Comprehensive Spending Review

Michael Meacher Excerpts

Wednesday 20th October 2010 Commons Chamber

[Mr Speaker]

Order. A very large number of right hon. and hon. Members are seeking to catch my eye, and I would like to accommodate as many of them as possible. I therefore issue my usual exhortation to brevity with particular force. Single supplementary questions, please, and economical replies from the Chancellor of the Exchequer.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

In cutting the deficit, why did the Chancellor ignore the economic growth dividend, which could yield at least £60 billion in extra Government tax revenues over the next five years? Why did he not tax at all the 1% super-rich, whose wealth has quadrupled over the past decade? And why did he not introduce a major public sector, as well as private sector, jobs and growth programme, which could most effectively cut benefit payments and increase tax revenues?

[Mr Osborne]

The first thing I would say to the right hon. Gentleman is that we believe strongly, as do the major employers in this country and the people internationally who look at this economy, that dealing with the deficit is essential for sustainable growth. That is what this is all about: putting the British economy and our public finances on a sustainable footing so that we can create jobs in the future and so that the economy can grow.

The right hon. Gentleman talked about taxes on the top 1%. We introduced an increase in capital gains tax, and the truth is that not everyone in my party was particularly happy about it, but Labour had 13 years and all those Budgets in which to do that. The shadow Chancellor now rather lamely says that Labour supports the capital gains tax increase, but I would love to know, when the Cabinet minutes are published in 20 or 30 years’ time, whether he ever raised this matter in Cabinet. We took a decision to increase capital gains tax to the higher rate, and last week I published proposals for increasing tax on the very highest pension contributions. That is a £4 billion tax; it was not an easy thing to do, but we have done it. We have also accepted and lived with the previous Government’s decision to increase tax to 50%—of course, they introduced that in the last month they were in office. Again, that was not an easy decision. I am not instinctively in favour of higher marginal tax rates, but it is necessary at a time like this. I am determined that all parts of the income distribution should make a contribution, but that the people at the top of the income distribution should make the most.

Finally, on the disposal of the banks, at the moment we are not in a position to do that, but of course we monitor the situation the whole time and, as and when we can dispose of them, we will. I am very keen to create a more competitive banking sector at the end of this process, which is one of the reasons why we set up the independent commission.