Amendment of the Law

Kate Green Excerpts

Thursday 22nd March 2012 Commons Chamber

[Vince Cable]

I am sorry; I do not follow the logic of the question. The Budget is of course fiscally neutral. I have just quoted figures, which the Office for Budget Responsibility has validated, which show that pensioners as a whole will gain five times as much from the increase in the pension and from pension tax credits as from the change in allowances.

[Kate Green (Stretford and Urmston) (Lab)]

What will the Secretary of State say to people who have saved into a pension all their working lives and who have only modest additional pension provision to rely on, but who will now, completely unexpectedly, see the reward for making that effort to save wiped away?

[Vince Cable]

There is a genuine issue about pensioners with limited income, much of it savings income, which has been progressively ignored over the years. I have fought very hard in Parliament on the issue of annuities reform, as have many colleagues, particularly on the Government Benches. Many of the people the hon. Lady describes are annuitants who have been severely squeezed by the very low interest rates. Despite numerous appeals to the previous Government, absolutely nothing was done about annuity reform. We have made an absolute commitment to end compulsory annuitisation, which will offer far more practical help than any of the things that she and her colleagues are describing.

Let me turn to these millionaires. I agree with the Chancellor that the decision to cut the top rate of tax from 50p to 45p was economically the rational thing to do. I want to focus the debate not on symbols but on substance. I share the emotional reaction of the many people who are disgusted to hear pampered financiers whinging about their taxes. On an emotional level, nobody can sympathise with that. However, we have to deal with the practical realities that were burned on my consciousness as a result of sitting in my place on the Opposition Benches for 13 years, exchanging views on the top rate of tax with successive Labour Ministers from Blair to Brown to Balls. Year after year, they would tell the Liberal Democrats that it was economically stupid to raise the top rate of tax above 40%. That was their message, year after year. Then, a few weeks before the end of their Government—I think it was 57 days—they introduced the 50p rate in order to create a political dividing line. That decision had nothing whatever to do with economics. The point that they had been making over all those years was that raising the top rate in that way would raise relatively little revenue.

Despite the casuistry of the shadow Chancellor’s intervention a few moments ago, in trying to argue that vast sums of money had been sacrificed, line 3 of the scorecard makes it absolutely clear that we are talking about a revenue loss of £100 million a year. That figure has been endorsed by the Office for Budget Responsibility. The changes that have been introduced in the Budget, including increased taxation of high-value property, plugging loopholes and much tougher anti-avoidance rules, will bring in at least five times that amount.

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[Mr Evennett]

I am grateful for my hon. Friend’s support. As the Mayor of London has said, a new crossing at Silvertown is essential. It will enable commuters and business traffic to get to their destinations quicker, and it will relieve the pressures on the Blackwell tunnel. In order to ensure the regeneration of south-east London, such public sector projects and investment are essential, and I welcome the Government’s commitment to look further into this crossing and to support other investment to improve our infrastructure.

I commend my right hon. Friend the Chancellor on his measures on taxation and families. Conservatives instinctively believe in lower taxation, not only because it allows people to keep more of their own money, but because they then have more choice in how their money is spent. Government do not always know best. They have a role to play, but people will spend their own money more effectively; it is not for Government to tell people what to do. Unlike the Labour party, which always believes in increasing taxation, we believe that people who have worked hard should have the opportunities to get on with their lives and careers, and to spend their money as they want. I therefore welcome the Chancellor’s aspiration to raise the personal tax allowance to £10,000 as soon as possible. That is good news for all working families on low incomes.

In government, Labour professed sympathy for working families on low incomes but did little to help them—in fact, Labour hindered. We did not hear anything in the shadow Chancellor’s speech about the failings of his Government. They allowed families to get worse off, and the increase in poverty was greater under Labour. This Government do not believe that people should be allowed to remain on benefits for ever because benefits are more attractive than working and earning. That is unacceptable. We are, therefore, grateful that we are changing the benefits regime and helping people with the tax regime, so that work does pay. That is fundamental.

Under this Government, great progress has been made in the past two years, with personal allowances going up by 25%. This year there is to be another rise and next year, in April 2013, there will be an additional rise in the personal allowance of £1,100. That is a real, positive advance for people on low incomes, allowing them to keep more of their money. I particularly welcome the fact that some 2 million people will no longer pay any income tax; they are on low incomes and they should not be paying income tax. It is the Conservative-led Government—a coalition Government—who are doing this, and I welcome the Business Secretary’s speech, which highlighted what the Government are doing and the logic behind it.

[Kate Green]

I note the hon. Gentleman’s welcome for families being lifted out of income tax. How does he react to the fact that 230,000 pensioners are being brought into the ambit of taxation for the first time by this Budget?

