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My hon. Friend raises the important issue of young people, for whom the changes in the minimum wage often make a particular difference. As I said, over the last couple of years, those changes have been worth £13 a week for those on low incomes and about £11 a week for the youngest age group. Although that has made a significant difference to their income, my hon. Friend is right that we are keen to do more to help younger workers who need investment in their
skills to get the chance of a better job. Our overall approach across the Government has been to support people, through work where possible, but children and pensioners, of course, cannot go out to work. We have given particular additional support to them as well, on top of such things as the working tax credit, but I recognise the points that my hon. Friend has made.
Mr. Graham Stuart (Beverley and Holderness) (Con): I am extremely grateful to the Chief Secretary for giving way. Further to the question from the hon. Member for Plymouth, Sutton (Linda Gilroy), can the Chief Secretary confirm that the number in the press at the weekend5.3 million peopleis correct? Will she share that with the House today?
Yvette Cooper: Indeed, those figures have been published as part of parliamentary answers, but I say again that they have not included such things as the winter fuel payment, which is an important factor. I would also say to hon. Members that they might be interested to know that about half those households that pay more this year are in the top half of the income distribution. It is right to say, as the IFS has said, that we are providing the most support for those who are on the lowest incomes.
Mr. David Chaytor (Bury, North) (Lab): While I fully accept and welcome the many positive proposals in the Budget, does the Minister accept that it is utterly perverse, given that a minority of households are losers, that they should be disproportionately represented among those just above the lowest income bracket?
Yvette Cooper: As I have just said, interestingly, the figures show that around half those who are paying more as part of this particular package are in the upper half of the income distribution, so in fact the distribution is rather different from how it has often been presented in the media. The IFS has made it very clear that those in the bottom third of the income distribution are the biggest gainers.
Let us be clear: we have to recognise the fact that in any major package of reforms it is difficult to help every household, but that is why we look continuallyin every single Budget and in every pre-Budget reportat what more we can do so that those who do not benefit in any one year may well be able to benefit in a future Budget or pre-Budget report.
John Bercow (Buckingham) (Con): The Chief Secretary has referred to the practical difficulties of making tax changes when the tax codes for this year are established, but she also referred to, and boasted about, increases in the national minimum wage. Given that the Government have announced increasesrespectively for the adult and youth rates of 21p and 17pto take effect from October, will she concede that in principle there is nothing to stop her raising the adult rate to £6 and the youth rate to £5 from October?
I appreciate the fact that the hon. Gentleman recognises the increases in the minimum wage that have taken place. I suspect that he is perhaps one of the few members of his party who have not
necessarily been adamantly opposed to the minimum wage throughout its history, as I know many of its members have been. Certainly, we take the advice of the Low Pay Commission in setting the minimum wage for the future and we shall continue to do so. We have a proud record of increasing the minimum wage.
Mr. George Mudie (Leeds, East) (Lab): I wish the Minister to see whether we can have a figure, even if it confirms the 5.3 million. That was the figure given last year by the IFS, but it has obviously been overtaken by the tax credit changes and so on. Is 5.3 million people still a valid figure or is it now outdated?
Yvette Cooper: My hon. Friend makes an important point, as the figure changes all the time because peoples income changes all the time. That is the figure that we have confirmed as part of parliamentary answerswe have set out parliamentary answers in this areabut it is also the case that, with every Budget, further changes are made. For example, the winter fuel payment, which is not taken account of, is part of that. Also
My hon. Friend the Member for Leeds, East (Mr. Mudie) will also appreciate that there are changes to the winter fuel payment and such things as the minimum wage, which are obviously not taken into account as part of this. Of course, there will be further changes.
Angela Browning (Tiverton and Honiton) (Con): At the beginning of March, I exchanged correspondence with the Financial Secretary to the Treasury about the 60 to 64-year-olds who would lose out. She wrote back to me admitting that there would be losses, but that they
will be relatively modest, at about £2 per week on average.
Those losses will affect about 1.5 per cent. of people on low incomes, in some cases both people in a household. When the current Prime Minister announced the Budget, did he entirely disregard the people who would pay more tax this year than they did last year, or was this an omission that was not recognised at the time?
