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The writing of the history of the Brown premiership may be quite imminent. I am not given to betting—not least because it is a good way to lose money—but I see that the shortest odds on the Prime Minister’s time of departure are for the final quarter of this year and that
the second shortest odds are for the third quarter of this year, the quarter that started today. The end may be fairly imminent. When the history of the Brown premiership comes to be written, people will offer many explanations on how he came to be such a disappointment in the post. They will say, for example, that he should have called the election in November and that that was a great missed opportunity. They will say that the lost tax discs were indicative of a wider malaise in the Government and that the visit to Iraq during the Conservative party conference made it hard for the Prime Minister to sustain the position that the era of spin had come to an end. All kinds of explanations will be offered on why he failed to live up to expectations, but the one that will last longest in the public mind—because it is not to do with Westminster political to-ing and fro-ing, but with the everyday lives of millions of people—will be the fiasco of the doubling of the 10p tax rate.
Let us look back, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) did, to the announcement that the Prime Minister made in his final Budget speech as Chancellor of the Exchequer. As the Treasury Committee rightly says, there are huge dangers in seeking to pull rabbits from hats, but that is precisely what the then Chancellor sought to do. It was a manifestly political move—about his positioning, his inheritance and his wanting to be perceived as the rightful heir to Blair, a mantle that he was keen to claim from the right hon. Member for Witney (Mr. Cameron). Labour Back Benchers cheered with great fury. I have been a Member of Parliament for only three years, so I have not had the opportunity and privilege of witnessing many Budget speeches. The Budget speech that I am talking about was significant, because it was the final one of an extremely long-standing Chancellor who had served in office for a decade. We remember that the Labour Back Benches resembled a football stadium after a winning goal had been scored in the last minute. There was a sense of euphoria that their man had come up with such a brilliant scheme—that he had out-manoeuvred the Conservative party and made it inevitable that he would become the Labour leader and Prime Minister and that Labour would go on to win the next general election.
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That was emphatically the mood among Labour Back Benchers on that day, so it is hard to believe, looking at them now, that that was ever their belief. As far as I can work out, the only Labour Back Benchers who now attend these debates are those who are critical of Government policy and wish to express their criticism. I am happy to give way to any Labour Back Bencher who thinks that this policy has been handled with perfection throughout the process, and perhaps we can all learn from that. I suspect, however, that there are two types of Labour MP—those who openly say that it was a fiasco and those who believe that it was a fiasco but do not say so openly.
The tragedy for the Prime Minister is that this is the man who said,
“best when we are boldest...best when we are Labour”,
yet has fallen down in trying to ape and emulate the Conservative party in his appeal to the population as a whole. He wanted to be the Chancellor and the Prime Minister who reached the promised land of the 20p basic tax rate, thereby managing to achieve what the
Conservatives did not achieve in 18 years in government. Even his heroine, Margaret Thatcher, whom he invited to Downing street to celebrate her achievements, had not managed to reach the 20p basic tax rate, yet here he was showing how it could be done. It was an extraordinary measure for him to implement. So overtaken was he by this sense of destiny—the sense that he could square the circle, rise above party, become the father of the nation and unite all these discordant political threads—that he completely failed to notice that 5.3 million people, the poorest people in the country, would lose out as a consequence of his policy.
Mr. Redwood: In the midst of this diatribe, does the hon. Gentleman have any thoughts on the new clauses before us?
Mr. Browne: I have plenty of thoughts, and I will unveil them all. I should compliment the right hon. Gentleman. The Conservative party is in a very optimistic mood about its prospects at the moment, and I see that one Conservative website is asking its readers to pick the dream first Conservative Cabinet. One has to be careful about schadenfreude—
Mr. Deputy Speaker (Sir Michael Lord): Order. With great respect, the hon. Gentleman has spent enough time setting the scene; perhaps he can now deal with the new clause before the House.
Mr. Browne: I will reveal on some other occasion what the website said about the right hon. Member for Wokingham (Mr. Redwood), but it was extremely positive.
What I am saying is relevant, Mr. Deputy Speaker, because the motivation for doubling the 10p tax rate was entirely party political. It had nothing to do with alleviating poverty. Anyone could see with only a moment’s examination of the policy that it was going to be disadvantageous to millions of the poorest citizens in the country. With respect, if my analysis is somewhat party political and partisan, it is because that was the Chancellor’s precise motivation when he introduced the policy.
Labour Back Benchers cheering euphorically and waving their Order Papers was phase 1 of the Labour party response. Phase 2 was the rebellious phase, when the right hon. Member for Birkenhead (Mr. Field) marched the Government to the top of the hill, in effect taking on the role of Prime Minister and deciding Government tax policy from the Labour Back Benches. It was an extraordinary act of revenge on his long-term nemesis that was interesting to watch and enjoy from these Benches. That rebellion was extremely successful. We then had a mid-term mini-Budget in which what the Treasury Committee describes as
“probably the least bad option”
was brought forward by the Chancellor despite protestations that he would not do so.
