Income Tax

Jim Cunningham Excerpts

Wednesday 28th November 2012 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend, who is the shadow pensions Minister, for his intervention. I am sure he could add many other examples of pensioners being hard hit by the Government. The change in annuity rates is one example as the economy continues to flatline.

The rest of the taxpaying public look with disbelief on what the Government are doing, including the families with children, who are, on average, £450 a year worse off because of last year’s VAT rise, and another £511 a year worse off this year because of further cuts, freezes and reductions to benefits and tax credits; the couples with children who cannot increase their hours to the higher threshold introduced by the Government and who will have working tax credits withdrawn, which, in many cases will drop them below the poverty line; the families with incomes above £26,000, who are now losing all their child tax credit, contrary to the Prime Minister’s promises before the general election; and those on modest earnings with children at school, who will suffer cuts to services equivalent to 13% of their incomes.

The deterioration of the economic outlook on this Chancellor’s watch has led to the OBR revising projections on real disposable income per household down by £800 last year, by £1,100 this year and by £1,700 next year.

[Mr Jim Cunningham (Coventry South) (Lab)]

On tax credits, what does my hon. Friend think about a case I heard about two or three days ago, in which the application for tax credits was not even opened for three months?

[Rachel Reeves]

Given the cuts to departmental budgets, it is not surprising that some applications are not being processed and that, as a result, families are missing out on the tax credits to which they entitled, pushing them further into hardship.

How will households throughout the country feel next year, when those earning more than £1 million get a tax cut of £107,000? What is the Government’s message to people who work hard and want to get on in life? We remember when the Conservatives liked to think of themselves as the party of aspiration. Baroness Thatcher liked to claim she stood up for people who wanted to work their way up, and yet, under this Government, people who get a pay rise or promotion lose their child benefit. Imagine that! A person who earns £49,000 a year and has three children will lose thousands of pounds in child benefit if they take a pay rise or promotion. What a terrible position to put people in.

The truth about the Government is this: pensioners pay more, low-paid parents pay more, and a family working hard to get on in life and provide for their children pay more, but millionaires pay less. That tells us everything we need to know about the Government and their values. For many, 2012 will be remembered as the year the Chancellor’s drastic cuts began to hit home, but for the richest, 2013 will be remembered as the year they received their tax give-away from this Robin-Hood-in-reverse Chancellor.

Last week, the Prime Minister compared the economic situation we face to war. It is true that we are facing a period of national upheaval, but that is why it is crucial that the Government are a uniting force, not a dividing one. Is this really the time for a tax cut for the richest? During the second world war, the public queued to get their copy of the Beveridge report, because it set out the beginnings of a welfare state in which everyone had a stake. In the period of reconstruction after the war, that spirit and sense of national mission led to the creation of the national health service.

The Government do not understand the need for one nation politics, or the need to take people with them and share the burden of sacrifice fairly. Instead, they will be remembered as a Government who divided. Indeed, of the richest who are receiving the tax give-away, 85% are men, but around 70% of the revenue raised from direct tax and benefit changes will come from women. Fifty-two per cent. of those benefiting from the millionaires’ tax give-away are based in London and the south-east, but long-term unemployment is rising in the north. The poor are expected to work harder, because otherwise they will be made poorer, but the rich will work harder only if they are made richer. There is one rule for the very richest and another for everybody else. It is the same old out-of-touch Tories.

When the Chancellor came to the House to deliver his 2011 Budget, he said that

“now would not be the right time to remove it when we are asking others in our society on much lower incomes to make sacrifices”.—[Official Report, 23 March 2011; Vol. 525, c. 957.]

He was right then, and he is wrong now. He revealed his true colours in this year’s Budget.