Finance (No. 4) Bill

Mark Reckless Excerpts

Thursday 19th April 2012 Commons Chamber

[Mark Reckless (Rochester and Strood) (Con)]

Yesterday, the Prime Minister pointed at the Opposition Benches and said Labour MPs would be voting to give themselves a benefit, yet just after the Budget the Leader of the Opposition said to the Cabinet that they were getting rid of the 50p top rate of income tax to help themselves. Can we not all accept that we on the Government Benches are getting rid of the 50p rate to try to improve the economy, and Labour Members are trying to protect universal benefits and the welfare state as they have understood it?

[Cathy Jamieson]

I was hoping that the hon. Gentleman was going to respond to my point about children, but that is obviously not the case.

It is expected that the revised proposal will affect about 1.2 million families. Some 790,000 couples and 30,000 lone parents will lose the full amount of their child benefit. A further 330,000 couples and 20,000 lone parents will lose a proportion of their child benefit. The average loss will be about £1,300.

When these proposals were first announced, I tabled a parliamentary question asking for an estimate—not an exact figure—of the number of people earning between £50,000 and £60,000 who are in receipt of child benefit in each parliamentary constituency. I received the answer two days ago. It was short and simple: this information is “not available.” Surely that is exactly the sort of information that should be available in advance of such proposals being made to help MPs judge the impact of Government policies on their constituencies.

--- Later in debate ---

[Mr Jackson]

My hon. Friend makes a valid point and I accept her argument, but we need to look at this proposal within the context of the wider proposals in the Budget. We are rightly reducing the top rate of tax and corporation tax, so for those in the upper 20% income range we have introduced fiscal policies through which we seek to support entrepreneurship and business, supporting those higher-rate earners. We are also proud to be taking a substantial number of poorly paid working people out of tax. My concern is that we are not extending those same tax breaks to the squeezed middle and it is a very important message that we are sending. I accept that the Chancellor has tackled the specific issue of the cliff-edge effect, but he has not done enough to secure my vote in terms of the discrepancy regarding the one taxpayer in a two-person household.

[Mark Reckless]

A rather larger category than that mentioned by my hon. Friend the Member for West Worcestershire (Harriett Baldwin) is the very minimum of £62 million a year—and I suspect much more—that is paid to children who are resident elsewhere in the European Union where costs are much cheaper, many of whom have never even visited the UK.

[Mr Jackson]

My hon. Friend makes an extremely apposite point. If we really are all in this together, it beggars belief for my constituents and his that we are talking about looking after the interests of people on low or median incomes but are remitting abroad, within the European Union, anything between £40 million and £75 million in various benefits for people and families who do not even live in this country.

It would not be fair not to mention that the Chancellor has sought to ameliorate the concerns that various Members across the House have expressed about this policy and I give him due credit for that. Unfortunately, however, I think this policy will go badly wrong and will have a specific impact on aspirational, ambitious families and will breach the basic tenet of universality in child benefit. For that reason, I cannot and will not vote for it.

--- Later in debate ---

[Mr Gauke]

We are somewhat short of time. There are two reasons why we may not be able to do the measure justice. First, the Opposition tabled an urgent question, which took an hour out of our debate—[Interruption.] They may groan, but they did. We had agreed that there would be no statements today to allow us to have a proper amount of time. Secondly, the Opposition included in the debate both the clause and the schedule. They need only have put the clause in for us to have the debate. As a consequence, the schedule will not be scrutinised in the Public Bill Committee.

Clause 8 introduces a tax charge on a child benefit recipient or their partner if their income is above £50,000. The changes that we are introducing in the Bill ensure a balance between reducing the cost to the Exchequer of child benefit and ensuring that those on low incomes are not affected. Opposition Members like to forget that the reason why we are making very difficult decisions is the state of the public finances that we inherited. We must ensure that the measures that we take are both fair and reasonable. It is only right and proper that we ask those with the broadest shoulders to bear the greatest burden. That is why the measure and others announced by my right hon. Friend the Chancellor at the Budget—

[Mark Reckless]

The Minister said that the charge would apply if “their” income was above £50,000. That would be correct if he accepted the amendment of my hon. Friend the Member for Christchurch (Mr Chope). But actually it applies if his or her income is above £50,000. But on “their” income, they can carry on up to £100,000 as long as the amount is split equally between them.

[Mr Gauke]

The focus on doing this through the tax system and on having one taxpayer above a certain threshold enables us to avoid the position whereby we would have to put every child benefit claimant through the tax credit system and apply a means-tested system to 8 million different cases, creating a substantially greater administrative struggle for both Government and many individuals. That is why we have taken that particular point.