share my pleasure in the fact that the majority of people benefiting from that threshold being raised are women, many of them working part time?
Jacob Rees-Mogg
That is a tremendously important point, because we have heard some complaints that couples, where both are working, are particular beneficiaries. But I think that that is great; I think that where the husband and wife are both going out to work, one of them is a relatively low earner and the whole family income benefits, that is good for men, women and probably their children, too. So this is absolutely the right policy.
In addition, we have cut corporation tax, a pro-business policy. We saw how well Ireland did by cutting corporation tax—[[Hon. Members: “It went bust!”] The reason Ireland went bust was not its low corporation tax. The reason Ireland went bust was because it joined the euro, a policy of which a lot of Labour Members were all in favour. Ireland’s corporation tax was behind it becoming a very successful economy and attracting companies to go there to do business. We want to do the same and I am glad that the Government have so much ambition to continue reducing corporation tax, to the benefit of the nation.
When we look at these great and bold things that have been done—getting the deficit under control, lowering the top rate of tax, raising thresholds and lowering corporation tax—we see that big, important measures have been taken. Yet what is the Budget criticised for? What is the Finance Bill criticised for? The answer is pasties. I have to say that the VAT levels charged are required to raise revenue and they include all sorts of funny things and they exclude some odd ones, too. Many of us will remember all the fuss there was about whether Jaffa cakes were cakes or biscuits, and whether, as a cake, they were exempt or whether, as a biscuit, they had VAT paid on them.
Ian Mearns (Gateshead) (Lab)
I wonder whether the hon. Gentleman would mind reflecting on the situation of the Greggs Foundation, in the north-east of England, which puts significant money, through charitable donations, into youth services and children’s breakfast clubs. If the pasty tax hits home and Greggs’ profits fall—we have already seen a significant reduction in the share price—those charitable donations may dry up. Is that a concern of his?
Jacob Rees-Mogg
That is rather contorted logic. Saying that one aspect of the activities of a big and thriving business has a slightly higher rate of tax and so the business will suddenly not be able to give any money to charity is a leap in logic so great that it can be ignored in this case. However, I did wish to discuss the point about charitable giving, because that is one of the biggest sticks that has been used to bash this Finance Bill and the Budget with.
Charlie Elphicke
Does my hon. Friend agree that it is odd that fish and chips should be subject to VAT but pasties should not? The sausage and egg McMuffin that I sometimes enjoy is subject to VAT, as is my Domino’s pizza and the Indian takeaway I enjoy from the Milaad Tandoori in Deal, but sausage rolls are not. Is that situation not unfair, as it subsidises pasties and sausage rolls?
Jacob Rees-Mogg
I agree with my hon. Friend that VAT is a tax of immense complexity. However, it is an essential tax for the revenue-raising that this country needs and it has to include in it things that all of us like and would rather not be taxed. Equally, it will include things that some of us do not like, do not particularly wish to eat and do not mind how heavily taxed they are. If I am put the question, I would choose a sausage roll over a pasty, but I know that others have different views.
I also want to mention briefly the freezing of the threshold about which the right hon. Member for Stirling (Mrs McGuire) spoke interestingly. Again, the Government were right. Because the big step is being taken to raise thresholds altogether, it makes absolute sense, at no cash cost to any current pensioner, to freeze this level and allow it to even out so that we have one threshold. Every time we have variance in tax levels, be they rates or thresholds, we simply employ more people at Her Majesty’s Revenue and Customs, we have a more expensive cost of collection and we fail to achieve the objective of simplicity across the tax system.
This has been a great Budget and I wish to finish by speaking briefly about this terrible question of tax avoidance. I agreed with my hon. Friend the Member for Dover (Charlie Elphicke) when he cited that notable judge with his phrase about allowing the taxman to take the biggest shovel. If people avoid tax, that is legal because we, as Parliament, have allowed them to do so. The following clauses in part 1 of the Bill allow legal tax avoidance: 13, 14, 15, 16, 19, 20, 38, 39, 40 and 44. All those clauses in the first 50 allow tax avoidance of which the Government approve. We will all approve of some of them, because they allow MPs £30,000 tax free when they leave Parliament, allow cars that must be made secure because people are at risk to be tax free and allow people in particular situations and circumstances to pay less tax than they would in normal circumstances. The enterprise initiatives under clauses 38, 39 and 40 allow investment that the Government want to encourage. Those are all examples of tax avoidance that is liked by the Government.
We have to be fair to taxpayers. We can only expect them to follow the law of the land as it is written—the black letter law of the land. We cannot expect taxpayers to look at their affairs and say that the Government might like them, if they are feeling kind, to pay more tax than they are being asked for. None of us has an obligation to do that and it is wrong and dangerous to elide tax avoidance and tax evasion.
Barry Gardiner
Does the hon. Gentleman therefore disagree with the Chancellor, who said on Budget day that he wanted the approach to be applied not simply according to the black letter of the law, as the hon. Gentleman puts it, but according to the spirit of the law?
Jacob Rees-Mogg
I do not believe that the law has a spirit; that is unduly philosophical for my view of tax law. Tax law is what Parliament passes and I have grave doubts about a general anti-avoidance principle. I do not think that we can reasonably expect people to pay tax on the basis of what Parliament might want, as they can only do it on the basis of what Parliament has passed into law. To undermine that is to undermine the rule of law on which we all depend, and it is fundamentally unjust to elide tax avoidance and tax evasion.
Although I know that I have unlimited time and that people are gathering for the excitement that the winding-up speeches hold in store, let me reiterate that this is a great Budget and a good Finance Bill. The criticisms have been fundamentally trivial but the basic point is that we will have—as Tories always have and as they always have had when they have come in after Labour Governments—sound money.
