Finance (No. 2) Bill
Debate between Jacob Rees-Mogg and Sheila Gilmore(10 years, 1 month ago)
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Jacob Rees-Mogg (North East Somerset) (Con)
It is an enormous pleasure to follow the hon. Member for North Durham (Mr Jones), who always entertains the House with his eloquence. I am sorry that he has been relatively brief today. On previous Finance Bills, he has held forth for over an hour, and I was hoping for something similar.
The hon. Member for Glasgow North East (Mr Bain) started with a list of anniversaries, but he was remiss in not mentioning that today is the anniversary of the death of Eleanor of Aquitaine, which I happen to think is rather more interesting than the anniversaries he was able to provide us with.
It is a great pleasure to support the Government on this Finance Bill. It is worth looking at some of the figures that have been batted back and forth during the debate, some of which seem, to some degree, to have been invented by the Opposition. The real figures show that the Government can be proud of their record. Let me run through them, if I may. They are a mixture from the World Bank and the Red Book. GDP declined by 0.8% in 2008 and by 5.2% in 2009. I think that some people may have missed that downwards revision by the Office for National Statistics. GDP rose by 1.7% in 2010, by 1.1% in 2011, by 0.1% in 2012, and by 1.8% in 2013. The key to those figures is that since this Government have been in office, there has been no triple-dip or double-dip, as was predicted; in fact, the economy has grown because the Government have followed the right policies.
Sheila Gilmore
Did the hon. Gentleman feel that the predictions that the Chancellor gave to this House and the public in 2010 and 2011 were over-optimistic, or did he think they were okay? I seem to recall that the Chancellor was not predicting that level of growth.
Jacob Rees-Mogg
The hon. Lady is aiming at the wrong target. The Chancellor, in his considerable wisdom, decided to make these forecasts independent and therefore set up the Office for Budget Responsibility. That is how we know that we are competent. Indeed, Labour is desperate that the OBR should view its own figures. An independent body was set up to give these forecasts so that there was no legerdemain in what the Chancellor was doing.
Sheila Gilmore
If those were the forecasts of the OBR, based on the position as it saw it in 2010, does the hon. Gentleman agree that it must be the Government’s policies thereafter that have meant that those forecasts have not translated into reality?
Jacob Rees-Mogg
That does not follow. It is like looking at the weather forecast on the BBC and saying that it is the fault of the newsreader if the weather then turns out to be different. The two are not the same. The forecasts were made in good faith, based on what was known of the global economy at the time. But of course, things change and responses are different. The global economy continued to be relatively sluggish, but the figures that have been achieved by the Government are enormously respectable. There has been economic growth pretty much since 2010 and, most importantly, in the past couple of years. Everyone knows that economic policies have a long-term impact. If a Government come to office in May 2010, we cannot expect the figures in June 2010 to be the result of that Government’s policies—there is inevitably a lag. The effects, as we have seen, have been positive; the economy is now growing, and growing increasingly strongly.
The problem that the Government faced when they came to office was severe. The deficit in 2009-10 was 11.2% of GDP, falling to 10% of GDP in 2010-11. That is not the structural deficit but the actual real money deficit. I happen to think that is a much better figure than the structural deficit, which is to some extent speculative, as economists try to work out what is structural and what is not. If we deal with actual fact, the figure was minus 11.2% in the last year of the socialists, falling very slightly to minus 10% in the first year of the coalition.
The reason the deficit was so high was of course in part the global financial crisis, but it was also because Government spending was simply too high. It had reached 47.4% of GDP in 2009-10, when revenue was only 36.2% of GDP. That latter figure for tax revenue ought not to be any surprise. One of the most remarkable things about this series of figures, going right the way back to Harold Wilson’s prime ministership, is that Governments find it incredibly difficult to get much more than 37% of GDP in taxation. It is interesting that, since 2010, although the Government have increased taxation and the tax take has gone up from 36.2% to 37.4%, the amount has not risen as much as was anticipated. The reason is that it is actually very hard to tax much more than 37% from an economy.
