Finance (No. 3) Bill

John Howell Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Alex Burghart]

My hon. Friend quotes Cicero far better than I ever could, and I regret only that she did not do so in the original Latin—we can hope for such things next time.

[John Howell (Henley) (Con)]

I am not going to quote Cicero, although I am perfectly able to do so, but I think the debate needs to progress as it should do. Is the cut in stamp duty, particularly for shared ownership schemes, going to have a major impact? Has my hon. Friend done any assessment of how much that is going to affect the people who are trying so desperately hard to get on to the housing ladder in his constituency and in mine? Does he have anything to support this argument?

[Alex Burghart]

I have no doubt that a cut in stamp duty will help homebuyers across the country, in my hon. Friend’s constituency and in mine. I am lucky to represent a constituency in Essex, near London. Our area has much to recommend it, but the price of housing is high. We are going through a programme of home building, reflecting the Government’s broader ambitions. I know from knocking on doors and speaking to young people and their parents that it is difficult to get on that housing ladder. Every incremental improvement that this Government can make on things such as stamp duty helps to make the dream of home ownership a reality for those young people and their families.

--- Later in debate ---

[Rachel Maclean]

I am sorry, but as much as I enjoy debating with the hon. Gentleman, I will not take any more interventions because I do not have much time and I have taken one already.

We have heard a lot of philosophy tonight. I will not quote Cicero again, but I will draw the House’s attention to the Jewish philosopher Maimonides who said more than 2,000 years ago that the greatest form of social justice and charity is to start a business and to create jobs. Therefore, I reject the Opposition’s amendment on the entrepreneurs’ relief. However, we should definitely keep it under review, and I am absolutely sure that the Treasury will do so because we on the Government Benches want to ensure value for taxpayers’ money in all the things that we do. We recognise that we are spending not the Government’s money, but our constituents’ money, and we need to do that carefully.

I now wish to address the movement on the tax thresholds, because this relates to a fundamental Conservative value.

[John Howell]

Will my hon. Friend give way?

[Rachel Maclean]

I am sorry but I will not give way. I only have a couple of minutes left. Please forgive me.

The movement on the tax thresholds is a fundamental point at the heart of our Conservative philosophy, which is freedom of the individual to spend their own hard-earned money how they wish. What this Budget and this Finance Bill are doing is taking people out of tax. A basic rate taxpayer will pay £1,205 a year less than in 2010, when Labour left office, and that is, effectively, a pay rise for those people, leaving them with more money in their pockets.

Let me say this to the Opposition: they often talk about how they want people to pay more tax. Well, people are free to pay more tax voluntarily, but, surprisingly enough, that is not often what people do. What we do see as a result of our tax policy of lowering tax rates is a greater tax take coming into the Exchequer. We see that fundamental principle illustrated time and again because of the policies advocated and enacted by the Government. It is right to lower the tax thresholds for low and middle-income earners. In fact, the shadow Chancellor and the shadow Chief Secretary do not even oppose that; they agree that we should keep those tax thresholds low. We need look no further than corporation tax, as those receipts are up 50% to £53.6 billion because of the lowering of the rate that has happened under this Government. That is £53.6 billion more for this Government to spend on strong public services up and down the country.

--- Later in debate ---

[Mel Stride]

May I say what a pleasure it is to serve under your chairmanship, Dame Eleanor?

Let me first pick up on some of the comments made by the hon. Member for Aberdeen North (Kirsty Blackman), speaking from the Scottish National party Front Bench. She raised the issue of the higher rate threshold in clause 5 and asked whether the Bill might be organised in a slightly different manner. The most important thing is that we have put forward the information in a simple and straightforward way. As I am sure she is aware, the rise to the basic rate limit is dealt with in clause 5(1), with the amendment to £37,500 in the Income Tax Act 2007. That of course gets added to the personal allowance. The higher rate threshold is UK-wide for both dividends and savings income, which is what the amendment to the Income Tax Act deals with and focuses on.

Clause 5(2), Dame Eleanor—as I know you and other Members of the House will be aware, having read this Bill in significant detail—deals with the rise in the personal allowance to £12,500, which once again is a UK-wide scope. Therefore, it is appropriate that it is in a clause that is not subject to the provisions of English votes for English laws.

