Income Tax (Charge)

Debate between Lucy Frazer and Barry Gardiner

Thursday 28th October 2021 Commons Chamber

[Lucy Frazer]

As the hon. Lady knows, we are on a trajectory to get the national living wage to a higher rate. We need to increase the national living wage, as we have by 6.6% this time round, and it will go up again in time. She will have heard Conservative Members asking how it will work for the businesses that are paying it, so there is a balance to be struck. This Government are progressing on that trajectory to the right path.

We are also reducing the universal credit taper rate from 63% to 55%, which, combined with a £500 increase in the work allowance, means an effective tax cut worth more than £2 billion a year. The hon. Member for Glasgow Central said that that would not help families, so let me give an example: a single mum living in Darlington who works full time on the national living wage would see a £1,200 increase in her pay by December, and that would be £1,900 in April when the new national living wage comes in. My hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) acknowledged the transformative effect that the increases to the national living wage and the universal credit taper will have for many of his constituents. I am grateful for the constructive comments made by the hon. Member for Ceredigion (Ben Lake) in welcoming the national living wage and public sector pay increases.

With fuel prices at their highest level in eight years, we are not prepared to add to the squeeze on families and small businesses, which is why the Budget freezes fuel duty for the 12th year in a row. The hon. Member for Newport East (Jessica Morden) is wrong to say that we are not supporting people with their gas bills: in addition to the fuel-duty freeze, we have the warm homes discount, which supports 2.2 million people, who receive a £140 rebate on their bills. Like the hon. Member for Cardiff North (Anna McMorrin), the hon. Member for Newport East called for a cut to VAT on fuel bills—something the Labour party calls for—but what would that do? What would happen if we cut VAT on fuel? Such a cut would apply for everyone, across the board, so who would it help as well as the low-paid? It would help the wealthy. I am quite surprised to hear Opposition Members suggest that.

[Barry Gardiner]

Does the Minister recognise that it is the poor who pay the largest portion of their disposable income in fuel costs? She is absolutely right that such a cut would, of course, be of greater benefit in monetary terms to the wealthy, who tend to spend more on energy, but in terms of the difference made to lives, 5.7% of the disposable income of the very poorest goes on energy costs.

[Lucy Frazer]

The hon. Member makes a valid point and I absolutely recognise that, but the way to solve that problem is not to give a tax benefit to a large group of people who simply do not need it, but to give discrete, directed support to those who do need it. That is what this Government have done: the hon. Member will know that six weeks ago we announced £500 milllion to support the most vulnerable families when they absolutely need it.

Members from all parties mentioned the support for families and for family hubs and welcomed the measures in the Budget. I was pleased to hear the support from my hon. Friends the Members for Don Valley (Nick Fletcher) and for Newton Abbot (Anne Marie Morris). My hon. Friend the Member for Telford (Lucy Allan) made a good speech about how important it is to support struggling families, and I was interested to hear what my hon. Friend the Member for Crewe and Nantwich said about the importance of not only supporting young families financially—we have heard how important it is to support recent mums and dads—but giving them emotional security as well.

I was disappointed to hear the shadow spokesperson, the right hon. Member for Wolverhampton South-East, speak about our lack of support for education, because we have invested significantly in education, not only in this Budget but in previous ones. This Budget provides a wide variety of support through the education system. We are increasing the core funding for schools, with an additional £1,500 per pupil, and providing catch-up funding, with an additional £1.7 billion bringing the sum up to £5 billion, In addition, as my hon. Friend the Member for Ipswich said, we are increasing the funding for SEND provision, with an extra 30,000 places for pupils with high needs. Through our new Multiply programme, we are helping school leavers who did not get the maths skills that they ought to have got at school.