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Yvette Cooper (Pontefract and Castleford): Will the right hon. Gentleman give way?
Mr. Maude: No, I am not going to give way.
What comfort is there for people approaching retirement? They are being told that, for the crime of being born after 1935, there will be no married couples allowance for them, and nothing to replace it, even if they still support children. They can forget it.
Yvette Cooper:
Will the right hon. Gentleman give way on that point?
That is not the complete story. Not only will people pay more income tax and other tax under Labour, but many people on low incomes will also pay a higher marginal rate of income tax. We asked the Secretary of State for Social Security how he squares the commitment not to raise income tax rates at all with the fact that the marginal rate of income tax has been increased for a large number of people. That increase is in clear contravention of Labour's direct pledge. Many people who previously paid a marginal rate of 20 per cent. will now have to pay income tax at a marginal rate of 23 per cent.
What price the posters everywhere that said that income tax rates would not be increased at all? Under the new system, people will start to pay income tax when their earnings reach nearly £6,000. Under the old system, that would not have happened until their earnings reached £8,600. For people between those income levels, there are higher marginal income tax rates under Labour. There was nothing about that in the promises before the general election, and no mention of it in the Chancellor's Budget statement. It is a disgrace.
Higher marginal rates of tax are bad because they reduce incentives. People are less likely to work for a pay increase if they know that a greater proportion of every extra pound they earn will be taken in tax. The increased rate is a complete betrayal of the Prime Minister's clear promise before the election that he would not increase income tax rates. About 4.3 million people have been let down by Labour's breach of that election promise.
Income tax is not the only one going up. National insurance is going up for many people. One might be forgiven for missing that fact, because it was not in the Chancellor's statement last Tuesday. We welcome the reforms that abolish the 2 per cent. entry fee, and we welcome the alignment of the national insurance contributions threshold with the income tax threshold. However, as ever, what Labour has given with one hand, it is taking back with the other.
In a move that merited just eight words in the Chancellor's speech, the Budget increased the upper earnings limit for employees' NICs to £575 a week. That amounts to a huge stealth tax increase on middle Britain. The net effect of the Government's changes to national insurance will be that many middle-income workers will be worse off because the gains that they make from threshold alignment and the abolition of the entry fee will be more than offset by the increase in the upper earnings limit.
Yvette Cooper:
Will the right hon. Gentleman give way?
Mr. Maude:
No, I am not going to give way.
When all Labour's reforms to employee NICs have been implemented--
Mrs. Anne Campbell (Cambridge):
Will the right hon. Gentleman give way?
Mr. Maude:
Labour Members ought to listen. I am talking about precisely the sort of people whom the Prime Minister was at such pains to claim he was going to protect.
When all Labour's reforms to employee NICs have been implemented, anyone who earns more than £27,000 a year will be worse off. Those people are by no means
rich and there are plenty of them--another 4 million, on top of the 4.3 million who were let down by Labour's previous pledge on income taxes--
Mrs. Campbell:
On a point of order, Madam Speaker. Is this not supposed to be a debate and should not the right hon. Member for Horsham (Mr. Maude) give way when hon. Members seek to intervene?
Madam Speaker:
It is up to the hon. Member who has the Floor to determine whether to give way. I understood the right hon. Gentleman to have indicated that he would not do so. Is that correct?
Madam Speaker:
In that case, hon. Members should not persist.
Mr. Maude:
Although it was a great mistake, I have already cut my speech short to accommodate the hon. Member for Chorley, who wasted the time of the House.
Business taxes are up too. The Chancellor and his right hon. Friends like to pose as the friends of business. Last Tuesday, the right hon. Gentleman told the House that he was announcing tax cuts for business--that is not how they look now. The Budget will increase tax on business by £3.2 billion in the next three years--we did not hear too much about that--on top of the £5 billion a year in extra taxes imposed in the Government's first two Budgets.
Those are not my figures but those of the British Chambers of Commerce. It took a few days for them to see through the vacuous gloss of the Chancellor's speech, but, by last Thursday, they were denouncing the right hon. Gentleman as a "smoke and mirrors Chancellor", who has increased tax on business, while pretending to cut it. The chambers of commerce calculate that
Perhaps the most discreditable part of the Government's policy has been their record on savings. Given the attack on pension funds and on dividend tax credits for the poorest pensioners and the abolition of tax-exempt special savings accounts and personal equity
plans--to be replaced by measures introduced by the former Paymaster General as his swan song--it is not surprising that the savings ratio has plummeted by nearly a third.
The Budget has made things worse. By committing himself to increasing the minimum income for pensioners in line with earnings, the Chancellor will increase dependency and discourage savings. People who save hard throughout their lives in an effort to remain independent of the state might as well not have bothered. It is not surprising that the right hon. Member for Birkenhead (Mr. Field) has borne that out and that the response of the savings industry to the Budget has also been scathing.
What did the Budget say about the economy? We have the first official confirmation that manufacturing will be in recession next year. The Treasury now expects a fall in manufacturing output. If the Government had listened to what they were being told earlier and stopped heaping on the damage, the higher taxes and the extra regulation, that recession might have been avoided, but it is too late now, as the Treasury has finally admitted. That means thousands more lost jobs. We read today that job prospects are at their bleakest for a long time.
The Chancellor's forecasts for growth are wildly unrealistic--[Interruption.]
Madam Speaker:
Order. This House must come to order. It is far too noisy.
Mr. Maude:
This is a Budget that is shot through with dishonesty from beginning to end. This is not spinning; this is deception. Taxes are rising in plain breach of the Prime Minister's solemn pledge. This is a bad and a dishonest Budget. I urge the House to reject it.
The Chief Secretary to the Treasury (Mr. Alan Milburn):
I have rarely seen a senior politician in a debate as important as this refuse to give way to hon. Members on both sides of the House. It makes me wonder what the shadow Chancellor has to hide.
We have had an important debate over the past few days. Last Tuesday, the Chancellor delivered a Budget that will deliver an enterprise economy and a fair society. The one sustains the other. We cannot have a successful economy without a fair society in which the talents of all our people are deployed to the full.
Mr. Ian Bruce (South Dorset):
I am grateful to the right hon. Gentleman. Can he solve a problem and admit to everyone that the Budget has brought in £7.1 billion in extra taxes? At least we would have some honesty from him.
"Business will be a grand total of £6 billion worse off each year for the next three years than they were before the last election".
The Budget offered some small tax breaks for investment, but those reductions are hugely outweighed by the increased cost of doing business under Labour: stealth taxes, regulation and red tape. It is no wonder that the Federation of Small Businesses has denounced the changes, stating:
"the real entrepreneurs and risk takers--the sole traders--will miss out on the corporation tax changes, but will be hit by increases to national insurance contributions".
On top of that, we must consider the effect of the swingeing 11 per cent. increase in diesel tax. No one heard the Chancellor announce that increase, which is hitting hauliers throughout the country and leading to a flood of people saying that they will leave. The words, "11 per cent." did not pass his lips, but that is what the price of diesel is going up by and that is why jobs will go. Even some of the right hon. Gentleman's hon. Friends are now pointing out the damage that is being done to serious British businesses. Business is being driven offshore by a Chancellor who does not care.
9.40 pm
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