Previous Section Index Home Page

Yvette Cooper: Once again, I note that the hon. Gentleman is not prepared to make any commitment, even to any targets. He is not prepared to make a commitment to support cutting child poverty at all. We have continued to make progress in cutting child poverty and will continue to do so. I say to him again that the
6 May 2009 : Column 186
most important measures that we are taking that will tackle child poverty are those to help parents to get back into work. Some £5 billion is being invested in helping those who lose their jobs to get back into work—that is £5 billion that Conservative Members refuse to support. They refuse to support £5 billion that can make a difference to parents across the country who might otherwise slip into poverty with their families if they are not able to get the help that we are determined to provide to get them back into work. Time and again, the Conservatives oppose not only the investment that Britain needs, but the measures to help bring borrowing down afterwards.

I return to clause 71 and the pensions tax relief measure that I mentioned. We continue to support tax relief for pensions and savings—indeed, we spent nearly £30 billion on pensions tax relief last year. However, more than £6 billion of that went to the top 1.5 per cent. of earners, and that cannot be fair. On average, someone on more than £150,000 will get about £27,000 a year in tax relief, whereas a basic rate taxpayer gets only about £1,000. I see from the Opposition’s amendment that they have decided to oppose this measure and to defend unfair tax breaks for the very highest-paid people in the country.

Clauses 15 and 16 implement fuel duty increases, but even by 2013-14 the duty will still be lower in real terms than it was in 1999. The measure will also reduce CO2 emissions by 2 million tonnes per year by 2013-14.

Mr. Alan Reid (Argyll and Bute) (LD): The cost of motoring might be lower in real terms, but I can tell the Chief Secretary that on the islands in my constituency the price of fuel tends to be between 15p and 30p a litre higher than on the mainland. Will this Government not do what Governments in other European countries do and apply for a derogation that allows them to charge a lower rate of fuel duty on islands? There would be no possibility of fraud because islands are clearly separated from the mainland.

Yvette Cooper: The hon. Gentleman will know that the Chancellor has raised concern previously about differential rates of petrol pricing in different parts of the country and has pressed for further work to be done on ensuring that unfair competition does not lead to some areas paying a higher penalty. The hon. Gentleman will also know that the points that he raises are raised by those in other parts of the country, including those in more rural areas. The important thing is to ensure fair competition in the sector and to continue to monitor fuel prices, as we did when the Chancellor delayed the increase in fuel duty as a result of the high oil prices last year.

Clause 93 is part of a further crackdown on tax evasion and avoidance and proposes naming those deliberate tax defaulters who are charged with civil penalties, in addition to those on criminal charges who are already named by the courts. Along with the other measures on avoidance and evasion, that will help to secure £3 billion of tax income.

Mr. Philip Hammond: The Chief Secretary mentions clause 93—the naming and shaming clause. Will the Revenue have the power to do deals with taxpayers who
6 May 2009 : Column 187
are prepared to accept penalties rather than to be named and shamed? Will HMRC be able to use that plea bargaining arrangement?

Yvette Cooper: The purpose of this measure is to encourage taxpayers to come clean, to pay up front and to recognise things that they might have been doing in the past that are wrong. Hon. Members will obviously have the opportunity to discuss the detail throughout the detailed clause debates on the Bill, so I will be happy to hear representations from the hon. Gentleman. The measure’s purpose is to encourage people to come forward and, on that basis, people such as those whom he mentions will not be named and shamed, and the provision will apply only to the most persistent defaulters, providing a strong signal that people should pay their taxes. Ordinary people pay their taxes, and those who are on the highest incomes and can afford the most expensive accountants should not be able to avoid making their legitimate contributions to this country’s tax base.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): The Chief Secretary has been talking about maximising the income for the Government. One of the major sources of corporation tax is the oil and gas in the North sea, but tax is paid on it and it provides jobs to my constituents only if it comes out of the ground. The Government have moved a little way with the field allowance in trying to encourage investment in very marginal fields. Why have they not gone further in recognising the banking crisis, the credit crunch problems and the cash-flow problems by examining the industry’s request to bring forward tax relief early for new entrants who do not have income at the moment, in order to encourage them to invest? They are the lifeblood in respect of bringing that new oil and gas out of the ground. Without that, there will not be the future revenues.

Yvette Cooper: The hon. Gentleman conceded that we have taken action to try to support the North sea oil industry, including promoting the opening of new fields. Obviously, in the light of the credit crunch, every sector makes representations to us about the additional support they require, and we have to judge how best to support the economy as a whole. That is what we have done, by providing the kind of tax breaks that support industry as a whole.

The measures I have set out will help to bring borrowing back down, once the economy is growing, but curiously most of them seem to be opposed by the Conservatives. Last week, their leader said he wanted to bring borrowing down faster, yet on Tuesday of last week they voted against billions of pounds of future tax revenue that will do exactly that. They have also said they would reverse the new top rate and the national insurance changes, they are opposed to the pension changes and they would introduce tax cuts for millionaires’ estates. All in all, their tax gap in future years is about £10 billion—the vast majority of it tax cuts for the very richest in the country.

Mr. Philip Hammond rose—

Yvette Cooper: I will give way to the hon. Gentleman if he can tell me where on earth he would get that money from.


6 May 2009 : Column 188

Mr. Hammond: I was inviting the Chief Secretary to give way so that I did not have to raise a point of order. I just wish to place on the record the fact that, as she very well knows, we have not made a commitment to reversing the new top rate.