[Mr Evennett]

The whole aspect of what we are looking at is increasing pensions and helping pensioners. This Government have done a lot more than the Government whom the hon. Lady supported—they gave a miserable 75p increase in the pension a few years back. Our Government are putting up the pension this year by more than 5%, which is a record and an achievement for this Government. We will take no lectures from the hon. Lady, because her Government let pensioners down.

Nationally, a total of 24 million people will receive a tax cut thanks to this Budget. That is good news for individuals, for families and for the economy. This Conservative-led coalition is proceeding to help working people, and the Opposition do not give us credit. I was disappointed with the shadow Chancellor’s speech. I usually listen to him with great interest, but he did not allude to anything that Labour would do if it were in government or to Labour’s failures when it was in government.

The family is the backbone of our society, and the issue of child benefit is always difficult. Fairness remains the key, and the original changes proposed caused considerable difficulty. I am pleased that the Chancellor listened to our concerns, and those of constituents, that the proposed changes were not really acceptable. By amending the proposals and tapering the benefit from an annual income of £50,000, some 90% of families will continue to benefit from financial support during these difficult financial and economic times. This Government are listening and changing policies after representations have been made, and that is to the credit of the Chancellor and the Treasury team.

Red tape, bureaucracy and taxation all adversely affect businesses. I welcome the news that more is being done to support small businesses and manufacturing. The investment in apprenticeships, lower corporation tax and extra support for start-ups will make a real difference. In addition, we heard the innovative idea of a student-style loan for young people to allow them to start up their own businesses, and I welcome the fact that the Chancellor is examining it. It would allow 18 to 24-year-olds who are keen on a business career to be helped. We all know that university is not for everybody; people may not want to go there and may want to go into business instead. So we need to provide the same sort of help for young entrepreneurs, whom we desperately need in this country, to enable them to go forward to make their name and their fortune. I welcome the fact that the Government are willing to examine that.

My constituency contains a number of innovative manufacturers, such as Texcel Technology in Thames road, Crayford, which I visited last month. I was really impressed with the dynamism of its leadership and its focus on high-tech products. I recently nominated it for the Made by Britain project. The NEPTUNE project, for which the company has provided power and switching solutions, will help to develop our understanding of the ocean and of many biological, chemical, physical and geological events that take place. I am pleased that such a successful firm in my constituency has designed and manufactured such innovative components for this international project. People at the firm were looking to the Government for some action and will be delighted with what the Government have proposed in the Budget to enable small firms like theirs to prosper and develop.

I know that the firm is concerned about regulations, bureaucracy and, of course, tax, so it will welcome the parts of the Budget dealing with business. Business is vital to our society; it makes the money and creates the wealth that allows us to invest in education, hospitals, all the other public services, pensions and all the rest that we want to invest in. If we do not allow business to flourish, we cannot make that wealth and we cannot have the taxes that come with it. This Government are focusing on those issues, to make sure that we are getting the wealth creation and the taxes from innovative small firms such as the one I mentioned.

We need to consider the whole of this Budget, as it works together as a rounded Budget, looking to the future. That is the great thing about what we saw yesterday from the Chancellor and the team; the Budget is looking to the future to make Britain better. It seeks to make Britain great again, as that will not come from the Opposition, after their 13 years. We remember how they “ended” boom and bust, and we remember all the things they had—the result was a disaster and it left us with the mess to clear up.

In conclusion, the Chancellor has been effective in looking to policies to solve our economic and financial situation. The Budget demonstrates that this Government are firmly on the side of those who aspire to do the right thing for themselves, their families, their businesses and this country, and I strongly back it.

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[Pauline Latham]

I do apologise, Mr Speaker.

The change to child benefit is also something that we should welcome, as it shows that the Chancellor has listened to what people out there have been saying. There will not be a cliff edge, as people have suggested, and no one earning £50,000 or less will lose anything. Only when people earn more than £60,000, which is quite a lot of money, will they lose their child benefit.

[Kate Green]

None the less, would the hon. Lady acknowledge that the Chancellor has been unable to resolve the anomaly whereby a couple earning £98,000 between them might be able to keep their child benefit, while a single parent on an income of £49,500 would not?

[Pauline Latham]

What the Chancellor has done is prevented us from having to go through a huge amount of paperwork that would have cost the country an awful lot of money. People might say, “Oh, but we don’t live together. We used to, but we are no longer together.” There will be so many loopholes, but he has done a good thing by going up to £60,000. I think that the majority of people in this country would agree with that, although of course Labour Members will not.

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[Kate Green (Stretford and Urmston) (Lab)]

All Budgets have a tendency to create both winners and losers, but this Budget, unlike others, appears to create winners and losers in an inconsistent and illogical manner and without any clarity of guiding values or objectives.

