Finance Bill

Tim Loughton Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Geraint Davies]

I am sorry that the right hon. Gentleman no longer has any school friends. Those who have abandoned the communities from which they came have proposed legislation to punish the poorest and reward the richest, which is a great shame. It is not too late for the Minister to think again about what is fair and right in distributive economics.

The reality is that the marginal impact of this change on the competitiveness of the City of London is very small indeed; it is not a serious argument. I can imagine the greed-fuelled lobbyists who come here on behalf of the City to demand an extra £145 million being the sort of people who say, “Oh, well, we have got to give these people more money, because otherwise they will leave the country.” We have heard all that before. In any case, many of those individuals have all sorts of tax havens, about which the Government pay lip service to investigating.

At the same time as we hear alleged concerns about those rich people avoiding tax, the Government say to them, “I’ll tell you what; here’s another 5p off the income tax.” People sometimes ask why there has been a 64% increase in bonuses this year. Could it be because the Government have provoked it, as people move their income from a tax year where they pay 50p to a tax year where they pay 45p? It was completely predictable, and it was even factored into the Treasury figures in the form of behavioural changes. The perverse thing was to hear the argument, “Oh, well, we are going to move to 45p instead of 50p because more money can be raised that way. Look, we are going to encourage our mates to move all their money to save tax”—[Interruption.] That proves that it is an absolute farce.

[Tim Loughton (East Worthing and Shoreham) (Con)]

Will the hon. Gentleman give way?

[Geraint Davies]

Of course. I was wondering whether the mumbling man was listening to anything, but I shall certainly give way to him.

[Tim Loughton]

There is of course always a temptation not to listen when the hon. Gentleman is on his feet. Does he remember the Finance Bill 1997, on which Committee he and I both served? I remember him making a similarly prejudicial class-bashing speech then and accusing merchant bankers or anyone working in the City as parasites, yet this industry accounts for many billions of pounds of revenue to the Exchequer and employs 1 million people. Does he still hold to that completely outrageous view? From what he is saying, it sounds as though he does.

[Geraint Davies]

It is interesting to see that the hon. Gentleman has changed from his red braces to blue braces—and very nice, too! I obviously do not regard the whole City of London and the banking community as parasites, as they are a major engine for exports, growth and productivity in Britain. The issue is about managed capitalism and what is the acceptable face of capitalism. It seems to me that many people on the hon. Gentleman’s side are not at all concerned, as more and more money is given to people who have already acquired enormous pots of money.

The distribution of income has shifted massively since 2010. We have seen the incomes of a large number of people in the top 10% growing by 5.5% each year over the past two years—at a time when most people have had pay cuts or pay freezes, certainly in the public sector, or lost their jobs. We have heard the Government boasting—this is their latest creative thought—that an extra 1.2 million people are in jobs, yet that has been contradicted by the Office for National Statistics. Even if there were another million extra people in work, with no extra growth and no extra output in the economy, productivity is going down and things are not going well. Nevertheless, the answer from the Government is still to give more and more money to the richest people and less to the poorest, and that is supposed to get us out of the mess, but it does not.

This stamp duty on transactions is the tip of an iceberg. I am sorry, Mr Deputy Speaker, that I have come on to describe the entire iceberg rather than the tip at the top, which we are talking about. It is important for people to stand up and be counted on this issue. There is no justification for these extra few buckets of money being thrown in the direction of those who have most. There is a great need for a more balanced growth strategy, whereby there is investment in infrastructure across the piece and where the opportunities for tax and spend are more fairly spread, so that together we can build a future that works and a future that cares—a one-nation Britain of which we can all be proud. I do not think that this suggestion makes sense, so I am very much in favour of putting a halt to this £145 million handout to people who are already rich, as it will not make any appreciable difference to the competitiveness of the City of London.

--- Later in debate ---

[Tim Loughton]

I beg to move, that the clause be read a Second time.