The work of the former Chancellor, and that of the current Chancellor, has strongly supported pensioners. In fact, the poorest third of pensioners are on average more than £2,000 a year
better off since 1997 as a result of the changes that we have introduced. This year we are increasing the winter fuel payment for the over-60s as well as the over-80s, and introducing a range of other changes such as free bus travel.
Jim Cousins (Newcastle upon Tyne, Central) (Lab): I understand that my right hon. Friend is trying to help the House, but does she accept that there are millions of low-paid losers who are not entitled to tax credits, and millions more who are but who do not claim them because their earnings change from week to week and they do not want to become enmeshed in overpayments? They face food, fuel and rent increases this week, or this month. They cannot wait for a package in 2009: they need it in 2008.
Yvette Cooper: Many of those families will be about £500 a year better off than they would have been under the tax and benefits system in 1997. It is right for us to continue to support households, which is why we introduced and increased the working tax credit to give additional help to, for instance, people with incomes of £14,000 or £15,000 a year. We have been working on the issue, and my right hon. Friend the Chancellor has said that he intends to return to it as part of his work on the pre-Budget report and on future Budgets. He wants to take into account not just those on low incomes with children, in whom we have already invested a considerable extra amount, but those with no children.
These measures will build on the progress that we have made over the last 11 years. Overall, the lowest-income families are receiving much more help through lower taxes and higher credits and benefits than in 1997. In practice, for the poorest prisoners and families with children
Mr. Patrick McLoughlin (West Derbyshire) (Con): On a point of order, Madam Deputy Speaker. Can you confirm that the debate can continue until any hour, which means that every Member will have ample opportunity to speak and the Minister has ample opportunity to give way as often as she wishes in order to clear the matter up?
Madam Deputy Speaker: I can certainly confirm that the debate can continue until any hour, but it is entirely up to the Ministerand, indeed, any other Memberwhether to give way or not, regardless of the time factor.
Yvette Cooper: I believe that the right hon. Member for West Derbyshire (Mr. McLoughlin) is one of the few Members on the Conservative Front Bench who was not a member of the Bullingdon club, but that does not appear to have stopped him engaging in student politics.
Peter Bottomley (Worthing, West) (Con): On a point of order, Madam Deputy Speaker. Is it in order for an ambiguous remark to be made that could encompass your response to the point of order properly made by my right hon. Friend the Member for West Derbyshire (Mr. McLoughlin)?
Yvette Cooper: Overall, the lowest-income families are benefiting by literally thousands of pounds a year as a result of the changes that this Government have made. The poorest third of pensioners are more than £2,000 a year better off than they were in 1997, and the poorest fifth of families with children are, on average, more than £4,000 a year better off. That means over £80 a weekcash that makes a real difference to those hard-pressed families, and cash that has, more often than not, been opposed by Opposition Members through their continual opposition to the tax credits system. Let us be clear about the crocodile tears we have seen from the Opposition [ Interruption. ]
Yvette Cooper: Since when have the Opposition cared about those on low incomes? Since when have they cared about the 10p rate? Last October, when the shadow Chancellor made his big speech calling for tax cuts, did he say that his priority then was to restore the 10p rate? Of course not. Did he say then that he was worried about low-income households? Not a bit of it. What he talked about then was inheritance tax for millionaires. In his big speech on tax reform in February, did he say that he wanted to change the 10p rate? Not once. In his website call for action on Budget day this year, did he mention the 10p rate? Not once.
What is the shadow Chancellors policy now? The Conservatives would vote to keep the 10p rate now, but they will not say where the money would come from. They will vote to keep the rate, but they will not tell us whether they would restore it. The shadow Chancellor tells us about plenty of other taxes that he has promised to cut, but there is nothing on the 10p rate. They would vote to keep the rate, but now they admit that they do not even like it. The hon. Member for Runnymede and Weybridge (Mr. Hammond) said this weekend:
We would not necessarily re-introduce the 10p rate. We are quite happy with the idea of simplification.
