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The right hon. Member for Oldham, West and Royton suggested that my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), a former leader of my party, was indulging in a mad fantasy in his stripping away of the Salome-like veils of the Prime Minister’s thinking and motives, but neither the right hon. Gentleman nor any other Labour Member has come up with any more credible theory than my right hon. and learned Friend’s damning, if scary, analysis.
Michael Jabez Foster: Will the hon. Gentleman give way?
Mr. Stuart: I will do so shortly.
We were told in 1997 that things could only get better. The incoming Labour Government could not believe their luck: they found that they had a large Commons majority and huge public good will, and that the basket-case economy that Labour had left behind in 1979 had been transformed by the now unpopular Tories into the most dynamic, flexible and fast-growing market economy in Europe. Five years of continuous growth from 1992 meant that Labour’s biggest economic challenge was to maintain stability and avoid wrecking what they had inherited.
Mr. Chaytor: Will the hon. Gentleman give way?
Mr. Stuart: In a moment, after I have made a little more progress.
The Labour Government could, therefore, fairly quickly turn their collective mind to the improvement of the lot of their historical and core constituency: the working class. In my speech, I plan to examine this Finance Bill in the context of that mission to improve the lot of hard-working people, and particularly the working poor. The Government have delivered some noticeable successes. The minimum wage dreamt of by Keir Hardie was implemented without the dire employment impacts initially forecast from the Opposition Benches. Economic growth has continued year on year, and employment has grown—even if at a slightly lower rate than under the previous Government of John Major.
On the back of that, the Prime Minister walked into No. 10 last summer with a reputation as a sound and competent manager of the nation’s finances and as someone who cared passionately about the plight of the working poor. During his time as Chancellor, he used the tax and benefit system to increase the average incomes of the poorest tenth of the population by 12 per cent. and cut those of the richest tenth by 6 per cent. Even if he was not allowed to say it in public, he did redistribute wealth. He set ambitious targets for the elimination of child and fuel poverty, and consistently championed his flagship new deal programme.
Michael Jabez Foster: The hon. Gentleman’s concern for the poor is touching, but when did the Tory party decide not to investigate further the flat tax, which was all the rage about two years ago?
Mr. Stuart:
Like a minority of his colleagues on the Labour Benches, but none the less too many, the hon. Gentleman wants to arrogate sole concern for those
with the least in our society to his own side. In the most arrogant and patronising way, he wants to suggest that Opposition Members are not as committed as him to creating a fairer and more decent society, not least for those with least. The difference between the two sides of the House is the methods of carrying out that programme; that is what separates us. The Opposition never arrogate moral superiority over Labour Members. We are more interested in delivering something better for the people of this country that will sustain and grow our wealth, not least for the benefit of those who have least in our society.
The flat tax is a way of looking at creating a more effective tax system. The Conservative party is not closed off to ideology and incapable of looking at new ideas. We will consider any ideas that will create a more dynamic economy, so that we can have a prosperous society for the good of all and first-class public services.
Michael Connarty: I am listening to all the allocations suggested by Conservative Members of tax cuts here and tax cuts there. They know that they are talking about expenditure, but the reality is that in their proposed tax take they are about £10 billion short of the money required for the building programme that this Government are undertaking to repair the damage done and the massive under-investment that took place under the hon. Gentleman’s party’s Government. Which services does he think could be taken away without affecting the poor—which particular building and which particular service that we have provided? There is a £10 billion gap in what has been said by his party today.
Mr. Stuart: One of the great dangers in political life is that, when one repeats a mantra often enough, one starts to believe one’s own propaganda. Those figures are entirely invented, and their repetition by Labour Members does not make them true. What is true is that the Bill increases taxes on 5.3 million households. That is the hon. Gentleman’s Labour party’s record and the legacy of the party of Keir Hardie to people around the country.
Mr. Stewart Jackson (Peterborough) (Con): Will my hon. Friend give way?
Mr. Stuart: If I may, I shall make a little more progress before I give way to my hon. Friend, who I know will have trenchant remarks to make, not least because of the challenges faced by his constituents in Peterborough.
Imagine my pride when I found myself in Washington DC last week, discussing climate change with various senators and congressmen on the hill. I knew that my Prime Minister was coming, and Pennsylvania avenue was closed, the bunting was out and people were lining the streets. Unfortunately, after a while I realised that it was not for the visit of the Prime Minister but for that of the pontiff. I realised that the Prime Minister’s great relaunch from his troubled Government at home had been completely mistimed.
Of course, the Prime Minister’s lack of timing is particularly relevant to the Bill, because it comes just when my constituents are finding it hardest to make
ends meet, facing high council tax rises—it has doubled under this Labour Government—and seeing their fuel costs going through the roof. Many of them are shift workers in Hull, having to travel from rural Holderness into work each day, and they are finding the costs enormously hard to bear. Just at this time, when so many people—the very backbone of this country—are struggling most to make ends meet, the Prime Minister decides to hit them with an increase in taxes.
