(9 years, 5 months ago)
Commons ChamberOrder. I shall ask Members once not to shout across the Chamber at one another, and to listen to whoever is on their feet, which at this time is the Minister.
Thank you, Mr Hood.
When President Hollande took office, with the enthusiasm and support of the Labour party in this country, I have no doubt that he wanted growth to increase in France. The fact that our economy is growing something like seven times faster than France’s is not because of a lack of desire on the part of the French Government, but because some policies work better than others. The Labour party’s policies would not result in higher growth—it is so anti-business that it would drive investment from this country, and its tax policies seek to punish wealth creators. I question Labour’s supply-side policies.
It should be noted that the Office for Budget Responsibility does not believe that any of the measures announced last week will feed through to higher house prices. We also announced supply-side policies and 20 housing zones last week. It is right that we take steps to support supply.
The hon. Gentleman said that I was being generous with my time, but I am conscious that I am also being generous with the Committee’s time, so let me make a little progress. To return to the point made by the hon. Member for Telford (David Wright), the VAT increase in 2010 applied only to the standard rate. Everyday essentials such as food and children’s clothing, as well as newspapers and printed books, have remained zero-rated throughout this Parliament, which protects those on low and middle incomes. On fairness, we have reduced income tax for more than 27 million individuals, with basic rate taxpayers £905 better off in cash terms compared with 2010.
There is no need to publish a report on the impacts of the rise in VAT announced in 2010—a rise that, after all, the Labour party did not oppose. The Government’s economic record speaks for itself: record employment in the UK against virtually record unemployment in France. By 2017, basic rate taxpayers will be £905 better off in cash terms compared with 2010, and 3.7 million individuals with low incomes will have been taken out of income tax altogether. The European Union’s own analysis describes UK living standards as the fourth highest in the EU, above those of France, Italy, Spain, Ireland and the Netherlands.
We have delivered sustainable economic growth while across the EU economies stagnate, but we recognise that the job is not finished. This Government continue to take the difficult decisions needed to secure a responsible recovery and stay on course to prosperity. I therefore hope that the Labour party will not press new clause 1 and that clauses 66 and 67 will stand part of the Bill.
I have now to announce the result of the deferred Division on the question relating to the draft Infrastructure Planning (Radioactive Waste Geological Disposal Facilities) Order 2015. The Ayes were 277 and the Noes were 33, so the Question was agreed to.
[The Division list is published at the end of today’s debates.]
It is a pleasure to serve under your chairmanship, Mr Hood. New clause 1 stands in my name and those of my right hon. Friend the Member for Morley and Outwood (Ed Balls) and my hon. Friends the Members for Nottingham East (Chris Leslie) and for Kilmarnock and Loudoun (Cathy Jamieson). It requests the Treasury to commission
“a report on the impact of the increase in the standard rate of VAT which took effect from 4 January 2011.”
The report must estimate the impact of that increase on living standards, small businesses, the fairness of the taxation system and economic growth.
The House has debated issues relating to VAT on a number of occasions, which the Minister referenced in his opening remarks, and it was, of course, a hot topic of debate at Prime Minister’s questions today. If the Prime Minister or any Conservative Member thinks that they can put the issue to bed today, let me tell them that they will not find it that easy, and I will set out the reasons for that during the course of my speech. Frankly, to believe what the Prime Minister has said today about VAT would be rather like believing what the Deputy Prime Minister said about tuition fees before the last general election. The public are simply not going to buy it, and I think the whole House is well aware of that.
Our new clause asks for a review because Oppositions are limited in what they can call for in amendments to a Finance Bill, but no Member can be in any doubt about our argument about the consequences of the political choices that are being—and that have been—made by the Conservative party and signed up to by the Liberal Democrats, even though they have been desperately trying to pretend that they had nothing to do with the fiscal assumptions given to the OBR, on the basis of which it made its assessments of what is likely to happen in the next Parliament. I welcome to the debate the lone Liberal Democrat on the Government Benches, the hon. Member for Burnley (Gordon Birtwistle). Perhaps if I give way to him he can rule out raising VAT.
