Oral Answers to Questions

Debate between Lord Austin of Dudley and David Gauke

Tuesday 24th April 2012 Commons Chamber

[Mr Gauke]

I am grateful to my hon. Friend for his support for the policy. As we said at the time of the Budget and in the Budget document, we are looking to explore with charities dependent on large donations how this can be implemented without it having a major impact on them. Of course, we will take into account the concerns of universities and others.

[Ian Austin (Dudley North) (Lab)]

Why does the Chancellor think his Budget is now widely seen as a complete and utter shambles?

Finance (No. 4) Bill

Debate between Lord Austin of Dudley and David Gauke

Thursday 19th April 2012 Commons Chamber

[Mr Gauke]

I will deal with that in my remarks on child benefit, which we will debate shortly. The idea of people having the same personal allowance whether they are 64, 65 or 75 seems to me perfectly sensible.

The changes made by the clause will help ensure that people get the allowances to which they are entitled, pay the right amount of tax and make it more straightforward for Government to administer, thereby minimising costs to the taxpayer. A 2009 report from the Public Accounts Committee commented that the age-related allowances were

“complex and hard for older people to understand and place too much emphasis on older people having to prove their eligibility, resulting in errors in claims and potential overpayments of tax”.

In March this year, the Office of Tax Simplification published its interim report, “Review of Pensioner Taxation”, which highlighted no less than nine complexities in relation to the age-related personal allowance. One of the main sources of complication is the taper, which we have heard about in the debate this afternoon. The taper removes an individual’s personal allowance where their income exceeds £24,000 at a rate of £1 for every £2 over this limit, up to the point at which their personal allowance is the same as that for an individual born after 6 April 1948. This creates a 30% effective marginal rate of tax for individuals on relatively modest incomes and brings people into the self-assessment system when, in most cases, they would otherwise have no need to complete a tax return.

For some, in particular people whose tax affairs have previously been entirely dealt with under the PAYE system through their working lives, and who have therefore had nothing to do with HMRC, this can be a challenge. They now find themselves having to complete forms and tax returns for HMRC because they may be affected by the taper when they reach the age of 65. The changes made by the clause, alongside the increases that we have made to the personal allowance, mean that we can now simplify the system of personal allowances. This will remove complexity and confusion for some taxpayers. But nobody will lose out in cash terms as a result of these changes.

Let me emphasise that point. As a result of these changes, nobody will lose out in cash terms. In fact, half the people over 65 in 2013-14 will pay no income tax at all and are unaffected by these changes. Those who are affected by the withdrawal of age- related allowances will benefit from a £1,100 increase in the personal allowance.

[Ian Austin (Dudley North) (Lab)]

The Minister said twice that nobody would lose out in cash terms. Can he tell us how many people will lose out in real terms?

[Mr Gauke]

The number affected is very clear. We have published it in the tax information impact note. It is 4.4 million people, as we have made clear throughout. But as I say, nobody loses out in cash terms, and the increase in the personal allowance is the largest increase ever.

Oral Answers to Questions

Debate between Lord Austin of Dudley and David Gauke

Tuesday 6th March 2012 Commons Chamber

[Mr Gauke]

We are cutting down on tax evasion. Whereas under the previous Government tax evasion coverage was reduced—the number of staff dealing with tax evasion was reduced—it can be seen that the number of people working on tax evasion in HMRC is now increasing.

[Ian Austin (Dudley North) (Lab)]

9. What assessment he has made of the effect of fiscal policy on the level of economic growth in 2011.

Living Standards

Debate between Lord Austin of Dudley and David Gauke

Monday 5th March 2012 Commons Chamber

[Mr Gauke]

There is so much wrong with that that I do not know where to start. Perhaps I will begin by pointing out that, at the last general election, our interest rates were at more or less the same level as those of Italy and Spain, yet there is now an enormous difference between us. I am afraid that the hon. Gentleman is wrong.

[Ian Austin (Dudley North) (Lab)]

rose—

[Mr Gauke]

I am going to make a little progress.

We know, given the constraints that we face in the public finances, alongside high commodity prices and international uncertainty, that these are tough times for many families. That is why we have taken substantial steps to protect living standards, and to ensure that we support our poorest and most vulnerable families. Even as we cut the deficit, fairness has been at the very core of our spending plans. We will not let our poorest and most vulnerable families bear the consequences of the previous Government’s failures. That is why we have secured the largest ever cash rise in the basic state pension, and why we have uprated working-age benefits by 5.2% to protect the real incomes of the poorest.

--- Later in debate ---

[Mr Gauke]

My hon. Friend makes a good point. If we are to find practical ways of improving living standards, the work that she is undertaking is exactly what we need to be doing. We need to ensure that we have an effective environment in which parents can work and child care costs are manageable.

[Ian Austin]

Will the Minister point me to the bit of the Conservative manifesto that promised hard-working families that they would lose their tax credits and be better off out of work, and to the bit that promised other families that if they had a pay rise that took them into the 40p band they would lose their child benefit and be much worse off, too? Will not people who voted Conservative at the election feel utterly betrayed by the introduction of these anti-work and anti-aspiration policies?

[Mr Gauke]

The people who voted Conservative at the election, and indeed others, recognise that this Government are prepared to take difficult decisions to get the public finances on track to provide the long-term credibility that our public finances need and to ensure that our economy can grow strongly once again. By sticking its head in the sand and opposing every step taken to get the deficit under control, the Labour party does itself no favours.

--- Later in debate ---

[Mr Gauke]

I want to make some progress.