Mr. David Hamilton: Will the hon. Gentleman get to the point? What is the Liberal position?
Mr. Browne: I am getting to the point, but the Labour party could learn much from the process because it is instructive on the way in which a political party that has lost its moorings and is trying to position itself in a way that is advantageous to Opposition parties can end up— [Interruption.]
Mr. Deputy Speaker: Order. We must not have sedentary interventions.
Mr. Browne: I am grateful, Mr. Deputy Speaker.
The second phase was the extremely successful rebellion that the right hon. Member for Birkenhead led. We must give him great credit for being the architect of much Government fiscal policy.
The third phase was the climbdown, with the right hon. Gentleman rightly apologising for some of the more personal elements of his comments about the Prime Minister. He also expressed his great gratitude because the problem had been resolved and put to bed, and the Chancellor of the Exchequer had found a solution. Of course, there was a problem with the solution: the Chancellor was spending £2.7 billion that he did not have—£2 billion of which was going to people who were already net beneficiaries of the tax changes. Nevertheless, there was a sense that peace had broken out on the Labour Back Benches and that the issue had been resolved.
Mr. Siôn Simon (Birmingham, Erdington) (Lab): I am sure that the hon. Gentleman told the Tories five minutes ago that one had to be careful about schadenfreude, yet he seems to have had it injected into his arteries. Will he please get on with the business of telling us how high the Liberals would raise the tax?
Mr. Browne: I am doing precisely that. However, as I have already said, the motivation for the measures was not helping poor people. Those who believe that our constituents on low to middle earnings welcomed the doubling of the tax rate delude themselves. The motivation was to ensure that Labour’s poll ratings went into the stratosphere. Judging by the effect of the policy, as well as other mistakes that the Prime Minister has made, on Labour’s poll ratings, it did not have its intended consequences. However, that does not mean that improving poll ratings was not the motivation.
Mr. Frank Field: The hon. Gentleman is not a betting man but we are. What odds would he give on his touching on one of the amendments before he finishes speaking?
Mr. Browne: They are extremely high. I tabled one new clause and one amendment. They are excellent and I recommend them to hon. Members, but they would not be necessary if the Prime Minister had not sought to wrong-foot the leader of the Conservative party and achieve the Thatcherite dream by pulling a rabbit out of a hat and doubling the 10p tax rate, which adversely affected the income of 5.3 million households. That is a reasonable point, although I can understand that Labour Members do not want to dwell on it.
Mr. Browne: I will give way again to the hon. Gentleman so that he can tell me which of the 5.3 million households have written to him, expressing gratitude for the previous Chancellor’s policy changes.
Mr. Simon: The hon. Gentleman has made it clear that he distrusts the motivation of the Prime Minister when he was Chancellor for reducing the basic rate of income tax to 20p. He must have said that a hundred times. Will he please now tell us how high the Liberals would have raised the basic rate and what they would do about everything else?
Mr. Browne: We had a long discussion in Committee on precisely that point and I can repeat it for those who were not present, although the hon. Gentleman was. Our party policy is for a basic rate of 16p in the pound. We believe that people on low incomes are paying too high a proportion of their income in taxation. We do not agree with the Conservative party policy position—that the Conservatives will match whatever level of tax the Labour Government set. That is not right or responsible, so we are in favour of lower marginal rates of tax for people on low and middle incomes. I will revert to some of the other proposals shortly.
Let me complete the phases of the Labour rebellion. We began with the joyous response, then we had phase 1 and we moved to the third phase, which was the climbdown. Now we are in the fourth phase, which is rebellion rising up again. That must be a source of great dismay to the Financial Secretary and the Prime Minister, because I suspect that they thought that the issue had been quietly put to one side. Eighty per cent. of those who were losers—roughly speaking, about four out of five of the losers from the doubling of the 10p rate—had been bought off.
What is more, millions and millions of people who were net beneficiaries had been given even more money, although they will all have to repay it eventually. Indeed, we will all have to repay it eventually, because borrowing is, after all, only deferred taxation. In the short term, however, people have more money in their pockets. I assume that the calculation that the Chancellor and the Prime Minister made was that if they could buy off 80 per cent. of the losers, the remaining 20 per cent. would fall by the wayside and not many people would notice. By definition, they were the poorest 1.1 million people, and in many cases probably do not have the loudest voices or the best opportunities to make their grievances known. That was the political calculation.
Of course, I acknowledge—others have made this point, including the hon. Member for North-West Leicestershire—that there is always a difficulty on these occasions over whether to go for the simple, easy-to-understand, less well focused and therefore possibly more expensive option or the complex but more targeted option. What the hon. Gentleman has proposed, aligned with what the Government propose, means that they are jointly going for the option that is both expensive and complex. That is probably quite a messy solution, although if they cover all their bases—that would be the result of the hon. Gentleman’s amendment—they can ensure that everybody is fully compensated. The obvious question is why we got ourselves into this mess in the first place, and that is what I have been trying to help the House understand in the past 10 minutes.