I thank the shadow Minister for inviting me to give my views on the fiscal situation. My constituency has seen unemployment fall from 7.5% to 2.5% and has received more than £50 million of Government money. I remember 1959, because I was 16 and had just started work. I canvassed for a guy called Arthur Davidson, who was a Labour Member, and he said the same old things that the Labour party always says: “Vote for us and there’ll be no problems. We’ll have full employment.” Well, I remember what happened after 1959, because I lived through it. It is very cruel of the hon. Lady to suggest that some of the thing we are agreeing to now are wrong—
Thank you, Mr Hood. I am grateful for the hon. Gentleman’s intervention, during which he did not rule out a rise in VAT under the Liberal Democrats. Perhaps we will have to wait for others to comment on that.
My hon. Friend is making a very good speech. She has returned to the point about the scale of the cuts. Is she as concerned as I am about that? My local council has been cut by 43% since 2010. We now have 1,000 people losing their social care packages this year. Is it not very frightening that what we face in the next couple of years are cuts that are deeper than anything we have seen before? I find that prospect frightening for social care and local services, which are already crippled, and for policing—for keeping our local community safe. Does she feel that way, too? We have already seen what has happened—
I thank my hon. Friend for her intervention. Clearly, those are the kinds of concern that people have.
On the VAT proposals, the changes and exemptions that the Government may wish to make for some worthy cause are welcome. I am talking here about the help for organisations such as hospices. But there is scope to go further. I will say something now that, although not Front-Bench policy, is perfectly legitimate to raise in Committee. As someone who has been very involved in housing, I know that the housing world is keen to see VAT relief on improving and restoring properties.
VAT can make refurbishing properties more expensive than rebuilding. Demolition and rebuild has become a cheaper option than preserving some of our properties. Having worked with many housing associations, I know that there have been times when they have wanted to do that kind of refurbishment and preservation work, but they had to do a massive upgrade behind that to bring the homes up to the required standard. Such a VAT exemption is something for which the housing world has campaigned for a long time. As we all want to increase sustainability, I hope that that is an issue that my own Front-Bench team will reconsider when they are in government.
That is a very interesting piece of information, and it is something that people should bear in mind—
Order. It is very interesting, but we are straying a wee bit from what we are supposed to be debating.
Thank you for your guidance, Mr Hood. I am sure that you would not want me to stray on to the whole issue of food banks, which would probably take us to midnight.
In conclusion, new clause 1 would provide us with an opportunity to look at the impact of VAT changes over this Parliament. We believe that they have been regressive and that many of our constituents have been affected, and we are concerned about the future. We need to look very carefully at what has happened before any decisions are made on further increases. We are always taken to task for proposing new clauses to Finance Bills that would set up reviews, and I understand that there are technical difficulties. I am sure that current Government Members will have the same difficulty when they come to scrutinise a Finance Bill in opposition in the next Parliament. Perhaps we will then make the alternative criticisms.
It is important that we fully understand the impact of the VAT changes, and not just through some kind of impact assessment that is done theoretically, but through an assessment of what has actually happened; they are not always the same thing. However, such proposals have been turned down in every Finance Bill I have encountered in this Parliament. The hon. Member for Dover (Charlie Elphicke)—he has still not returned to his seat—and I are obviously similar; we are either terribly keen to serve on Finance Bill Committees, or we are such a soft touch that when our Front Bench teams or Whips ask, “Wouldn’t you like to serve on the Finance Bill Committee?”, we say, “Oh, all right then.” Some of us have certainly done our stints on Finance Bill Committees, and I am sure that we all hope to be able to do so again from a governmental position.
On a point of order, Mr Hood. Can we look again at the way in which the business of this House is organised, because it brings our procedures into real disrepute when we have not had the chance even to look at a set of important amendments, much less to debate them. [Interruption.]
Order. I ask Members for order to allow the hon. Lady to make her point of order.
I was simply making the case that our procedures are brought into disrepute when we have not had the chance even to debate a huge number of amendments, much less to put them to the vote, including an important amendment that would have closed a tax-dodging loophole for private equity firms. Can we look again at the way in which the business of this House is organised, Mr Hood?
I thank the hon. Lady for her point of order. She may want to take her point up with the Procedure Committee. Unfortunately, it is not a matter for me.
(10 years, 1 month ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Order. The hon. Gentleman was able to intervene, but the Minister has sat down and the hon. Gentleman cannot make another speech.
Question put and agreed to.
(10 years, 6 months ago)
Commons ChamberI am quite amazed that the hon. Gentleman is surprised that I and many other hon. Members are against his nationalism. To put my comment last week in context, I said that despite the lying of the SNP Government and the Westminster Government here, I would not support nationalism and would therefore vote against his Government. He should not be surprised, because I have always opposed nationalism. I always will oppose nationalism, because I do not make judgments about people on the basis of the side of the road or the side of the bed they were born on.