Owen Smith (Pontypridd) (Lab)
What a pleasure it is to follow that barnstorming speech by my hon. Friend the Member for Bassetlaw (John Mann), which is one of many powerful speeches that we have heard from Opposition Members. There have also been some interesting speeches from Government Members, which I will come to in a moment.
People used to say that Budgets from Tory Chancellors, and Tory Chancellors themselves, were cruel but competent. After this Budget, they do not say that any longer. Opposition Members do not say it and nor do Government Members. We have heard quite a bit of criticism of the Budget, but little praise for it. Over the past few weeks, as the chicanery at the heart of the Chancellor’s Budget has been exposed, line by line, clause by clause, in the newspapers and in this House, the scales have fallen from the eyes of people across this country, and especially from the eyes of the people who were kidded into voting Conservative at the last election; from the eyes of the people who thought that the Chancellor was an astute political strategist and a smart steward for the economy; from the eyes of the people who thought that the NHS was safe in the hands of the Conservatives; from the eyes of the people who bought the balderdash about the big society; and from the eyes of voters in my constituency and constituencies like it across the country who heard that, apparently, we were all in it together.
That myth has been wholly debunked over the past couple of weeks, and in the speeches of my right hon. Friend the Member for Knowsley (Mr Howarth), my hon. Friends the Members for Dumfries and Galloway (Mr Brown), for Middlesbrough (Sir Stuart Bell), for Kingston upon Hull North (Diana Johnson) and for Llanelli (Nia Griffith), my right hon. Friend the Member for Stirling (Mrs McGuire), my hon. Friend the Member for Edinburgh East (Sheila Gilmore) and, of course, my hon. Friend the Member for Bassetlaw, we have heard it exposed once more today. They have exposed the black hole at the heart of the Bill where there ought to be measures for growth. The price for that black hole will be paid for by working people across this country. They have exposed the ludicrous, unthought-through, ill-judged measures, whether on pasties or caravans, that have been rightly and roundly mocked in the press.
Government Members have also made significant and challenging speeches. The hon. Member for Cities of London and Westminster (Mark Field), with his characteristic candour, pointed out the lack of growth measures in the Bill and bemoaned the fact that the Chancellor has not done more to deliver growth and to stop the economy flatlining. The hon. Member for Christchurch (Mr Chope) exposed the perversity at the heart of the changes in clause 8, which relate to child benefit. The hon. Member for York Outer (Julian Sturdy) gave a particularly good dissection of the madness of the pasty tax and the caravan tax. Those Government Members know that they no longer have a Chancellor whom they can trust to run the economy or to take charge of their party in the future, because in this Budget he presided over a slow-motion car crash.
With the tax on pasties, grannygate, the conservatory tax, VAT on caravans and the charity charge, this is not a Budget to boost growth or a Budget for any particular sector of our economy, except for the headline writers. They are the ones who have been waving their Order Papers and who continue to celebrate this Budget—the gift that keeps on giving.
Only this morning, we heard the Exchequer Secretary trying to justify the proposed changes on charitable giving and the 25% cap on tax relief. He did so by revealing that a handful of people in this country who earn more than £1 million and more than £10 million succeed in dodging paying their tax. There is no news in that. One would have thought that a competent Government who understood what they were doing would have realised that the flipside of that argument was to reveal that more than 75% of higher rate taxpayers—those paying 40% and 50%—do pay all of their taxes.
Members do not need to believe my words about that, or even examine the Treasury’s own analysis that reveals it. They simply need to read what the BBC’s economics editor Robert Peston said today. He pointed out that more than 73% of people earning more than £250,000 had been paying the 40p and 50p rates. Even among people earning between £5 million and £10 million, 70% or 80% paid the full rate. What does that mean? According to the economics editor of the BBC, it
“implies that many tens of thousands of people were (and are) paying the 50% tax rate, and were unable to dodge it. To state the bloomin’ obvious, all of those people were given a very lovely tax cut in the budget.”
It must surely have occurred to a competent Chancellor that he would be exposed by such analysis.
Owen Smith
I will in a moment, because the hon. Gentleman has some interesting perspectives on the value of the 50p rate.
One would have thought that a competent Chancellor, or perhaps some of his Ministers, would have spotted that if such data were put into the public domain, some of us might realise not only that the 50p rate garnered £1 billion in the last year, as has now been confirmed, but that it was going to bring us £3 billion to £4 billion a year steadily, not the £100 million figure that the Government are suggesting using smoke and mirrors.
Jacob Rees-Mogg
Even though the economics editor of the BBC says it, it does not necessarily mean it is so. The hon. Gentleman does not know what income people would have been able to draw but decided not to because it would be liable to the 50p rate. People with large incomes can decide not to take them. All that is known is that they paid the right rate on the income that they took.
Owen Smith
All that we know is what is written on page 52 of the review by Her Majesty’s Revenue and Customs of the 50p rate, in table A2. It states in black and white that £3 billion a year will be forgone as a result of the changes, not the £100 million figure that is arrived at with smoke and mirrors about the taxable income elasticity calculation that Treasury Ministers signed off. What does the Office for Budget Responsibility say about that? As the hon. Gentleman said, it says that there is huge uncertainty about that calculation. We contend that we should rely on the absolute numbers, as revealed this morning—that £1 billion was raised from the 50p rate last year, not the nonsense £100 million figure.
That situation reveals the priorities of the Government, who are taking £3 billion from pensioners. On average, £83 is being taken from them, and £285 is being taken from those turning 65 this year, to pay for a tax cut of an average of £40,000 for 14,000 millionaires. That is the Government’s priority. We cannot pretend to understand it, but it is unfortunately the priority that working people will pay for.