Clause 5(4)—I notice the hon. Member for Aberdeen North looking at this quite closely—also breaks the link between the personal allowance and the national minimum wage, which is once again a UK-wide measure. On the hon. Lady’s very specific point, it is appropriate that all these measures are contained within one clause.

The hon. Lady also mentioned the national minimum wage and the level at which it is set for those aged 16 to 24. She will know that a review is currently being conducted by the Low Pay Commission, which will report in spring 2019, although the commission has said in the past that increases up towards the level of the national living wage—which is what I think the hon. Lady is seeking—may have a detrimental impact on the level of employment. Of course, this Government have overseen a halving of the level of youth unemployment since 2010, something of which we are justly proud.

The hon. Lady brought up the issue of raising the personal allowance to £12,750, in line with her party’s new clause 19. The important point is that we have been able to raise the personal allowance from around £6,500 in 2010 right the way up to £12,500, taking about 4 million of the lowest paid out of tax altogether. That comes at huge cost, and the estimated cost of going still further, to the level that hon. Lady suggests, would be of the order of £1.5 billion. For that reason, we believe that the very significant rise that we have put in place is proportionate and should be welcomed by many of the lowest income earners, whom the hon. Lady quite rightly seeks to protect.

The hon. Lady raised the issue of poverty, as did a number of other hon. and right hon. Members. I remind the Committee that there are 1 million fewer people living in absolute poverty than in 2010, including 300,000 children. It is also the case that there are two thirds of a million fewer children living in workless households. We have heard a great deal about the importance of employment and our record on employment, with virtually the highest level of employment in our history and the lowest level of unemployment since the mid-1970s. Work is a very important route out of poverty and we have a strong record in that respect.

A number of Members mentioned entrepreneurs’ relief. The hon. Member for Aberdeen North suggested that the shift from the one-year to the two-year qualifying condition might actually impose a hurdle to entrepreneurship—I think that was the expression she used—but we see it as important that we at least have entrepreneurs who are not in and out within a period of 12 months, but who are actually there for the longer term. Of course, the Labour party seems to be entirely hostile to the whole notion of an entrepreneurs’ relief, which is not surprising given the general approach it seems to take towards business.

[John Howell]

Will my right hon. Friend comment on the fact that entrepreneurs’ relief is aimed at securing longer-term investment? This country has been very used to short-term investment, but it has done nothing for us. We need people to invest in the longer term.

[Mel Stride]

My hon. Friend is exactly right. This is why we also have the enterprise investment scheme and the seed enterprise investment scheme, and why we have made this change to entrepreneurs’ relief. An interesting fact is that of those who benefit from the entrepreneurs’ relief, around a third go on to reinvest in further businesses, so those tax savings are being reinvested in further economic activity.

I turn to the comments of the hon. Member for Bootle (Peter Dowd), who made a number of important points—or, should I say, he made a number of points about important matters? That might be slightly more to the point. However, I agree entirely with my hon. Friend the Member for Brentwood and Ongar (Alex Burghart), who is no longer in his place; I have a great affection for the shadow Minister, particularly the Plutarch and Cicero quotes of which he is most fond. In fact, I will share one with him that does not apply to him in any way, of course:

“Any man can make mistakes, but only a fool persists in his error.”

I think that is probably more appropriate to the leader of his party than to the hon. Gentleman himself.

The hon. Gentleman raised the issues of the amount of tax burden shouldered by the wealthiest in the country. I remind him that under this Government the wealthiest 1% pay a full 28% of all income tax; it was about 24% when the Labour party was in power. As my hon. Friend the Member for Gloucester (Richard Graham) pointed out, the lowest 20% of earners have benefited the most since 2010, from the combination of changes to tax, the national living wage and other factors.

The hon. Gentleman mentioned the UN rapporteur and my appearance on Channel 4. I have to point out that the rapporteur produced, I think, a 24-page report based on around two weeks’ fact-finding in this country. The Government’s view is that the conclusions drawn were disproportionate to say the least. The hon. Gentleman suggested that I did not answer the questions put to me on that particular occasion, which I dispute. However, it is indisputable that he failed to answer the question of my hon. Friend the Member for Cheltenham (Alex Chalk) as to exactly what the Opposition would do with the personal allowance, given the exception that they are taking to our tax measures in the Budget.