Order. I think the hon. Gentleman has got the message across.
(11 years, 3 months ago)
Commons ChamberI am delighted to have caught your eye, Mr Deputy Speaker, and to speak in the debate on the Gracious Speech. I made my maiden speech in a debate on the Gracious Speech on 8 July 1987, following Mrs Thatcher’s third victory. I remember using an analogy. I said that the Government and the Gracious Speech were more of the same poison in a different bottle. I thought of that comment when I looked at the Conservative Back-Bench amendment. It is déjà vu, or Maastricht, all over again. If historians check the speeches on the Maastricht debate in Hansard against what we have heard in the past hour or so, I am sure they will understand what I am saying.
As one who led the Maastricht rebellion, I should say that, at the time, we made predictions. Exactly what we said would happen has happened—that is the difference.
The hon. Gentleman has been saying exactly what he said in the Maastricht debate ever since, at every opportunity. It will surprise no one, including me, if he continues to say those things, but I am speaking to the reality. Some say that the Conservative amendment is a UKIP amendment. In fact, the hon. Member for Harwich and North Essex (Mr Jenkin) accepted that he agrees with a lot of what UKIP says.
I remind the House of something the Prime Minister said in his Conservative party leadership campaign. He promised the country and his party that he would make the Conservatives electable again, and get rid of the “nasty Tory” image. He travelled to the Arctic to embrace huskies, and came back here and cuddled hoodies. These are changed days. Where is he now? This week, with conspiracies going on behind his back in his own party in Parliament, he is away negotiating an EU trade deal. You could not make it up! As my grandmother used to say, when the cat’s away, the mice will play. That is what is happening to him.
The debate and the run-up to it are more like Shakespeare’s assassination plot in “Julius Caesar”. The big question is who will be Brutus. Margaret Thatcher’s political assassination in 1990 had nothing, or nothing much, to do with Europe, but we have the same modus operandi. As my hon. Friend the Member for Bolsover (Mr Skinner) pointed out in a speech two weeks ago, the Conservatives kicked Mrs Thatcher out on the street like a dog.
My hon. Friend is asking questions, but not pointing fingers. Does he think it was significant that the Chancellor made a very anti-European statement today? He made it clear that he is in line with the people who are calling for the referendum, and demanding we join them, while the Prime Minister is away. He may not be the great wizard, but he is certainly the great Machiavellian.
I do not disagree with that. The Chancellor is supposed to be the campaign manager for the Conservative party and he could well fit the title of Brutus. I do not want to accuse him of being a Brutus, because there are so many of them about. It will be interesting to see who is the first to stick the dagger in. I should thank the hon. Member for Croydon South (Richard Ottaway) for having the temerity to speak up from the Government Benches in a pragmatic and sensible way on our membership of the European Union.
One of the many questions thrown at our Front-Bench team is whether they support a referendum. Hon. Members should not bother to ask me. I do not support a referendum on staying in the United Nations, I do not support a referendum on staying in NATO and I do not support a referendum on staying in the European Union. Yes, the EU needs reforming, but it can only be reformed from within. We cannot reform it and influence it from outside, and I hope that can be taken as read.
It is my judgment, supported by a considerable weight of evidence, that today’s Conservative party is so far to the right that it refuses to select candidates that are moderate, pragmatic or pro-Europe. There lies the difficulty. I started my younger political life being anti-Europe, but I accepted that the world moves on and I moved on with it. In the Labour party in the late ’70s and ’80s, it was difficult to be a candidate for a European seat without being anti-Europe. That is exactly where the Conservative party is now. The selection process is causing all the difficulties for its leader today in Parliament.
The hon. Lady will know that I always try to be respectful, but that is a foolish comment to make on such a serious subject. If she wants me to give my comments on the leader of the Labour party, I am absolutely delighted. I supported the leader of the Labour party, and I might point out that he is not doing badly, because we are considerably further ahead in the opinion polls than the Conservative Government.
It looks like I am running out of time. The Queen’s Speech should have been about stability, growth and employment.
I am listening with interest, as I always do, to the hon. Gentleman’ s speech, and I have heard it a few times—a lot of times, in fact. If he gets his referendum and the vote is overwhelmingly, or marginally, in favour of staying in the EU, will he then embrace the EU and work from the positive side, in the same way as everybody else?