[Mr Bain]

My hon. Friend is showing her customary generosity in giving way. I anticipate that she might make the point that 70% of the cuts in tax credits will affect people in the lower half of the income scale, but the Resolution Foundation determined yesterday that 70% of the gain from the change in the personal allowance will go to people in the top half of the income scale.

[Kate Green]

My hon. Friend does indeed anticipate my first point. Although there is of course an attraction in lifting more people at the bottom of the wage spectrum out of tax, it makes little sense to introduce a measure that still favours more men than women when women have already lost out under previous Budgets and spending announcements.

[Mr Tom Clarke]

On that point, which I dealt with briefly in my speech, is it not a great worry that female unemployment has risen by 22,000 in the past year, adding to the problems that were already there?

[Kate Green]

It is of deep concern to me, as I am sure it is to you, Madam Deputy Speaker, that female unemployment is now the highest it has been in a quarter of a century and that it was female unemployment that rose most rapidly in the last quarter, considerably outstripping what is happening to men.

I find it difficult to understand the fairness or logic of introducing a higher tax threshold that lifts some low-paid workers out of tax while at the same time disincentivising many other low-paid workers who are seeing their tax credits frozen or lost altogether if they cannot reach sufficient hours, to the extent that work will become hardly worthwhile for them at all. I cannot see the logic of the Government telling pensioners that on the one hand they will give to them through the triple lock, which I welcome, but with the other hand they will take away from them by raising the threshold and bringing 230,000 of them into tax, while at the same time trying to take people in low-paid work out of tax.

I am struggling to understand how a Government who said that they wanted to be fair and to operate a system that was simple can have arrived at the decision they reached on child benefit, according to which a couple with an income just short of £100,000 will be able to keep all their child benefit but another couple where only one member of the household has an income, but it is in excess of £50,000, will not. How can that be fair? How can a system be simple when it starts to claw back at the rate of 1% for every £100? How will people know where they stand in relation to their child benefit entitlement, and where is the incentive to work more and earn more in such a context?

I am struggling to understand why a Government who want to be progressive, who say that that is their reason for moving away from universal child benefit, which I hugely regret—I want to put on record that I absolutely stand by universal child benefit—and who say that they think there needs to be more progressivity, as they see it, in the way they administer child benefit, then introduce less progressivity in income tax by cutting the top rate from 50p to 45p when, as the OBR has said, there is considerable uncertainty that such a measure will deliver the tax receipts that the Government seem to believe will be brought into the Exchequer. With respect, I think that the Chancellor was a little over-optimistic in his analysis of the OBR’s comments on the likely efficacy of that measure, and it is also unclear to business commentators that the measure will be good for our economy.

Let us be clear that our corporation tax, even before this Government took office, was by no means among the highest in the developed world. I am interested in how a Government who make great play of seeing small businesses as the future of increasing employment, who want to reduce corporation tax, who are on a downward trajectory in relation to it and who want to enable small businesses to employ more workers have failed to notice that the very smallest businesses are completely unaffected by the cut in corporation tax because they already have a tax rate of only 20%. What are the Government doing to support those businesses when what they would really like is effective measures on employers’ national insurance contributions, something that again the Government have managed to address only in a most limited way?

[Lorely Burt]

What we are doing for small businesses, which will alleviate many administrative difficulties, is introducing measures such as cash accounting on cash flow, so we are working hard to help them in every way we can. We are also amalgamating national insurance with the other forms of tax paid so that only one lot of tax is collected.

[Kate Green]

It is not that everything the Government are doing is necessarily bad, but overall it is woefully insufficient in relation to business and not what the smallest businesses have been talking to me—or I suspect to the hon. Lady in her constituency—about. They have been talking about employers’ national insurance contributions, business rates and their concerns about the rise in VAT, which means that there is pressure on their turnover, but in the Chancellor’s statement yesterday the Government had nothing to say about any of those issues.

I should like to say a little about welfare and pensions. On welfare, I share with many of my right hon. and hon. Friends the deep concern that, after £18 billion of social security and tax credit cuts already from this Government, the lowest-income households in this country now face a further £10 billion of cuts. That will mean a hit on disability benefits and on the benefits that enable people to reach basic living standards. When the Government publish on people’s tax statements, as they say they will, a breakdown of where their spending has gone, I hope that they show in great detail who the losers are from that welfare spending. A broad-brush statement, “This is what is spent on welfare,” will not tell people that carers, the disabled and people raising children are actually the losers, so I hope that such information appears on the tax statements that the Government produce.

Finally, the Government propose to keep the state pension age under review in line with rising longevity. That, too, is a measure that will deliver greater inequality, because it will penalise most of all the poorest, who already have poorer health outcomes and poorer life expectancy, and those doing manual and hard, physical jobs. So buried in the detail there is considerable injustice, unfairness and inconsistency, and I shall vote against the Budget on Monday.