I am delighted to have the opportunity to speak to new clause 1, albeit very briefly. It is rather ironic that this issue has probably been one of the most over-reported aspects of this Finance Bill, when it was not even in the Bill and we have only a minuscule amount of time to discuss it. Many colleagues here would like to speak to the new clause, and many others have come up to me to express their support.

There has been a lot of misreporting about the new clause, which has commonly been referred to as some sort of “rebel” amendment. It is strange when a manifesto commitment, which was also in the coalition agreement, to a measure of which the Prime Minister himself is a huge fan, becomes a rebel amendment. We are not rebels. There has been no campaign to orchestrate some sort of rebellion; in fact, there was never any intention to force the new clause to a vote, as anyone who had asked would have found out. New clause 1 is simply a helpful amendment, tabled solely in my name, to nudge the Chancellor to give a formal commitment in law to a Conservative party pledge—a popular one at that—and to name the day, and so dispel the concerns caused by vague references to the measure being introduced “in due course”.

The measure was good enough to be in the Conservative party manifesto. It was good enough to be argued out in the coalition agreement, with accommodation for the Liberal Democrats. It has been good enough for the Chancellor and Treasury Ministers and the Prime Minister quite rightly to reaffirm its importance, so surely it must be good enough to get on with now, to lay to rest any uncertainty about the commitment to its implementation and to end any delay in its becoming a reality. I am therefore delighted, even if I have little time to express my delight this evening, that the Prime Minister has indicated that the measure in the new clause will now be brought forward. I hope that the Minister will be able to assure me from the Dispatch Box this evening, or, if there is no time, by writing to me and other hon. Members, that the measure will be in the next autumn statement, with a view to putting it in the next Finance Bill, so that, hopefully, the money will be in people’s pockets by the time of the next election.

I have framed the new clause to give the Chancellor maximum flexibility to determine the exact details of its execution. Spouses, civil partners and indeed the beneficiaries of same-sex marriage, if that Bill goes through, will qualify. There is no prescription about whether the provision applies to basic rate or higher rate taxpayers, or whether the whole or part of an allowance should be transferable. That can be specified by order to suit the Chancellor. It is suggested that the tax relief should focus on couples with at least one child under the age of five—that is, under school age—and therefore correspond to the child care allowances to be introduced from 2015, but that, too, can be changed by order. This is not a prescriptive amendment.

What is uncertain is the timing. I hope that the Minister will be able to confirm what the Prime Minister said in the briefing that he and officials gave on the other side of the world that the measure will be in the next Finance Bill.

Perhaps the most extraordinary aspect of this debate has been the reaction of the left to the proposal. This is a popular proposal, and a modest one. It is popular among the public and among the majority of Labour voters. The Lib Dems are split on it, but one would expect that: it is party policy to oppose it, but only recently the Business Secretary attacked the prejudice against stay at home mothers. When we have an organisation, Don’t Judge My Family, apparently formed solely to oppose the measure, saying that it is a throwback to a 1950s fantasy family image, that is deeply insulting not only to the many millions of married couples who decide to make a lifelong commitment to each other in front of their families and friends that is recognised in law, but to the 90% of young people and the 75% of cohabiting under-35s who in recent opinion polls have said that they aspire to get married.

There are many different forms of family in the 21st century, and most do a fantastic job of keeping together and bringing up children, often in difficult circumstances, yet almost uniquely among large OECD countries, the UK does not recognise the commitment and stability of marriage in the tax system until one of the partners dies. Worse still, one-earner married couples on an average wage with two children face a tax burden 42% greater than the OECD average, and that gap has been getting worse.

So to introduce a recognition of marriage in the tax system, particularly in the modest form suggested, is not to disparage those single parents who find themselves single through no fault of their own, perhaps as a result of having had an abusive or deserting partner, nor is it to undermine two hard-working parents, all of whom get help and support from the state in other forms, and quite rightly. But uniquely, married couples, civil partners and same-sex married couples in future are discriminated against in the tax system.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for giving way and I am conscious of the time. Like him, I passionately believe in marriage, as do my constituents in Strangford. They are keen to see the benefits for their families and their children in Strangford, across the whole of Northern Ireland and in the United Kingdom. Does the hon. Gentleman have an assurance from the Government that the time scale will be met? In other words, will the marriage tax allowance be delivered before the next election?