I have come to the conclusion that we have to leave the existing treaties, but I will say one last thing. The UK Independence party argument is self-defeating, for a simple reason. If UKIP were to take a number of marginal seats on the scale that seems likely and we were to lose the next general election, UKIP will not get the referendum or make the changes it wants, because we would be faced with a Lib-Lab, pro-integrationist, anti-referendum situation, which would be a complete disaster. UKIP, with which I am quite obviously much in agreement, will not produce the answers, because it is not possible to repeal the European Communities Act 1972 or have a referendum without a majority of MPs. It does not have a majority and it will not get one.
It is a great pleasure to follow the right hon. Member for Salford and Eccles (Hazel Blears), who made a passionate and knowledgeable speech about social value.
Amendment (b) has been signed by 92 right hon. and hon. Members, drawn from the Conservative, Labour, Liberal Democrat, and Democratic Unionist parties. The amendment respectfully regrets
“that an EU referendum Bill was not included in the Gracious Speech.”
Members may wonder why I am speaking about the European Union on a day that was allocated to a debate on economic growth. The one thing that is certain is that there is absolutely no connection between economic growth and membership of the EU—quite the reverse. However, it is the Labour Opposition who choose the subject for each day of debate on the Queen’s Speech. On no day did they choose to debate foreign affairs, which indicates how little regard they have for international relations in general and Europe in particular. I suspect they did not want to let the House know of their divisions over Europe.
The Prime Minister would have liked to put an EU referendum Bill in the Queen’s Speech, but was blocked by the Deputy Prime Minister and the Liberal Democrats. However, yesterday the Conservative party published a draft EU referendum Bill. If this Bill can be debated in Parliament, I believe it can become law.
(11 years, 4 months ago)
Commons ChamberOrder. I ask hon. Members to desist from commentary during the contributions of other hon. Members.
Unless such money is put in a mattress, it has an effect, because it goes into the banks. As hon. Members know, the banks have been short of capital to lend out and short of deposits.
Order. Before I call the next speaker, I should say that I am mindful to call the Minister at 1.15 pm. Hon. Members should therefore bear that in mind when they make their contributions.
I rise to support the proposals in the names of my hon. Friends.
On the one hand, Government Members accuse Labour Members of always wanting to clobber the rich, but on the other they accuse us of not introducing the 50p rate early enough. We had a vibrant economy, but everything changed with the enormous banking crisis in 2008. In response, we had to introduce a deficit reduction plan, part of which was the perfectly logical introduction of the 50p tax rate.
I make no apology for Labour’s firm commitment to the redistribution of wealth through the taxation system. The majority of citizens in western European democracies share that view. The taxation system is not the only redistribution mechanism. Other mechanisms include the minimum wage, which the Labour Government introduced. I hope the Government retain the minimum wage and increase it year on year in line with inflation. It worries me that it is going up by only 1.9% this year, while inflation races ahead. It is important that we have such mechanisms, but taxation is an important mechanism in the redistribution of wealth. The vast majority of people in this country recognise the need for all to contribute to the many public services we enjoy, and the need for some redistribution through the taxation system.
The economic argument that my hon. Friend the Member for Wrexham (Ian Lucas) advanced about money going back into local economies is extremely strong. People on the lowest incomes tend to spend money immediately, so it goes immediately back into the local economy and helps the local high street. Local businesses are going bust because people simply do not have the money to spend. They are struggling. They are turning to food banks—they are unable to buy food, never mind Christmas presents, clothes and the rest of it.
Local economies are struggling enormously. We have heard from many wise sources that the Chancellor needs to get his act together on stimulating the economy, and putting the money in the pockets of people who have the lowest incomes, who will then use it immediately in the local economy, is one way of doing so. That is not happening, which is why the Opposition are so angry about the cut in tax from 50% to 45% when there is an enormous squeeze on those on lower incomes.
One of the most insidious changes is the change to tax credits. They are difficult to explain because they have been designed to suit each individual household, which makes it more difficult to speak about them in a more general sense. Nevertheless, let us look at the changes. First, there has been an increase in the tax credit clawback. The whole point of tax credits is that they are an incentive for people to work if they can find it. Many who are on low incomes cannot get more hours, and the maximum amount that many can be paid for the hours they work in a full-time week still qualifies them for tax credit. Any reduction in that tax credit is therefore counter-productive—it does not help people at all.
