Finance (No. 4) Bill

Debate between Rachel Reeves and Alun Cairns

Thursday 19th April 2012 Commons Chamber

[Rachel Reeves]

It is a privilege to serve under your chairmanship, Ms Primarolo.

I rise to speak to the amendments and to oppose clause 4, which will freeze age-related allowances for those who are receiving them and abolish them for those who are approaching retirement. I hope that Members from all parts of the Committee will join us in our opposition this afternoon. Defeating the clause would prevent a real-terms increase in tax for millions of older people in this country, which will cost £83 a year for 4.4 million people on modest incomes and as a much as £322 for 360,000 people who will reach the age of 65 next year.

We are seeking to reverse the Government’s freezing and abolition of age-related allowance for three simple reasons: first, that tax increase adds to the financial pressure already felt by older people on modest incomes facing rising costs; secondly, it picks the pockets of pensioners to fund an irresponsible tax cut for millionaires; and thirdly, the way in which it has been introduced adds insult to injury, breaking a promise made by the Chancellor just a year ago and using the language of tax simplification to cover up what is clearly and simply a tax grab.

[Alun Cairns (Vale of Glamorgan) (Con)]

The hon. Lady is expressing opposition to the freezing of the age-related allowance. Did she express the same opposition when the last Chancellor did exactly the same in the Labour Government’s last Budget?

[Rachel Reeves]

This is a permanent freeze, and the allowance is being abolished entirely for people coming up to retirement next year, so it is very different from a one-year freeze.

[Alun Cairns]

Will the hon. Lady give way?

[Rachel Reeves]

I will make some progress.

For the reasons that I have given, pensioners from the National Pensioners Convention have come to Parliament today to lobby MPs to vote against the change. Let us take each issue in turn and consider who will be hit, because there has been some myth making by defenders of the granny tax about how only well-off pensioners will be affected. The truth is, those who will be hit have very modest incomes.

Amendment of the Law

Debate between Rachel Reeves and Alun Cairns

Monday 26th March 2012 Commons Chamber

[Rachel Reeves]

I said earlier that the big story about the Budget was what was missing from it rather than what was in it. My hon. Friend has identified another thing that is missing, namely an explanation of how the Government will balance the books after the last two years of the current Parliament. We all know that the Government are now borrowing £150 billion more because of the failure of their policies and their decision to cut too far and too fast, which choked off the economic recovery. As a result, deficit reduction will have to continue well into the next Parliament, but we have not heard how.

The Chancellor said that the Budget was about rewarding work. A Budget that takes tax credits from low-paid working couples with children, plunges them into poverty and leaves them better off if they leave their jobs is not a Budget for work, is it? As for the notorious hit on pensioners with modest incomes, springing it on people with no notice and then dressing it up as a simplification was not only ill-judged, but profoundly disrespectful to the millions of pensioners who made sacrifices to save during their working lives.

[Alun Cairns]

Did the hon. Lady make the same protests when her right hon. Friend the Member for Edinburgh South West (Mr Darling) introduced a granny tax in preparation for the financial year 2010-11?

[Rachel Reeves]

This is not just about freezing an allowance; it is about freezing an allowance this year, next year and the year after, and for many years to come. It is also about getting rid of the allowance, because it is disappearing for people who will retire next year. Next year people will receive not a reduced allowance but no additional allowance at all, and as a result they will be £323 worse off because of the choices that this Government have made.

I am sure that in a moment we will hear protestations from the Chief Secretary about his great triumph in raising the personal tax allowance for working-age people, but families with children have already lost £450 on average from the VAT increase, and another £530, starting on 6 April, through cuts to tax credits and the freezing of child benefit. Does the Chief Secretary really expect families to be thankful to be getting less than half this back in 2013? Is it not more likely that they will see this for what it is?