Finance (No. 4) Bill

Mark Field Excerpts

Thursday 19th April 2012 Commons Chamber

[Ben Gummer]

My hon. Friend is full of vigour and will be going a long time, so I hope not.

The key challenge facing us is the extraordinary rate of demographic change in this country. Between now and 11 minutes past 3, the average age at which people are expected to die in this country will increase by 15 minutes. As a consequence, by 2041, the amount we spend on old-age pensions will have increased from about £80 billion now to £250 billion, even with the changes introduced by my right hon. Friend the Chancellor and his colleagues. Even with the reforms that the Government have initiated, we will deliver to our successors in this place—including the shadow Chief Secretary to the Treasury—a formidable challenge, and not only have we not properly faced up to the challenge but we are not talking properly to the public about it.

I can understand why Labour Members have tabled amendments on VAT and other matters—they can make their political points about the balance in the Budget and the Finance Bill with complete justice—but I am seriously disappointed that they have tabled amendments on this issue, because it is the most modest start to trying to deal with what is a really big and fundamental problem for us all.

[Mark Field (Cities of London and Westminster) (Con)]

My hon. Friend is making a sensible and thoughtful speech and some important points. The hon. Member for Leeds West (Rachel Reeves) prayed in aid changes made by Sir Winston Churchill 87 years ago. However, the numbers qualifying then for any sort of pension, let alone an age-related one, were minuscule compared with the numbers qualifying today and in decades to come.

[Ben Gummer]

My hon. Friend is entirely right. When Sir Winston Churchill served in Lloyd George’s Cabinet and the Liberals introduced the universal pension—one of that Government’s great achievements—a quarter of people never reached pension age. They never got to the point where they could draw down their pension. We are in a completely different place now.

I am not proposing to the Committee that we start now to think about the wholesale and widespread pension reform that is required, but surely we should start by trying to change some of the anomalies, and this anomaly is such a glaringly obvious one. At the moment, Members on both sides of the House, including those of us who represent constituencies with many low-earners—low-earners with families struggling desperately—are telling our constituents to pay a different rate of tax from pensioners, who, only because of their age, qualify for a different allowance.

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[Ben Gummer]

I wish we could deal with this canard. I did not want to be political about this—[Interruption.] No, I tell the hon. Member for Nottingham East (Chris Leslie) that I did not. Five times more revenue is being taken from the wealthiest people in this country as a result of the Budget than from reducing the top rate of tax. That argument has been dealt with and, although it is pity, I suspect that that is why the hon. Member for Leeds West, who is a serious-minded and intellectual member of the Opposition Front-Bench team, realises that the only way she can make an argument about this issue is by trying to shackle it to a false argument about the top rate of tax, to which it has no relation whatever. This is about beginning to reform provision for people who are retiring in our country. If we do not begin to make these small changes, we will not even be in a position to make the changes that will be necessary in future.

[Mark Field]

Will my hon. Friend give way?

[Ben Gummer]

I will give way once more.

[Mark Field]

My hon. Friend was absolutely right when he said earlier that we have collectively been living well beyond our means. That over-consumption by today’s Britons, including today’s pensioners, will have to be paid for by generations to come, and that cannot be justifiable. Given the interventions on him from the Opposition, does he agree that we made it clear before the election in our manifesto that we would maintain intact all the universal benefits—in particular, TV licences, the winter fuel costs and a lot of the travel allowances, along with a significant number of other pension-related benefits—that we have been true to our word and that we will remain so for the rest of this Parliament?

[Ben Gummer]

My hon. Friend represents a seat with a huge personal vote. I was not lucky enough to take over from a Conservative Member of Parliament with a huge personal vote such as his. I was therefore targeted in the last few weeks of the campaign by the Labour party and its union friends, who issued a series of postcards claiming that we would abolish the winter fuel allowance, free TV licences and all those other things. It is a matter of great pride to me that even in coalition, when compromises must be made, those promises, made by my right hon. Friend the Prime Minister, were kept.

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[Margot James]

I wanted to begin by setting the scene and explaining why I thought that the Budget represented a step forward, but as the debate is actually about the age-related allowance, I will make a bit of progress on that subject now.

[Mark Field]

rose—

[Margot James]

However, I will give way to my hon. Friend.

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[Mark Field]

I thank my hon. Friend. I entirely agree with what she said about the importance of promoting enterprise.

It was suggested earlier that 14,000 millionaires would benefit from the tax reduction. I am not sure how Labour Members arrived at that figure, but surely the notion that all our problems could somehow be solved if the rich paid their way is the nub of the issue. Given the relative scarcity of rich people in comparison with the vast majority of the electorate and as a proportion of the United Kingdom’s population of over 60 million, it is an absolute myth that we could solve all our problems by imposing heavy taxes on bankers and other rich people.

[Margot James]

I thank my hon. Friend for his intervention, which prompts me to remind the House that the top 1% of wealthy people in this country account for 30% of tax revenues. As my hon. Friend has pointed out, they constitute a very small segment of the population, and I think that if they are required to contribute any more than a third of the total, many will choose to go overseas where they will be taxed less.

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[Margot James]

I thank the hon. Gentleman for his comments, but I should not take any more interventions as other Members wish to speak.

[Mark Field]

Will my hon. Friend give way?

[Margot James]

Yes, but for the final time.

[Mark Field]

It cannot be bad that a U-turn should come so quickly. Seriously, however, I wanted to make the point that there are some very poor pensioners in my constituency—it is more socially mixed than many colleagues might imagine—and they are suffering greatly. However, the message I get from many of my pensioner constituents is that they worry for their grandchildren. They worry about their opportunities and about the difficulties they will face in getting on the housing ladder and in having the quality of life that their grandparents perhaps took for granted. Many of my pensioner constituents understand my hon. Friend’s point that the burden of getting the deficit down must be shared across the generations.

[Margot James]

My hon. Friend has, in part, responded to the point made by the hon. Member for Stoke-on-Trent South (Robert Flello), and I was going to say that some 5 million older people will not be affected by this measure. We can split hairs on this issue, but I accept that the measure does amount to an additional payment. However, although the allowance freeze results in an increase in tax payable, it does so only by an average of £84 a year. I accept that that is not nothing, but it is a relatively small sum. The measure is raising so much money for the Exchequer by dint of the fact that so many people are in receipt of state pensions. The pain, as it were, can therefore be shared by many, and the resulting amount per person is very small. I apologise for the fact that I shall not take any more interventions, but so many other Members still want to speak.

To address the other point made by the hon. Member for Stoke-on-Trent South, the Government have a good record in protecting people on pensions. We have restored the earnings link. The Labour party had 13 years in which to restore the link, and Barbara Castle called for that every year until her death. We have done it. We have also secured it with the triple lock.

The hon. Member for Leeds West (Rachel Reeves) was ungenerous in arguing that we appeared to be proud of the inflation rate. If she had remained in the Chamber, I would have told her that that inflation has largely been driven by increased oil and commodity prices, which Governments have no control over. It is to the credit of this Government that they were brave enough to say, “We will increase the state pension by either 2.5%, the rate of inflation or the rate of earnings, whichever is the greater.”