Balanced Budget Rule

Debate between Julian Knight and Peter Dowd

Wednesday 23rd January 2019 Westminster Hall

[Peter Dowd]

First, I did not make the latter point. The Tories can make up their own policies on the hoof—but don’t make up ours. Secondly, the Minister still has not answered the question. It has nothing to do with the outcome; it is about why the Government, if they are so economically capable and confident, have missed all their targets.

[Julian Knight (Solihull) (Con)]

He has already answered you.

[Peter Dowd]

No, he hasn’t.

Finance (No. 3) Bill

Debate between Julian Knight and Peter Dowd

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

[Julian Knight]

My hon. Friend answered the hon. Lady’s intervention better than I did, so I do welcome what he said.

Let me sum up. In its treatment of tax thresholds and stamp duty, the Bill lays out a fairer tax system. It is a tax system predicated on a better society, and it is a system where people who can pay have to pay their fair share, but where that is achieved without being punitive and without, frankly, trying to put dogma over the reality of the situation.

[Peter Dowd (Bootle) (Lab)]

I am glad to have this opportunity to debate the issues surrounding new clauses 1, 2 and 3 in my name and the names of others in the Committee of the whole House, and to discuss them in the context of the Government’s attempts to distract attention from their woes. We have just had a lesson in voodoo economics from the hon. Member for Solihull (Julian Knight).

Members need to pay attention to Labour’s proposals in relation to new clauses 1, 2 and 3, but I must first point out that, in response to the Government’s authoritarian restrictions on amending this Bill, we had asked whether the entire legislation could be debated on the Floor of this House. That would at least have ensured a scintilla of constructive discussion among Members on the whole Bill. Alas, our request was denied by the Government, and we are left yet again asking for reviews and assessments as set out in our new clauses. It is important none the less to get these issues about child poverty out into the open. The Government increasingly seek to implement their austerity agenda—for that is what it is—behind closed doors. They will no doubt see our new clauses as an irritant that would highlight the differences between a slash-and-burn approach to public services by the Government juxtaposed with a policy of investment, renewal and rebuilding from this party based on a fair taxation system, as identified in our new clauses.

The Government have practised their manoeuvres in Committees that they have stitched up to give themselves the majority, which they do not deserve, and they do not have the guts to allow proper amendments to their Bill. No Minister has had the decency to defend that position and it is pretty pathetic. The electorate did not give them that mandate, but they arrogantly take it in any event, so it is important that we debate and tease out the issues that we have set out in new clauses 1, 2 and 3.

Tax Credits (Working Families)

Debate between Julian Knight and Peter Dowd

Tuesday 7th July 2015 Commons Chamber

[Julian Knight (Solihull) (Con)]

It is a particular pleasure to follow the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), the Father of the House.

Tax credit payments play an important role in the finances of many of my constituents, helping them to provide for childcare, meet ongoing expenditure and, crucially, join the workforce. My constituency is the prosperous town of Solihull, but there is still a legion of very hard-working people on not particularly high salaries who are helped by tax credits. I remember one door I knocked on in Shirley about a year or so before the general election. I met a young couple who told me that they both worked full time, brought up two children and earned something like about £20,000 a year between them. They had to drive around in a 15-year-old car. Their lives were difficult financially and tax credits really helped them to get over a hump in the road. It would therefore be wrong to lose tax credits overnight without proper recompense through the tax system and other means of helping individuals. Incidentally, the couple also commented on how the state provided for people local to them who did not work, but had a much higher standard of living—a strong argument for a sensible cap on benefits, with which it seems that the shadow Chancellor now agrees.

We should not pretend, however, that tax credits are perfect. When they were launched, there was a massive problem with over and underpayments—2 million instances in the first year alone—and this has not stopped. Okay, they are better managed by Her Majesty’s Revenue and Customs, but there is still a great deal of confusion in the tax credits system. If we were designing a system now to help people into work and to support families, would we really design tax credits with the inbuilt pitfall of overpayments that must then be clawed back, often to the great personal distress of the claimant?

There are also long-standing issues of fraud in the tax credits system. The online portal was closed in 2005 when tens of millions of pounds was defrauded, much of it by organised gangs from overseas. I remember reporting on the story in my capacity as BBC News personal finance correspondent and being told by officials that although it was unfortunate, the fraud was seen as a price worth paying to deliver the project. The phrase used was “spray and pay”.

In addition, there is an issue, touched on by hon. Members, about how tax credits effectively top up low pay in the economy. They are effectively a subsidy for big business. I note that the hon. Member for Birmingham, Ladywood (Shabana Mahmood) disputed this fact, but that august publication, The Guardian, carried a story on 20 April saying that £11 billion was being used to top up low pay through the tax credits system.

There is also a strong cultural issue. Does it not damage society and individual entrepreneurialism to have so many people effectively in receipt of welfare and beholden to the state, as my hon. Friend the Member for South Suffolk (James Cartlidge) asked earlier? As we have seen in Greece and elsewhere, over-reliance on the state damages society and leaves individuals incredibly vulnerable to global financial shocks, as well as domestic economic shocks. He made an interesting point about whether many loans that are now active are predicated on tax credits. Surely that needs to be investigated further by the Financial Conduct Authority.

Also, it is possible that some governing parties have used tax credits as a means by which—heaven forbid—to curry favour with the electorate. We should not forget that the biggest rises in tax credits came just before the 2005 and 2010 general elections. Is it not significant as well that tax credit spend rose by 340% between 1997 and 2010, whereas average salaries rose by only 30%? Tax credits have increased by 10 times the level of average salaries, drawing more and more people into dependence on the state. There is also the wrongheaded situation of people on salaries far in excess of the national average being dragged into tax credits. In particular, single people often do not get any help whatsoever, yet the pattern in this country is of more single households being formed.

No Government Member has so far suggested that tax credits should be done away with overnight. They should, however, be replaced slowly over time by a different, cleaner system less open to fraud and miscalculation. For me, increasing the personal allowance, from £10,000 to £12,500 and potentially beyond, is key. We should cut out the middle man. There is no need to claw cash back. It is also essential to raise the 40p personal allowance. There are many people paying tax at 40p in the pound who should not be; the system should not have been so designed that they have to pay it.

We are doubling the amount of free childcare from 15 hours to 30 hours—a key means by which to enable people to get back into the workforce—while fuel duty is now 18p cheaper than it would have been under Labour’s plans, which has made a massive difference to family finances. In addition, ending the green levies on energy, including home energy supplies, should press down on home energy costs. In Solihull, we have just managed to freeze council tax for the fifth year on the trot—another means of delivering tax cuts, in effect, when compared to inflation, for working people. This has happened while unemployment in my constituency has fallen by 67% since 2010.

[Peter Dowd (Bootle) (Lab)]

Does the hon. Gentleman agree that the Chancellor was very specific about how he intends to cut tax credits for poorer working families, but very woolly about how, as part of the so-called long-term economic plan, he would encourage employers to pay decent wages?

[Julian Knight]

rose—