We are limiting the increase to Transport for London and regulated rail fares, funding South West Water to enable it to cut bills by £50 per year for households that currently face the highest water bills in the country, setting aside an extra £675 million for local authorities in England to freeze or reduce council tax in 2012-13, and providing real help for households that are feeling the squeeze. We are deferring the fuel duty increase that was due to take effect on 1 January to August this year, while also cancelling the further increase in August. As a result, tax on petrol will be a full 10p lower than it would have been, and families will have saved £144 on the cost of filling up the average family car by the end of next year.

[Ian Austin]

Will the hon. Gentleman give way?

[Mr Gauke]

No, I am going to make a bit more progress. I have already given way to the hon. Gentleman once, and I think that that was enough for all of us.

It is because of our decisions that we have secured record gilt yields, feeding through to record low and stable interest rates that make a real difference to families paying their mortgages and businesses refinancing loans throughout the country. If we are going to discuss a squeeze on living standards, let us discuss what an increase in market interest rates would mean for families throughout the United Kingdom. It would force taxpayers to find an extra £21 billion in debt interest payments, increase the cost of business loans by £7 billion, and add £10 billion to mortgage bills every year, an extra £1,000 for the average family—and that is just a 1% rise. Let me remind the House that when the Government came to office, our rates were tracking those of the likes of Spain and Italy, and that they are now close to those of Germany. It is because of the tough decisions that we have made to cut the deficit that the UK has broken ranks. In the last year alone, its rates have fallen by about 1.5%, whereas those of Italy and Spain have risen by almost 3%.

I know the shadow Chancellor considers that low interest rates are a sign of trouble, and that he would prefer higher interest rates, a bigger squeeze on families, and an even bigger fall in living standards, but the simple truth is that the Opposition have no credible response to the economic challenges that the country faces.

Finance Bill

Debate between Lord Austin of Dudley and David Gauke

Tuesday 28th June 2011 Commons Chamber

[Mr Gauke]

If the hon. Gentleman is prepared to be patient, I will set out the Government’s position.

If we are to address poverty, it is important that we address not just poverty but the causes of poverty—to coin a phrase—and ensure that work pays, and that is what our welfare reform programme is designed to do. It is also important that we take steps to ensure that the family and marriage are recognised, and that we do what we can to support stable relationships.

[Ian Austin (Dudley North) (Lab)]

Under the Minister’s proposals, if a man abandoned his wife and children and got remarried, would he continue to receive the tax allowance? If a woman were widowed, would she lose it?

[Mr Gauke]

Let me set out—[Hon. Members: “Ah!”] Let me set out the point. As has been said many times during this debate, marriage is recognised in the vast majority of countries. The previous Government introduced the transferable nil-rate band for inheritance, which was specifically designed to assist married couples and civil partnerships. If the Labour party is against any kind of recognition of marriage within the tax system—

--- Later in debate ---

[Ian Austin]

rose—

[Mr Gauke]

Let me finish this point. If the Labour party is against any kind of recognition of marriage within the tax system, why did it introduce the transferable nil-rate band for inheritance tax?

[Ian Austin]

rose—

[Mr Gauke]

Perhaps the hon. Gentleman will explain. [Interruption.]

[Ian Austin]

Would a woman whose husband was killed in Afghanistan lose this benefit?

[Mr Gauke]

As I sat down to give way to the hon. Member for Dudley North (Ian Austin), the shadow Chancellor said, “You don’t have to be married to benefit from the transferable nil-rate band.” He is absolutely right. As I said, it applies to married couples and those in a civil partnership. That is exactly what I said earlier. As the hon. Member for Dudley North pointed out, it is important that we support widows in the circumstances he mentioned. Does that mean, though, that we should never do anything for married couples? It does not necessarily follow.

I want to put this in the wider context of what we are doing to help strong and stable families. For example, the Department for Education has announced plans to spend £30 million on relationship support to deliver better support for couples in relationship distress. However, as hon. Members will be aware, the Government have made it clear that we intend to introduce proposals to recognise marriage and civil partnerships in the tax system. As the Prime Minister said recently, this will show that as a country we value commitment. I certainly agree, therefore, with the intentions behind the new clause.

Although the Government support the principle behind the new clause, now is not the appropriate time to bring forward such a measure. It would entail significant and immediate costs to the Exchequer, its scope is wider than the Conservative party manifesto pledge and the cost, we estimate, would be more than £4 billion. It would also necessitate substantial implementation costs.

Oral Answers to Questions

Debate between Lord Austin of Dudley and David Gauke

Tuesday 10th May 2011 Commons Chamber

[Mr Gauke]

It is quite striking that on one side of the argument, saying that we must be serious about getting the deficit down, there is the OECD, the IMF, the European Commission, the CBI, the Governor of the Bank of England and the US Government, whereas on the other side we have the Labour party. We do not find the Labour party’s case terribly persuasive. On the evidence of last week, nor do the British people.

[Ian Austin (Dudley North) (Lab)]

Does not what happened in Greece show that measures that hamper growth make tackling the deficit all the harder? Is that not why, six months after the geniuses opposite took stewardship of an economy that was beginning to recover strongly, growth had ground to a halt? Is it now why, far from tackling the deficit, which is what all this is supposed to be about, the small print of the Budget shows that the Government will have to borrow £46 billion more?

[Mr Gauke]

I know that the hon. Gentleman is close to the former Prime Minister, but it really is disappointing that he is such a deficit denier. He even seems to suggest that the Greeks should not be doing anything about their deficit. If we do not have a credible plan, then the economy is at risk. We do have a credible plan.