The child care tax credit has also been reduced. That is another seemingly mad policy. The money is desperately needed to help people to work. The family element of tax credit has been abolished, as has the 50-plus element, and the working tax credit has been frozen. Given current inflation, the proposed cap of 1% on increases in working tax credit and child tax credit is effectively another cut—it is a cut in what lower-income families can buy with the money they have, with the catastrophic effect that all hon. Members see in our local economies and high streets.
In Wales alone, the tax credit measures will suck some £794 million—much-needed money for lower-income families—out of the economy. The whole point of tax credits was that they were calculated on what it was reasonable for a family to live on, which helped those whose earnings did not meet that rate to keep going.
I beg to move, That the clause be read a Second time.
Thank you, Mr Hood, for using my full name. My mother will be most impressed, as she is the only other person on the planet who addresses me as “Catherine”, rather than Cathy. She will be delighted.
I am sure that many Government Members are interested in the rate of VAT and perhaps rather relieved that they are not in the same frenzy over it that they were when we debated the Finance Bill this time last year. I see some hon. Members agreeing, because I think that we all learned far more than we ever wanted to about ambient temperatures, pasties and the impact of the VAT proposals on not only hot food, but caravans, churches, sports nutrition products and so on. Perhaps Government Members will be more relieved to talk about our VAT proposals.
We have tabled new clause 2 because, as has been said in earlier debates, we have concerns about the rising cost of living and its impact on ordinary people. In the last debate we heard many passionate speeches from Opposition Members, particularly on how the rising cost of living is impacting on their constituents, and I was struck by the number of Members who referred to constituents having to rely more and more on food banks. Having moved on from the debate on hot food, it is sad that we are now talking about more people having to rely on food handouts. Those handouts, of course, show the generosity of many people in our local communities, and I applaud them for the work they are doing, but surely in this day and age people should not have to rely on such initiatives.
I am broadly sympathetic to the proposal, which could stimulate the economy significantly, but VAT brings in about £100 billion a year, so the question the right hon. Member for Wokingham (Mr Redwood) asks is valid. Does “strong growth” mean consistently positive growth and, if so, at what level and for how long, or would it require a return to trend growth of about 2.5% and, if so, for how long, or would it require above-trend growth and, if so, for how long? To have an open-ended commitment to lose potentially £10 million a year for some years would be quite a serious and significant thing, irrespective of the positive impact it might have.
Order. I say to the hon. Gentleman, in case he is going to make any further interventions, that he should make them a bit shorter and get straight to the point.
I am interested to hear that the hon. Gentleman has some sympathy with our proposal—I suspect that we might not have the same agreement over some of the other issues up for debate today. He raises important issues. That is why, through new clause 2, we want to ensure that a report would be produced. We are calling on the Government to do that now, rather than put it off into the future. The Government could put in place monitoring measures now; that would allow for a temporary VAT cut, which would help stimulate the economy.
Borrowing to pay for the cost of economic failure has risen—it is now forecast to be £245 billion more than planned at the time of the spending review. That, of course, excludes the one-off transfers of the Royal Mail pension fund and asset purchase facilities. The Government are not going to balance the books by 2015 as the Prime Minister promised. National debt as a percentage of GDP is not now forecast to start falling until 2017-18. It is important to remember that, as it breaks one of the Government’s own fiscal rules.
As this week’s labour market statistics show, halfway through a Parliament, Britain is still being scarred by rising unemployment, an issue raised in earlier debates by many hon. Members, who brought attention to what was happening in their constituencies in the real world.
Not only are more people unemployed than at the election, but the number is rising. Earlier, my hon. Friend the Member for Newcastle upon Tyne North referred to the rising numbers: 70,000 more people are on the dole now than last month; long-term unemployment has risen yet again; and, most damagingly of all, the next generation is paying the brutal price, with youth unemployment up yet again, by 20,000.
People are no longer giving the Chancellor the benefit of the doubt. I think I said that about this time during last year’s debate; I felt that at that stage the public were beginning to lose confidence in the Chancellor’s economic strategy. This week, we have to take note of what the International Monetary Fund’s chief economist said:
“In the face of very weak private demand, it may be time to consider adjusting the original fiscal consolidation plan”.