Mr. Frank Field: The odds on the hon. Gentleman reaching his amendment before he sits down are changing as the hours go by. One useful thing that our constituents would like to know is whether, given that the Government have increased allowances, he would advocate clawing that back next year or making it part of the tax threshold.
Mr. Browne:
That is precisely what I am waiting with bated breath to hear the Financial Secretary announce— [ Interruption. ] I do not always agree with the Conservative spokesman, but the woes and ills of the Labour party are not my No. 1 priority, either. To be honest, one
would think that there were enough people in the Labour party wondering where it all went wrong without the need for anybody else to supplement that process. My concern is with the 5.3 million people in this country whom the then Chancellor and now Prime Minister sought, as a deliberate act, to make poorer, even though they were the poorest people in the country. He did that so that he could claim that he was a better heir to Blair than the leader of the Conservative party, make a connection with middle English, despite the fact that he is not English himself, and be an exciting and reforming Prime Minister who could win a fourth term for Labour and reach the promised land of a 20p basic rate, which Margaret Thatcher never achieved.
Mr. Browne: That was the motivation, so Labour Members can talk about the politics and I will talk about the 5.3 million, which I will do after I have taken this intervention.
David Taylor: I may have had too long a slot earlier, but is the hon. Gentleman familiar with the internet slang term ROFL, which stands for “rolling on the floor laughing”? That is what those watching this who take an interest in politics must have been doing when he said that he was not really interested in the woes of the Labour party, because he has spent 18 minutes trying to stir the pot in a party political way.
Mr. Browne: It was not me who started it; it was the Prime Minister, with such an appallingly ill-judged electioneering Budget. Anyone who thought that his judgment was sound— [ Interruption. ] I give credit to the right hon. Member for Birkenhead, who was one of the, I think, eight Labour MPs who did not sign the Prime Minister’s nomination papers—
Mr. Browne: Only five—well there we go.
The right hon. Gentleman’s judgment has been immaculate throughout. He realised not only that 5.3 million people would lose out as a result of this process, but that the architect of the policy was not fit to be leader of the Labour party or the country. However, I cannot see anyone else who made such sound judgments.
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Mr. Browne: I am having difficulty getting to the nub of my argument, so perhaps the hon. Gentleman will allow me to make a little more progress—[ Interruption.] I have been very generous and taken many interventions from Labour MPs who are suffering from a collective guilt complex.
As a result of this deliberate political calculation, 5.3 million people lost out. The Government’s response was initially one of denial, and the Prime Minister told the Treasury Select Committee that no one would lose out. However, there now appears to be an acceptance, including by the Prime Minister, that more than 5 million people will lose out as a result of the changes that he announced. There was then a long and protracted process
while the Government tried to decide what to do and the right hon. Member for Birkenhead held a gun to their head. Then the announcement was made that the Government were going to borrow £2.7 billion, £2 billion of which would be given to people who were net gainers in any case. And we are now in a position of having 1.1 million people who are still losers.
What can we learn from that process? I have tabled a new clause and an amendment. The new clause seeks to ensure that, when changes are made to the levels of income tax, a proper assessment is made of the impact of the changes. One of the biggest lessons from this hopeless process must be that sleight of hand—the rabbits being pulled out of a hat—will be consigned to history, and that there will be greater transparency in the setting of taxation. Members of the Treasury Select Committee and Members who wish to participate in debates in the Chamber should be able to have the information clearly and concisely set out on who will be the winners and who will be the losers. We should not have to rely on organisations such as the Institute for Fiscal Studies. It is an excellent organisation, but there is no reason why it should have the job of telling Members of Parliament the implications of Government policy for people on low and middle incomes.
Amendment No. 6 would require the Chancellor to report within six months on the impact of the 10p compensation mechanism on people earning less than £13,000 a year. Labour Back Benchers have expressed support for the principle behind the amendment, which is to ensure that this issue does not disappear into the long grass of politics. We do not want a situation in which everyone vents their fury and expresses their reservations here, after which the Government push their measures through using their natural majority and everyone forgets about the 1.1 million people who are still losers as a result of this change. The Liberal Democrats are keen to guard against that, and I would urge Members on both sides of the House to support amendment No. 6. The hon. Member for North-West Leicestershire estimated that between 2,500 and 3,000 people in a typical constituency remained losers, and the amendment would ensure that their interests would not be forgotten when the political debate rolled on to new territory.
Rob Marris: The hon. Gentleman claims not to have been making a load of partisan points. I shall take his claim at face value; hon. Members can make up their own minds. He has finally got round to talking about his amendment and about new clause 13, both of which deal with transparency—an attractive proposition—and with generating reports and information, which is potentially attractive. He claims to be very concerned about the position of the 1.1 million people. Will he therefore tell us why he did not put his name to new clause 20?
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