Lack of timing is in many ways the Prime Minister’s weak point, as, equally, is his inability to take responsibility. It was almost comical when he was asked—in the United States, I think—about selling gold at the lowest point in the market for decades, why he had done this and whether he was responsible. He said no, he was not—it was the fault of the previous Conservative Administration. This is a man for whom denial is some kind of speciality.
The Prime Minister, as Chancellor, came before the Treasury Select Committee and was asked about the change to the 10p rate. One of my hon. Friends asked him to explain to the Committee why, if the economy is doing so well, low earners should lose out. He said:
“I do not accept your conclusion about low paid workers”,
suggesting that they would not lose out in the end. When asked again about those who would lose out under the change, the then Chancellor said:
“At the end of the day I do not think we will see the effects that you are saying”.
There was the report of the meeting of the parliamentary Labour party on 1 April—I would be grateful if Labour Members intervened on me about this—at which the Prime Minister was rightly challenged by Labour Members about the impact of the abolition of the 10p rate. He responded by pointing out that no one would be less well off as a result of the 10p tax rate abolition stated in his last Budget. If the right hon. Member for Oldham, West and Royton wants to intervene, perhaps he can share with the House whether that incident took place. Clearly, no one wants to get to their feet. I think that we can conclude from that that the Prime Minister did in fact say that no one was going to lose out—in complete contravention of the truth. I now give way, as I promised, to my hon. Friend the Member for Peterborough (Mr. Jackson).
Mr. Jackson: I thank my hon. Friend for giving way. Does he share my concern at the Government’s lack of contrition about the fact that, because of their fiscal policies, they are forcing more of the poorer working people to pay taxes, and at the same time more than 5 million people are on some form of welfare? Their uncontrolled, unfettered immigration policy has meant that more people who want to work in this country are being forced on to benefits.
Mr. Stuart:
My hon. Friend is of course absolutely right. So few of the benefits of job creation over the past few years have gone to those who voted for this Labour Government in the hope that they would provide benefits to them—benefits in the form not of a
girocheque, but of the sustainable work and employment that I know my hon. Friend’s constituents would like to see.
It is noticeable that when the Government were riding high in the polls last year, Labour Members—with a very few honourable exceptions—seemed strangely indifferent to the impact of the abolition of the 10p tax rate on the working poor. It is interesting to note that the reawakening of the Labour party conscience has coincided with plummeting poll ratings and the realisation that many Labour MPs could lose their seats. In preparing for this debate, I decided to look back at last year’s Finance Bill debates. Again, with just one honourable exception, there was barely a mention of the Government’s decision.
Britain’s families are hurting. They are hurting every time they fill up their cars; they are hurting every time they go shopping; they are hurting every time they receive their council tax bills. They are hurting from a constant barrage of price rises and tax increases. This Budget hits ordinary families up and down the country—people whose only luxuries are having a couple of pints on a Friday night, and who are seeing the price go up, and a week’s holiday in the summer.
On Saturday, I held my normal street surgery in Withernsea, and Joan Kaye came to speak to me about the price rises. She said, “How am I supposed to make ends meet when my income tax is going up from £22 a month to £41 a month?” Her council tax is going up by £5 a month, and her gas and electricity is up by £36 a month. She has at least £60 extra a month to pay out and cannot survive.
Another constituent e-mailed me this morning, saying:
“I would like to voice my objection to the abolition of the 10 per cent. tax band. My husband has had to leave work with Alzheimer’s...he is 61 and has been retired 2 years. This year I have given up work to be with him.”
Their two pensions take them just out of benefit, and they find that they are worse off. These are the people who are being hit by this Government’s attack on the hard-working and those who retire early, often because of illness.
Anne Main (St. Albans) (Con): Would my hon. Friend like to pick up on the remarks made by the right hon. Member for Oldham, West and Royton (Mr. Meacher), who described the whole thing as a mishap? As I understand it, a mishap is something that is not planned and happens by accident. If that is really what Labour Members think of their Prime Minister—that he operates by mishap—we should be incredibly worried about this Bill.
Mr. Stuart: My hon. Friend is right. Almost every contribution from a Labour Member contained two themes. One is a fury that the Conservative Opposition have not provided the solution so that they can adopt it—after all, they have adopted so many of our policies lately. The other is a complete inability to explain why a Labour Prime Minister, who supposedly has a lifelong commitment to helping working people who have the least in our society, should deliberately bring about this policy. Labour Members have given reasons, such as incompetence—
Mr. Stuart: Or indeed mishap. We have not heard a proper explanation, but perhaps the Minister will be able to give us one before we finish this evening.