(12 years, 4 months ago)
Commons ChamberOn a point of order, Mr Hood. I believe that the hon. Gentleman referred to my hon. Friend the Member for Pontypridd (Owen Smith) as not being wholly honest. Will you clarify whether that is in order?
I thank the hon. Lady for her point of order. It is not a point of order for the Chair if an opinion is expressed by an hon. Member. It is certainly not against the Standing Orders of the House.
If my remark caused offence to any Opposition Member, I will happily withdraw it. To rephrase what I said, the hon. Member for Pontypridd was inconsistent in his argument.
There is obvious uncertainty about the data that HMRC presents.
Very much so. My hon. Friend makes a good point. It is also in the OBR report. These are the forestalling measures—[Interruption.] Labour assumes that people forestall for only one year and that the income will suddenly pop up the following year. That is not what really happens. Often people will take a long career break. [Interruption.] I shall give the hon. Member for Pontypridd, who is chuntering from a sedentary position—
Order. I will not accept this happening across the Committee. Right hon. and hon. Members should know better.
I will give the Committee an example. Let us say that I earn £150,000. Obviously, as a Member of Parliament, I do not, but let us assume that I did and that I did not feel like paying the 50p rate. What could I do? People’s response—the market response, if one likes—is to set up things such as personal service companies, and then we will not see the 50p tax rate again. They will shove money into their personal service companies and pay the small companies rate of taxation. They then sit tight and pay a very low dividend rate of taxation when they get the money out as and when they see fit. Alternatively, they do this trick where they loan themselves lots of money and pay an extraordinarily low beneficial loan rate of tax. I think that such behaviour is wrong. The Labour party ought to know about this not just because of Ken Livingstone but because others of them are up to it as well. They should come clean and be a bit clearer with the Committee about their understanding that people will avoid and forestall for good.
On a point of order, Mr Hood. You may not be aware of it, but the media are reporting that, contrary to what was announced to the House yesterday afternoon, Abu Qatada might have been arrested by the Home Office illegally because it had not consulted the European Court of Human Rights on the last available date to—
Order. I have heard enough of the hon. Member’s contribution to give him a ruling. That is not a point of order for me. He can request that the Government make a statement to the House on the media or television report to which he refers, and if the Government agree, they can do so. As I said, it is not a point of order for me to deal with in this debate.
We have a report that produces evidence. I can also assure the hon. Gentleman that the Government have made clear their determination to reduce tax avoidance, and have taken a number of steps to do just that.
Amendment 1 has created some confusion. The Opposition Members who tabled it propose that the additional rate for 2013-14 should be left out altogether. Unlike the 45p rate proposed by the Government, the higher rate of 40% would apply to income over the higher-rate threshold. I understand that Labour sources have been briefing this afternoon that the amendment deliberately leaves the top rate undecided. It does not leave it undecided; it abolishes it. The Labour party has found itself in an extraordinary position.
We have heard astonishing suggestions that we should accept the “static” argument, although, to be fair to the hon. Member for Pontypridd, he has been somewhat hesitant about simply quoting the static numbers as if they were acceptable. We must take account of the behavioural impact, and as we have seen more evidence, it has become clear that it has been greater than was anticipated.
The effect of the 50p rate has been damaging not just to the Exchequer in failing to raise the money that was anticipated, but to competitiveness. There has been a 29% increase in Britain’s—[Interruption.]
Order. I apologise for interrupting the Minister, but I cannot hear a word he is saying because of the noise made by his colleagues who are sitting on my right. I ask Members to give their own Minister some order when he is winding up a debate.
Thank you, Mr Hood.
As I was saying, there has been a 29% increase in the number of Britons given permission to work long-term in Switzerland, and the United Kingdom has become less competitive. As a result of our reforms—the additional measures that we are taking to cap charitable and other reliefs, and the measures we are taking to deal with avoidance—27% of revenue from income tax will come from the top 1%, who paid between 20% and 25% under the Labour party.
The reduction in the additional rate is understandably controversial, but we should look at the evidence, not the Opposition’s rhetoric. The 50p rate did not raise the revenues that it was intended to raise, and what money it did raise came with a cost of damage to growth and competitiveness. This is not a sustainable position, so we are reducing the rate to 45p, providing certainty and clarity for those affected. That will mean a relatively small cost to the Exchequer and a significant boost to our competitive position. As the CBI has said,
“Reducing the 50p income tax rate will send a clear signal that the UK is open for business. We must continue to encourage top talent to live and work in the UK.”
