Finance (No. 4) Bill

Mark Garnier Excerpts

Thursday 19th April 2012 Commons Chamber

[Graham Evans (Weaver Vale) (Con)]

I pay tribute to my hon. Friends the Members for Stourbridge (Margot James) and for Ipswich (Ben Gummer), who have eloquently made many of the points that I intended to make. I do not want to repeat them.

First and foremost, the Bill makes it clear that the Government are sticking to the plan to deal with the mess left by Labour and eliminate the structural deficit. That is essential for market confidence in the future of our economy and wealth creation.

Secondly, the Bill is clearly on the side of working people and pensioners. It is pro-business and helps people who want to do better for themselves and their families. It cuts tax for 24 million ordinary families across the country, including 2.5 million in the north-west. Thanks to the Budget, most basic rate taxpayers will keep an extra £220 of their salary every year. That represents the largest real personal tax cut for people on average earnings in more than a decade. I appreciate that £220 might not seem like that much to the Labour leader, sat in his multi-million pound home in Primrose Hill, but for people struggling to get by in Cheshire, £220 is a real help. The Bill therefore helps working people.

[Mark Garnier (Wyre Forest) (Con)]

Does my hon. Friend agree that over the period of the changes to the tax-free allowance, the total contribution will be more than £500 for the average individual?

[Graham Evans]

I am most grateful to my hon. Friend for making that good point, with which I agree. It is a good Budget for working people on basic rate tax.

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[Katy Clark]

Government Members keep trying to return to that point. As I have said, the freeze applied to all allowances, and it is not comparable to what we are debating. This is a specific debate about long-term Government policy towards pensioners and the long-term cumulative effect that this change will have.

As I say, this is the wrong time to come forward with changes of this nature. We heard a well-informed contribution from the hon. Member for Banff and Buchan (Dr Whiteford) on the situation faced by pensioners who rely on private savings. I suspect that many of us as constituency MPs have had a considerable number of representations from individuals who have planned their pension and retirement savings over many years on the assumption that higher rates of interest would apply, enabling them to live off the savings they had made over a long period. I very much hope that in 2013, when these changes come into force, the economic situation will be different, but I suspect that those pensioners will be in a similar position. That is another powerful reason why now is an incredibly bad time to make changes of this kind. In my view, they should have been introduced with far greater notice.

The Government should know that pensioners are being disproportionately affected by the policies they are pursuing. We hear a great deal from Government Members about their ambitious deficit reduction plan—so far, of course, we have only seen the deficit increase. What we are seeing locally, and I suspect they will be seeing it, too—[Interruption.] Government Members are well aware that they are borrowing more and that the deficit is going up. In their constituencies as well as mine, however, local people will be experiencing the start of draconian cuts in public services, which will have and are already having a disproportionate effect on those in retirement. Even before the current economic difficulties, we were all aware of the struggle councils were having in trying to provide the social services required for our changing demographic and our ageing population.

[Mark Garnier]

The hon. Lady really must get the point about the deficit right. The deficit has been reduced from more than £150 billion when this Government first came to power to, I think, £132 billion this year. She may be getting confused between deficit and debt, and Government debt is going up, but it is going up because we have such catastrophic public finances as a result of the previous Government.

[Katy Clark]

The hon. Gentleman is well aware that borrowing is going up. As I was saying, despite the fact that the Government are failing and have consistently failed to meet their own targets, the reality is that the cuts in public spending they have already made—and they propose more for the coming years—are having a disproportionate effect on the pensioner community.

--- Later in debate ---

[Cathy Jamieson]

My hon. Friend makes a significant point and that is part of the fairness test, which I do not think has been met. The Centre for Social Justice has been very critical of this aspect of the Government’s plans, which it argues could

“threaten a new wave of family instability and breakdown…which flies in the face of their commitment to ‘shared parenting’.”

[Mark Garnier]

I am not entirely unsympathetic to a great many of the hon. Lady’s points, but what she is describing has a great deal to do with the complexity of the tax system as a whole. That tax system doubled in complexity under her Government.

[Cathy Jamieson]

With respect to the hon. Gentleman—he said he had some sympathy with my points, so I do not want to be entirely negative in response—we will not solve the complexities of the taxation system by adding even more complexities that are unfair to families and will affect children negatively.

Let me put one final issue on the record. People who are not in work and who receive child benefit for a child under 12 receive national insurance credits to enable them to build up entitlement to state pensions. The Government’s original announcement led to concerns about the impact on future pension entitlements of women, in particular, if families stopped claiming child benefit. The Government said from the outset that no one would miss out on national insurance credits as a result of the child benefit changes, but it is unclear how they proposed to ensure that. Under the latest proposals, people who are entitled to child benefit and families affected by this charge may elect not to receive it, but a claim for child benefit will still need to be made in order to receive national insurance credits. Information published by HMRC confirms that.

I am extremely conscious of the time so I will not say anything more, other than that I think that everybody should listen carefully to the debate and to the points that have been made. When Members consider how to vote, they should consider both the principles involved of support for families with children as well as the layers of complexity and confusion there will be if the proposal goes through.