All the shadow Chancellor could say today was that he wanted to reopen the whole package. Perhaps the Conservatives could tell us whether that means he now thinks that we should stop the 2p cut in the basic rate.
Once again this is shocking opportunism, and we will not take any lessons from the Conservative party on helping families on low incomes. That party opposed the minimum wage and even now still wants to opt out of the social chapter. Nor will we take any
lessons from the party that is opposing the funding for the winter fuel payment this year and the child benefit increase next year.
Mr. Frank Field: I am very grateful to my right hon. Friend for giving way, and pleased that she is making the point that when we debated this matter last year, the Opposition sat on their hands and did not support the amendment proposed by Labour Members. She has said that the Chancellor will return to the issue in the autumn. I know that her hands are tied on this, but may I remind her that the House returns to it next week? Many of us want to know what the Government propose to do to ensure that 5.3 million lower-paid workers are not made worse off by the Budget.
Yvette Cooper: I say again to my right hon. Friend that the distribution of households that are paying more is rather different from how it has been portrayed in the media. It is clear that the lowest-income households are the ones who benefit the most. This is an area on which we continue to work and, following on from our work on child poverty, we will look at those people without children and what more can be done to support them. We will also take the views not simply of MPs, but of stakeholders and others.
I want to return to the important point about the winter fuel payment, which is important for pensioners this year. In order to fund the additional winter fuel payment, as well as child benefit and child tax credit increases the following year, we are increasing alcohol duty as part of this Finance Bill. Over recent years, as incomes have risen, alcohol has become more affordable. In the supermarket, a bottle of wine costs around £4, whereas 10 years ago, the equivalent figure was nearly £4.50. The extra duty is worth only around 14p, so that bottle of wine is still cheaper than it was a decade ago. That is why this is a fair time to raise a bit of extra revenue from alcohol to help pensioners and families with children.
Mr. Dunne: I am grateful to the Chief Secretary for finally giving way. She has now mentioned the winter fuel payment nine times in her speech. She has just told us that it is being funded through a permanent increase in alcohol duty. Over what period will the increase in the winter fuel payment last?
Yvette Cooper: The Budget clearly sets out that we are paying for the winter fuel payment and also for the child benefit increase and the increase in the child tax credit in the following the year, so we are benefiting both pensioners and children through the increase in alcohol duty. The Opposition voted against that increase, so they are saying no to pensioners on their fuel bills this winter, and they are saying no to families with children on their increase in child benefit for the following year. Opposition Members have not been honest about that with their constituents, have they?
Rob Marris (Wolverhampton, South-West) (Lab): I entirely understand the Governments position that such matters have to be looked at in the round, in terms of countervailing measures such as the increases in tax credits, age-related personal allowance and winter fuel allowance, and that therefore the 5.3 million figure is wrong, particularly in the context of the households to which she referred. If one takes into account such countervailing measures, and also that some households have a low-paid earner and a higher-paid earner, what is the net number of households that will loseif there are anybecause of the abolition of the 10 per cent. tax rate?
Yvette Cooper: The figures change, but we have set them out in parliamentary answers and they are that four out of five households will benefit or stay the same. One in five will pay more as a result of the package, but that does not take account of measures such as the winter fuel payment, because it is difficult to take account of such measures against the personal tax package.
There is a further series of changes in the Finance Bill around inheritance tax and allowing married couples and civil partners to transfer unused inheritance tax allowances to each other, and there are also
Yvette Cooper: I have given way many times. The Finance Bill also makes changes to allow people who stay in this country for many years as non-domiciles to pay on a fairer basis. People come here from across the world to work, and we should continue to welcome them, but people who make their lives here should make a fairer contribution. That is why we are making changes in that regard. We are also making key changes
Yvette Cooper: Next years Budget will also be the first to set out carbon budgets for the nation, following the implementation of the Climate Change Bill. That will make the UK the first country in the world to put carbon budgets into legislation. This years Budget announced funding for the green homes service, but the Finance Bill particularly includes measures to promote more environmentally friendly cars, with changes to vehicle excise duty, and further announced changes will, of course, be implemented through next years Finance Bill.
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