This change is good for our long-term tax revenues, it is good for our economy, and it is good for the UK as a whole. I therefore ask hon. Members not to press their amendments, and propose that the clause should stand part of the Bill.
This is the second time that I have had to deal with a point like this and that is not a point of order for me. I have been chairing the Finance Bill Committee for the past two hours and I am unaware of whether anybody has been in touch with the Chairman of Ways and Means or with Mr Speaker himself about any such statement. That is a matter for the usual channels and not for me.
Clause 209
The Bank Levy
I beg to move amendment 5, page 121, line 19, at end add—
‘(2) The Chancellor of the Exchequer shall review the possibility of incorporating a bank payroll tax within the bank levy and publish a report, within six months of the passing of this Act, on how the additional revenue raised would be invested to create new jobs and tackle unemployment.’.
With this it will be convenient to discuss clause stand part and schedule 33 stand part.
It is a pleasure to serve under your chairmanship, Mr Hood—the first chance that I have had to say that today.
Clause 209 and our amendment to it, amendment 5, relate to the bank levy. The point of the amendment is to raise the issues that Opposition Members believe ought to be at the forefront of the Government’s thinking and at the heart of their Budget: what we do to stimulate growth and, in particular, to generate jobs in our economy. Crucially, on a day when we have seen yet another report, this time from the Institute for Public Policy Research, on the scarring impact of long-term unemployment on, in particular, young people, and on a day when we still see 1 million young people languishing on the dole, it seems to me a very easy argument and a very simple point to make to the Government that such issues ought to be at the forefront of not just our mind but theirs.
This aspect of the Bill, the bank levy, offers an opportunity for the Government to do something to fill the gaping hole at the heart of their Budget when it comes to creating growth and generating jobs. There is not a single word in the Budget or in the Bill about the problem of youth jobs, and that is a crying shame, so I hope that the Government will later today amend that omission.
In a moment I shall discuss the background to the bank levy, but to begin with I shall draw together some of the common themes that run through my remarks and the Bill—themes from the debate that we have just had on clause 1 and this debate on clause 209 and the bank levy.
First, I want to raise some questions about the Government’s competence. Clause 1, the profound uncertainty about Government decisions, the other more general decisions in the Budget in relation to VAT on caravans and on pasties, which we will debate later, and the various other curious measures that they have brought forward have all already raised enormous and pressing questions about the competence of the Chancellor and the Government when it comes to managing our economy.
Secondly, there are questions about certainty. Earlier we debated the HMRC report on the Exchequer effect of the 50p rate, and Opposition Members such as the hon. Member for East Antrim (Sammy Wilson) and my hon. Friend the Member for Rhondda (Chris Bryant) asked significant questions about the accuracy of the Government’s modelling in that report and the accuracy of the claims that only £100 million will be lost to the Exchequer. There are further questions to be asked about the accuracy with which the Government have measured the impact of the bank levy to date and juxtaposed it with the rates of revenue which were raised by the bank bonus tax that the previous, Labour Government introduced.
Thirdly, there is a crucial set of questions about values and priorities, because both the clauses that we have debated to date and the clause before us raise questions about the priorities and values of this Government versus those of the Opposition. Those questions do not reflect terribly well on this Government, Mr Gale, it is a pleasure to welcome you to the Chair—[Interruption.] Sir Roger, of course. How on earth could I have forgotten? Sir Roger, welcome. It is a pleasure to serve under your chairmanship.
I suggest that the Government could simply do the decent thing today by deciding to retain the bank levy but also introduce a bank bonus. That would be the wise thing to do, and it would set about raising the revenue that could be used to try to create 100,000 jobs for young people.
(13 years, 7 months ago)
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I am grateful to you for giving way, Mr Hood, and I apologise for missing the start of the debate.
Thank you, Mr Hood. I will get used to the conventions of this place eventually. The Minister has responded to my hon. Friend the Member for Edinburgh East (Sheila Gilmore) on the subject of basic bank accounts. One point that I regularly heard from the BBA, the Royal Bank of Scotland and HBOS, as it was at the time, was that if the staff in local branches were not able to offer a full bank account to potential customers, they did not then offer a basic bank account. Will the Government consider issuing guidance on that through the BBA to ensure that people who do not meet the criteria for a full bank account are automatically offered a basic bank account?