United Kingdom Corporate and Individual Tax and Financial Transparency Bill
Debate between Jacob Rees-Mogg and Sheila Gilmore(10 years, 8 months ago)
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Jacob Rees-Mogg (North East Somerset) (Con)
It is a pleasure to follow the right hon. Member for Oldham West and Royton (Mr Meacher), partly because I disagree with almost everything he has said, but also because it is rather refreshing that Opposition Members are willing to say it. Most of them hide their true socialist credentials, but the right hon. Gentleman is a socialist red in tooth and claw. That is admirable, because it gives us on the Conservative Benches something to get our teeth into and oppose.
I disagreed with the right hon. Gentleman from the very outset of his speech. I disagree with the way he examined the financial crisis and the blame he places. He puts it exclusively on the bankers, but it is not as simple as that. It takes two to tango—not, I must confess, something I do very often, if ever. The crisis needed people and institutions to borrow the money that the bankers were lending. It needed the regulatory system that was set up by the last Government, which took the Bank of England out of regulating the banks.
Sheila Gilmore (Edinburgh East) (Lab)
In criticising the lack of regulation, is the hon. Gentleman suggesting that his party leader was wrong to say in opposition that there should be less regulation?
Jacob Rees-Mogg
That is a complete non-sequitur. The issue is bad regulation, not too much or too little. It is perfectly logical to argue that there was too much bad regulation prior to the financial crisis and not simply think that we need more to solve the problem. I would argue that the Governor’s eyebrow is not something that can be regulated particularly effectively. No Act of Parliament, powerful though Acts of Parliament are, can determine how the Governor should raise his eyebrows or not; on the other hand, that was an effective way of regulating banking and ensuring that banks did not become overextended. Ticking boxes to comply with regulation often ensures that people obey the detail of it, but get away from the spirit. That is certainly what happened with some of the bank capital regulations prior to the financial crisis and some of the behaviour of financial institutions, which followed the letter of the law but got into a great deal of trouble. It was not that there was too much or too little regulation; it was that there was bad regulation.
I disagree with the right hon. Member for Oldham West and Royton on his understanding of the crisis, but I disagree with him even more firmly on the Government’s approach to solving it. Getting the public finances back into good order is the essential foundation for an economic recovery. The idea that the situation could have been improved by spending more each year in deficit, when tax revenues were low and the economy was weak, than we had ever spent in peacetime, is absurd. It would have just put us into a debt spiral. The United Kingdom’s credit would have declined and we would have been unable to finance our annual deficit and our cumulative debt.
Finance (No. 2) Bill
Debate between Jacob Rees-Mogg and Sheila Gilmore(11 years ago)
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Jacob Rees-Mogg
However much we tackle tax avoidance, if we set tax rates at so high a level that people decide not to work, no legislation can force them to work to earn more. Unless we want to be like the Russia of the 1980s, we cannot pass a law to prevent people from leaving the country to work elsewhere if the taxes are too high here.
Sheila Gilmore
The point is constantly made that the top 1% pay a very high proportion of income tax and that that makes this measure okay, but presumably they pay that because their income is high. The gap in this country between low-income people and high-income people has widened considerably. That happened under the Government of the late Baroness Thatcher, but, admittedly, not enough was done to address it under the subsequent Labour Government. The point, however, is that if people are paying so much, it is because they have the income to do so.
Jacob Rees-Mogg
The hon. Lady almost makes my argument for me. In 1979, that hallowed year in which the great lady to whom she referred came to office, the highest rate of income tax was 98%, and the proportion of income tax revenues paid by the top 1% was about 10%. When the rate fell, the proportion paid by the top 1% went up, so more money came from the richest in society when rates were lower. Lower rates of taxation therefore resulted in the advantage of an increase in revenue for the Government and the ability to spend more on the services deemed necessary.
