Finance (No. 2) Bill

Neil Parish Excerpts

Thursday 18th April 2013 Commons Chamber

[Cathy Jamieson]

I thank the hon. Gentleman for his intervention. We argue that the new clause would be part of a package of measures. We have heard about other initiatives that could be brought forward, and it is important to recognise that others in industry and business are also saying that one way to stimulate the economy would be to introduce at least a temporary cut in VAT. There are serious questions to be asked about the other issues, but if we could get unanimity about this issue, it might be possible for the Government to consider it and bring forward further proposals.

In the Budget, the Government had the opportunity to change course, make the necessary changes and kick-start the economy. Sadly, however, more and more commentators are reflecting that all we got was more of the same from the downgraded Chancellor. As a result, the cost of living for people up and down the country is rising day by day. The economy is flatlining, inflation remains high and food bills are rising. Energy bills are soaring, thanks to the Government’s failure to break the stranglehold of the big six energy companies. The Office for Budget Responsibility’s most recent figures show that people will be worse off in 2015 than when the Government came to office.

The reality for people is that real wages are now £17,000 a year smaller than they were in 2010. To add to that hardship, any benefit that hard-working people might have received from the Government’s much trumpeted rise in the personal allowance has been uniformly swept aside by the raft of tax and benefit changes that the Government have made since 2010. Those changes mean that families will be an average of £891 worse off in the new financial year, according to the analysis of figures made by the independent Institute for Fiscal Studies—even more money out of the pockets of hard-working people up and down the country.

The truth is that even if those tax and benefit changes had never happened, any benefit from the rise of the personal allowance would have been wiped out by the Government’s 2011 VAT rise from 17.5% to 20% alone. Research from the TUC confirms that by the time of the next election, families of all incomes will lose more from the VAT rise than they will gain from the increase in the personal allowance and the changes to national insurance, with low-paid workers losing up to four times more per year from the Government’s increase in VAT than they will gain from the raising of the personal tax allowance to £10,000.

[Neil Parish (Tiverton and Honiton) (Con)]

I understand that times are tough, partly because we have to try to bring the economy together after the last Labour Government. The hon. Lady said that individuals are £17,000 worse off than they were. I cannot understand that. Has she added on too many noughts, or what?

[Cathy Jamieson]

I intended to say £1,700; if I said £17,000, I apologise. Obviously, Mr Hood, I need to put my spectacles on when I read the numbers. I am glad that the hon. Member for Tiverton and Honiton (Neil Parish) is accepting my apology.

[Neil Parish]

indicated assent.

[Mr Jackson]

rose—