Finance (No. 4) Bill

Debate between Nigel Mills and Fiona O'Donnell

Thursday 19th April 2012 Commons Chamber

[Nigel Mills]

I entirely agree about a simplified tax system, and if we could have found a way of merging income tax and national insurance, taking away one complexity, that would have been a great step forward. The tax regime for pensioners—people in retirement—is far too complicated and we need to find a way of simplifying it.

[Fiona O'Donnell]

rose—

[Nigel Mills]

Not at the moment. I am sure that all hon. Members have seen pensioners in their surgeries who have suddenly been landed with a huge tax bill that they were not expecting because PAYE had not been deducted from a private pension or because they had different income levels from those they were expecting. All of a sudden these people are facing a bill of a £1,000 or more that they literally cannot afford, and through no fault of their own. So the whole spirit of trying to simplify the tax position for pensioners is exactly the right way forward. This measure is not the end of that; it will be the start of trying to get to a place where everyone can understand what their correct tax position will be and will not have to fill in myriad tax returns. People have to claim this age-related allowance, and that is slightly unusual. Normally, people expect their personal allowance to be an automatic thing, but people have to write to claim this, and that has always struck me as a strange anomaly.

The direction we are trying to take is clearly the right one. This measure is not something that any of us would have wanted to do, and I feel sympathy for all those pensioners, including my parents, who will lose money as a result of it. This is one of the many issues about which we do not just get grief from our constituents; we get grief about it from our own families every time we see them. I have to try to explain to my family why they have to put up with this pain. When we have got the personal allowance up to £10,000, the actual value of these increased allowances over that level will have been greatly reduced compared with the £3,000 difference that I believe the figure was at the start of this Parliament.

I do not think that anyone in this House is saying that as the basic personal allowance is rightly hiked up to £10,000, there is any way we can afford to hike the pension one up by the same amount—all anyone was ever expecting was for it to go up by some measure of inflation. As that benefit was to be so reduced by the end of this Parliament, we have to wonder whether or not the actual benefit to people would have been worth all the complexity, and all the hassle of maintaining these things and the delivery cost.

So I say to the Government that simplifying tax is right. This measure is one of those in the box marked, “Necessary, but unpleasant and not what we wanted to do”. We would all much rather find ways of giving our pensioners more income, but I am convinced that this is one of those things that we just have to do to take our tax system in the right direction and try to fix the deficit. However, I encourage the Government to examine all the other things in the Office of Tax Simplification’s report on tax and pensions and try to introduce some of them too, so that we get a fully developed and balanced reform, rather than just this start.

Fuel Prices and the Cost of Living

Debate between Nigel Mills and Fiona O'Donnell

Wednesday 16th March 2011 Commons Chamber

[Nigel Mills]

I am grateful for that intervention from a fellow Derbyshire Member, and I entirely agree with him.

The hon. Member for Bassetlaw (John Mann), who is no longer in the Chamber, said that all Governments had chosen to increase fuel duty over the years. We must accept that it was our Government who, nearly 20 years ago, introduced the fuel duty escalator, but the aim then was to encourage people to improve their behaviour by driving smaller and more fuel-efficient cars and considering alternative means of transport. I think we can tell the Government that we have all got that message. Many of us have started using diesel and have bought cars with smaller engines in an attempt to cut our spending on fuel. I know that many of my constituents have done that. However, the scope for such measures is limited, as many people still cannot afford to drive a car. If the nudge is the order of the day, I think that we have got the message and do not need any more nudging.

[Fiona O'Donnell]

I can tell the hon. Gentleman that we too have got the message from the Government, who claim that they want to make work pay. Does the hon. Gentleman accept that for many working people, fuel price increases mean that work is not paying?

[Nigel Mills]

I am grateful for that intervention—I think. The cost incurred in driving to and from work is clearly a factor when people are deciding whether work pays, which is why the increase planned for 1 April really should not go ahead.

Let me return to the topic of nudging. I think we all accept that tax can influence behaviour, and that if we further increase the tax on driving we will see the changes in behaviour that we would expect. People will drive to work less, and businesses will not be able to survive, prosper and grow because they will not be able to cope with the increased cost base. We can all cite small haulage businesses in our constituencies that are struggling to deal with the duty rise. As has been pointed out, reversing the VAT rise will not help those businesses at all; it is the level of duty that we need to consider. If the Government want to find another way of raising some revenue from the haulage industry to help compensate for the loss of fuel duty, I urge them to accelerate their plan to charge foreign road hauliers for using our roads.