This argument was proved in 1979 when the rate went down from 98% to about 60% and again in 1988 when it went down from 60% to 40%. On both occasions, the amount of tax revenue increased because people were willing to work harder and people were attracted to work in this country—so the burden was, indeed, put on to the shoulders of those best able to bear it.
An argument is made about fairness. We say it is fairer to have a high rate of tax. We say that that is symbolically right—that we should have it so that people know they are doing something difficult and we are all in this together—but what is the symbolism of saying to people we will take less tax from them, and what is the symbolism of having lower revenue for the Government?
Jacob Rees-Mogg
The hon. Lady—my near neighbour, as she represents a Bristol constituency—is very wise and does, I am sure, understand this point. The answer is that the question being asked differs between benefits and earnings, although the argument is essentially the same. Inevitably, where there is a level of benefits that discourages people from working, if that increases more slowly, it encourages people to work. It is an identical argument to the one that says people keep more of the money they earn if taxes are set lower.
Sheila Gilmore
The problem for many people at present is that the jobs simply are not out there. In my speech on Monday I explained that I had used the Government’s new universal job match. When I put in “shop assistant” on behalf of a constituent of mine, I discovered there were 76 entries, which sounds good, but 57 of them were for vacancies all over the region, not just in my city, and involved going around delivering catalogues and trying to sell things to people. Those are the kinds of so-called “jobs” that are out there, and that explains why people cannot find work.
Finance Bill
Debate between Jacob Rees-Mogg and Sheila Gilmore(11 years, 10 months ago)
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Sheila Gilmore
As I think the hon. Gentleman knows fairly well, the increase in inequality began far earlier than that. The point in the history of the post-war United Kingdom when the equality gap was narrowest was 1979, which, interestingly, marked the end of a 20-year period during which Labour Governments had predominated. After 1979, the widening of the gap began and accelerated.
I would not suggest for a moment that the party of which I am a member did as much as I should have liked it to do when it was in government, but we did a great deal for pensioners and the least well-off workers in society by, for instance, getting single parents back to work and introducing the minimum wage. It is simply not true that we were not aware of the issues, or that we did nothing to tackle them. The hon. Gentleman may want to return to the heady days of 1979, and perhaps we should all want to do that. Now, however, inequality is breeding a society that poses many dangers, and we want to reduce that inequality, but I do not believe that the Budget does anything to reduce it. We know that the Budget will increase child poverty, and I believe that in three or four years the inequality gap will have widened even more.
Jacob Rees-Mogg
It is a real pleasure to follow the hon. Member for Edinburgh East (Sheila Gilmore), who made such an enormous contribution to the Public Bill Committee. She enlivened it regularly with her thoughts, with which I have almost invariably disagreed—and today is no exception.
We are now dealing with the best part of the Budget: the heart, soul and even the guts of it. We are doing some big and bold and important things, with which I shall deal in turn. One of them is tough and brave and noble. It is the proper aim of Government to take on difficult things which, although difficult, are right. But I shall start, instead—
Jacob Rees-Mogg
I am in entire agreement with my hon. Friend. We want to get people out of the tax and benefits system as much as possible so that they can stand on their own two feet. That is what people want.
Sheila Gilmore
The problem with the hon. Gentleman’s argument is that, even if the tax threshold is raised towards the median income, as he suggested, unless the minimum wage is raised substantially, many people’s earnings will be so low that they will still live in great poverty. That was why benefits such as tax credits were created. The other route might be to raise the minimum wage.
Jacob Rees-Mogg
Mr Deputy Speaker, you will rule me out of order if I argue that raising the minimum wage would be extremely unwise, so I would not dare to say it. However, on the point of benefits for the worst off, I am all in favour of those. It is a thoroughly good thing to help people who are just in the earning bracket, but not to give benefits to people earning £70,000 a year, paid for out of their extraordinarily high taxes.