Oral Answers to Questions

Debate between Mark Field and Owen Smith

Tuesday 26th June 2018 Commons Chamber

[The Minister for Asia and the Pacific (Mark Field)]

Thailand is an important partner of the UK, and the Westminster Foundation for Democracy, whoever its chairman may be, has an extremely important role to play in this matter. My hon. Friend rightly points out that there is a sense of revitalisation, particularly in respect of anti-corruption and the culture of cronyism throughout the region. We were delighted to see Prime Minister Prayuth visit London and we are looking forward to the elections in Thailand in the early part of next year.

[Owen Smith (Pontypridd) (Lab)]

In the light of the legitimate concerns expressed by global businesses such as Airbus, Siemens and BMW about the post-Brexit world, will the Secretary of State confirm that and remotely justify why his response was to say “F business”?

Finance (No. 4) Bill

Debate between Mark Field and Owen Smith

Wednesday 18th April 2012 Commons Chamber

[Owen Smith]

Again, I am pleased that I gave way, as I think that is an excellent suggestion, which we really should take up. Of course the series of interventions on the 50p rate from the current Mayor of London—I say current; I hope he will not be Mayor for much longer—and, indeed, the series doubtless coming from the Chancellor’s and Prime Minister’s other wealthy mates, backed up the ideological decision to get rid of it. In fact, I am tempted to say that the cut in the 50p rate gives a whole new meaning to the phrase “mates’ rates”.

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

The hon. Gentleman will recall that when, in November 2008—for the first time and 11 and a half years into the Labour Government—the suggestion was made to change the higher rate of income tax, the then Chancellor suggested bringing in a 45p rate. Might that rate have been suggested simply because it was felt it would maximise the tax take from it? Is that not one reason the hon. Gentleman is somewhat misguided in supporting this amendment?

[Owen Smith]

No, and I shall get into the technicalities in my response, if I may. When the 45p rate was initially mooted, the recession was not as profound as it subsequently became, justifying the shift to the 50p rate. If we look at the calculations underpinning the suggestions of the 45p and 50p rates, we find that they were informed by the use of a taxable income elasticity number of 0.35, which shows that an even higher rate, nearer 56%, might have been the optimal level for imposing the tax. We did not impose that rate, and—before the hon. Member for Cities of London and Westminster (Mark Field) bobs up and down excitedly—I am not for a minute suggesting we ought to impose it. What I am saying is that there is uncertainty about the optimal rate, which is why it is so foolhardy for this Prime Minister and Chancellor to hang their credibility, and the claim of fiscal neutrality at the heart of their Budget, on economic calculus and economic modelling that is inevitably uncertain. That is the word used 32 times in the document, and I am going to use it some more in a moment. Unfortunately, it shows the truth for this Government.

[Mark Field]

I entirely appreciate that the hon. Gentleman’s case applies to all sides—that there is much uncertainty about precisely the optimum rate of tax—but does he not accept that the 45p rate mooted three and a half years ago, which has now been put in place, was suggested simply because of the totemic effect of having to pay less than half one’s income at the highest rate of income tax? That totemic effect has a massive impact on both entrepreneurial spirit here and the international competitiveness that my hon. Friend the Member for South West Norfolk (Elizabeth Truss) mentioned earlier.

[Owen Smith]

What I would accept is that the rate was raised to 50p in the end because we felt that there was still an overriding imperative to help through the period of recession the people in our economy who are the most vulnerable and to ask those who are the most fortunate in our economy to bear the broadest and biggest burden in order to allow that transfer to occur. That is the totemic rationale from our perspective. What is totemic for this Government, I fear, is the idea that the 50p rate is not approved of in the City or by the wealthiest people, but I do not believe that that provides a justification for making this decision—and nor does the Chancellor, which is why he eschewed the possibility of arguing from a political or ideological perspective to justify the cut to 45p. He argued that it was being done on the basis of evidence. In fact, that was the only Keynesian bit of logic in the Chancellor’s Budget speech. He effectively said, “The reason I no longer believe what I believed in 2009 and 2010 is that the facts have changed”, and he changed his view accordingly. In his view, based on the dodgy dossier, the rate was not bringing in the anticipated amount of money, which is what justified paring it back to 45p.