[Tim Loughton]

I very much hope so. That was the clear indication that the Prime Minister gave in his briefing in Pakistan. I very much hope that the Minister will be able to confirm, because the timing of the measure is important, that it is not something that will be done “in due course”, but in the next Finance Bill.

[Sir Edward Leigh (Gainsborough) (Con)]

Will my hon. Friend allow me?

[Tim Loughton]

I briefly give way to my hon. Friend, who has been a great champion of this measure for many years.

[Sir Edward Leigh]

Not just the Prime Minister in a faraway place, but the Chancellor of the Exchequer, in my own home, not 300 yards away, in front of 40 MPs, gave a solemn pledge that this was going to be brought in before the general election. This will and must happen.

[Tim Loughton]

So the mystery is why on earth it is not happening and the Prime Minister has not been able to say, “We back this amendment.” However, I trust what he has said. Those I do not trust are those who oppose the amendment, because those who oppose it as some sort of 1950s throwback are the ones who are being judgmental about how certain people choose to live their relationships. That view has been endorsed on many Labour party members’ blogs. Disgracefully, they seek, in effect, to pit working mums or dads against stay at home mums or dads, who are of course no less, and often more, hard-working.

My support for a transferable married couples tax allowance has never been based on some moral stance on types of relationship. My concern, as might be expected, is based on what is best for children. That is why I have suggested that it is limited in the first instance to families with children under the age of five. Two statistics say why. For a 15-year-old living at home with both birth parents, there is a 97% chance that those parents are married. For a five-year-old with parents at home, there is a one in 10 chance of those parents splitting up if they are married, but a one in three chance if they are not married. The cost of family breakdown is £46 billion and rising. That is what we need to attack.

Marriage accounts for 54% of births but only 20% of break-ups among families with children under five. We must recognise that in the tax system and we do not. That is what this modest amendment seeks to put in statute as a starting point to appreciate that.

[Andrew Selous]

My hon. Friend is making an excellent speech. Does he agree that we encourage many things in the tax system—for example, employees cycling to work? It is therefore no great surprise that we want to support marriage, given the number of families that split up each year.

[Tim Loughton]

And marriage was invented before bicycles, so why do we not support that, recognise it and value it, as we all do?

There are those who have come up with arguments against the figures, saying it is all about causation and effect. The millennium cohort research revealed that the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples, so it is insulting to say that marriage is the preserve of the middle classes or better educated or better-off people.

This amendment alone will not solve all the problems that I have laid out. I am not naive enough to suggest that £150 or whatever the end result may be when this amendment becomes law in some form, as we hope, represents the difference between staying married or getting divorced, or getting married or cohabiting, but it does send a clear and strong message that we value families who take the decision to bring up their children within marriage. When I stood on our manifesto in 2010, and for many years before, my Front-Bench colleagues agreed with that. My amendment makes that a reality, beyond all doubt.

[Mr David Burrowes (Enfield, Southgate) (Con)]

Is it not also a matter of fairness and social justice, because the Institute for Fiscal Studies has shown that 70% of the benefit of a transferable tax allowance would go to those currently on the lower half of the income distribution scale?

[Tim Loughton]

My hon. Friend is absolutely right. I think that that dispels many of the myths being put around against the measure.

I hope that the Minister will take the new clause absolutely in the way it was intended. I do not intend to force it to a vote. I think that the Prime Minister has acknowledged the imperative of getting on with it now. I hope that, at last, our constituents can expect to benefit from the proceeds before the next election, both financially and with regard to our clear commitment to marriage, and that we can benefit from delivering on a popular, practical and achievable pledge, rather than the promise of jam in due course. If we can do that, it will be box ticked, job done.

[Several hon. Members]

rose—