Amendment of the Law

Sheila Gilmore Excerpts

Monday 26th March 2012 Commons Chamber

[Danny Alexander]

First, I am very grateful to the hon. Lady for at least agreeing that we are going considerably further on the personal income tax allowance. That was sadly lacking from most of the contributions from the Opposition. They will also know that the OBR’s forecast that was published alongside the Budget revised downwards the forecast for the claimant count this year, next year and in every year over this Parliament.

As I was about to say, in this Budget we have announced the largest ever increase in the amount that people can earn tax-free—an increase next April of £1,100 to £9,205. That is a tax cut of £3.5 billion for working families and is the biggest ever increase in the personal allowance. It is the biggest income tax cut for people on low and middle incomes for a generation—a tax cut for more than 23 million people. It means £220 for every basic rate taxpayer, or £170 in real terms. The tax bill of someone who works full time on the minimum wage will already have been halved by this Government.

[Sheila Gilmore (Edinburgh East) (Lab)]

While he was arguing for the rise in the tax threshold, did the right hon. Gentleman at any time argue for the people who are losing their working tax credit from April this year, or did he just not bother to argue for those very low-paid people?

[Danny Alexander]

We have argued for measures to ensure that people on low and middle incomes are taken out of income tax altogether. We have made significant changes to the tax credit system, which, frankly, under the previous Government, reached way up the income distribution. The changes we have made are appropriate and fair, and it is right that we have drawn back on a system that was costing many billions of pounds under the previous Government.

Taken with the previous increase in the income tax personal allowance, this measure means that this coalition Government have reduced tax paid already by basic rate taxpayers by £350 in real terms. It is this coalition Government who, as a result of the measures in this Budget, will have lifted 2 million people out of income tax altogether—59% of them women, to respond to a point made during the debate. That is the right measure on taxation and the Labour party should support it. Labour thought it was right to double the tax on people on low incomes, but we do not; we think it right to halve the tax on people on the minimum wage.