Lynne Jones (Birmingham, Selly Oak) (Lab) rose—
Mr. Stuart: I shall now come to a conclusion.
This Budget hits ordinary families up and down the country—people whose only wish is to contribute to society, play by the rules and leave a couple of quid to their children when they pass away. They are the bedrock of our society, the people who get up every morning and earn an honest living. That is the constituency that the Prime Minister and the Labour Members who vote for this Finance Bill will have betrayed. They are the millions who gave that Prime Minister the benefit of the doubt last year when, unelected and unopposed, he introduced himself as their new leader. Those millions now find themselves drowning in debt, yet they are being hit for more by a Prime Minister who is both out of touch and out of time.
9.21 pm
Mr. David Chaytor (Bury, North) (Lab): It is a pleasure to follow the hon. Member for Beverley and Holderness (Mr. Stuart), although I was deeply disappointed that in his passionate espousal of the cause of the working poor he was not able to remind us what the standard rate of income tax for the working poor was under the previous Tory Government and at what level of earnings that 23p standard rate of income tax kicked in. Before we progress this debate, we must expose the hypocrisy of those on the Conservative Benches when they now talk about the plight of the working poor.
I feel strongly about some aspects of the elimination of the 10p rate of income tax, but I do not intend to focus my remarks on that. I should say that I associate myself with the general approach adopted by my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher). He gave the House some specific suggestions on the way forward, and I hope that the Government will consider some of them in the next few days.
I want to draw attention to the hidden agenda of this Budget. Overall, the Budget is a good one for the vast majority of British people: it supports pensioners, children and families, and it makes the vast majority of British people better off. There is a difficulty with the anomaly of the impact of the abolition of the lower rate on a certain group of people, and I know that many others have discussed that. What this Budget also does, possibly for the first time in 11 years of Labour Budgets, is take seriously the issue of climate change and the environment. Interestingly, although I have not been here for the entire debate I cannot recall a single Conservative Member touching on that issue.
The Budget of course paves the way for the establishment of five-year carbon budgets. The UK is the first country in the world to adopt that policy. It makes an important commitment that in the third phase of the European Union emissions trading
scheme 100 per cent. of permits will be auctioned, which is an enormous improvement on phases one and two; and it recognises that the taxation of aviation has to change from a per person basis to a per plane basis. To their credit, the Opposition have raised that issue over the past year or two, but they chose not to mention it this evening.
The Budget also takes other important steps forward in respect of transport taxation, particularly the changes to fuel duty and vehicle excise duty, and contains ambitious targets for zero-carbon homes and new buildings. I want to say a word or two in support of fuel duty, because in this House, over many years, fuel duty has been the issue that almost everyone has united against.
We now need to realise, given not only the urgency of the problem of climate change but the imminence of peak oil, that fuel duty is a sensible, effective, environmentally sustainable and efficient form of taxation. It is socially just, because it impacts least on those who consume the least fuel. It is easy to collect and, in the long term, it will serve to conserve our supplies of fossil fuel, rather than burn them off in a great orgy of consumption.
I want to put the case for fuel duty, but I do not argue that fuel duty should rise every year infinitely, without any changes to other forms of taxation. What is especially good about the Budget is that it balances a slight increase in fuel duty with a significant reduction in income tax. That is the way forward and, for the first time in 11 years, the Government have started to take seriously the important message about shifting the burden of taxation from the bads to the goods, reducing taxation on income and labour and increasing taxation on pollution, and I welcome that. I am just desperately sorry that the official Opposition, who have tried over the past two years to identify themselves opportunistically with the politics of climate change and the environment, are silent on the really important measures in the Budget.
I welcome the ambitious targets for zero-carbon buildings. All new homes should be zero-carbon by 2016 and all new commercial buildings by 2019. However, we still have the problem that the overwhelming majority of buildings in the country are not new. Most were built decades ago and, in some cases, centuries ago. We have to do more to address the problem of retrofitting those buildings, because they are the source of the most significant proportion of carbon emissions.
I know that other hon. Members wish to speak, so I shall conclude my remarks. Although the Budget does the right things in terms of climate change and the environment—it takes huge steps forward—the Government need to do more. We have not yet succeeded in properly explaining to the population as a whole the purpose of this historic shift in the basis of taxation away from taxation of labour to taxation of pollution. My final comment is an appeal to my right hon. Friend the Minister—I am sure that she will pass this on to other Treasury Ministers and the Chancellor—to ensure that taxation goes hand in hand with explanation. If the Government do not take more seriously the need to explain to the citizens of the United Kingdom the urgency of the challenge of climate change and the imminence of the threat of
peak oil, we will not be successful in building support for the green tax policies that the Government are now successfully pursuing.
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