Yvette Cooper: Perhaps the hon. Gentleman ought to mention that to the right hon. Member for Witney (Mr. Cameron), who said very clearly that this would join the queue of measures that the Conservatives were determined to reverse. In other words, the right hon. Gentleman is determined to reverse not only the top rate of tax, but a series of additional measures, and today we have found out what some of them are. The list includes the changes to tax relief on pensions for those on the very highest incomes and the national insurance changes. In addition, they want to put in place the tax cuts for millionaires’ estates. The vast majority of the measures that Conservative Members want to propose are tax cuts for the very richest in the country, in order not to bring down borrowing but, in fact, to increase it.

Mr. Hammond: The Chief Secretary has talked a great deal about tax increases for people on high incomes. One might get the impression from what she has said so far that there were no tax increases for people on ordinary incomes, whereas more than half the tax increases announced in this Budget for this year will fall on ordinary people, not on those on higher incomes. As she is so interested in the Opposition’s policies, let me tell her, for her information, that our priority will be cutting Labour’s taxes on jobs—the increase in national insurance contributions that will affect everybody who is earning more than £20,000 a year.

Yvette Cooper: If that is the case, why is the Conservative party’s only manifesto commitment to cut tax on inheritance for millionaires’ estates, so that the 3,000 richest estates in the country will each get £200,000? How can that be a defence of ordinary people? It is defending the richest estates and shows the wrong and distorted priorities of the Conservative party in the middle of a recession—so much for fiscal conservatism.

There is a pattern here. In the 2005 election, the Institute for Fiscal Studies said that the Conservatives’ plans for tax and benefits alone would have cost an extra £5 billion—unfunded except by higher borrowing. Before the credit crunch hit, they were calling for £10 billion of unfunded tax cuts. The idea that these guys want to bring borrowing down is a joke. They do not want to cut borrowing. They just want to cut spending. That is what this is really all about.

Ms Keeble: Does my right hon. Friend agree that the Conservatives are keen to knock back taxes because they want to cut the public services on which all our constituents depend? I point her to the excellent report by PricewaterhouseCoopers that spells out the severity of the cuts package that the Conservatives’ proposals would produce and the devastating impact that it would have on our constituents.

Yvette Cooper: My hon. Friend is right. The fact is that the Conservatives want to cut spending right now in the middle of recession—hitting apprenticeships, transport and education. This is the Conservative party finally ditching compassion and returning to its ideological
6 May 2009 : Column 189
roots. This week, the Conservative leader has admitted Margaret Thatcher is his great inspiration in rolling back the state.

The Conservatives have been watching too much “Ashes to Ashes”. This is ‘80s revivalism gone rampant. Spandau Ballet are back together, Depeche Mode are back in the charts and they are pinning their hopes on Boy George. All we need now is for the hon. Member for Runnymede and Weybridge (Mr. Hammond) to don the stripy legwarmers. If they honestly think that a return to Thatcherism is best for Britain’s future, they are living in cuckoo land.

We remember Thatcherism. We remember the devastation it caused to our communities, the generations of young people abandoned to long-term unemployment, the soaring child poverty, the public services neglected and the families scarred. We will not return to the politics and policies of the ‘80s.

We have presented a Finance Bill that supports the economy and brings borrowing back down when the economy is growing. The Opposition want tax cuts for the very richest, spending cuts on the very poorest, cuts in the middle of recession, the rolling back of the state and businesses and families left to sink or swim. The measures that we are taking will support 500,000 jobs across Britain. The measures that they support would betray jobs across Britain. The measures in this Finance Bill will help to support our economy and Britain’s future, and I commend it to the House.

1.23 pm

Mr. Philip Hammond (Runnymede and Weybridge) (Con): Well, that was quite a rant. The Chief Secretary has obviously decided that if she cannot defend her own policies and record, the best thing to do is to come out of the bunker spraying fire in all directions and hoping to get away with it. We will take no lectures from her or anyone on the Treasury Bench about the economy and the challenges ahead of us.

The overwhelming sense that I got from that speech, and indeed from the interventions from Labour Members, was that they simply do not get the scale of the crisis that they have created and the challenges that it may fall to others to pick up in an attempt to put this country back on its feet. Hon. Members might be forgiven for experiencing a sense of déj vu today. It is only last week that we were debating—and unravelling—the Budget. Now we must debate a Finance Bill that was published only last Thursday. Outside experts have scarcely had a chance to digest it, but it will be forced through the House at a pace dictated by the political decision to delay the Budget until after the G20 meeting, rather than by the needs of good government and proper scrutiny. It was a political decision to delay the Budget until after the G20, because the Prime Minister had intended to announce a major fiscal stimulus, which he could present as part of a wider plan delivered by him on his saving the world agenda. That plan was dashed by the Governor of the Bank of England on 24 March when he gave evidence to the Treasury Committee and told the Prime Minister what we had been telling him for months— [ Interruption. ] The hon. Member for Taunton (Mr. Browne) is right—Britain’s credit card is maxed out and the Prime Minister cannot borrow his way out of trouble.


6 May 2009 : Column 190

We have déj vu in another sense. Last year’s Finance Bill Second Reading was dominated by the Government’s attempted sleight of hand on the 10p tax rate and the growing rebellion on the Labour Benches as the impact of that broken manifesto pledge became apparent to them. This year, the split in the Labour party is caused not by any sympathy for the targets of the distraction taxes in the Budget, but by a tug of war for the heart and soul of the Labour party between the adherents of new Labour’s embrace of aspiration and the exponents of the politics of envy as the most expedient tactic for a Prime Minister who is already up to his armpits in the political mire and sinking fast.

Mr. Frank Field (Birkenhead) (Lab): I thought that the hon. Gentleman would spend a little more time on the 10p issue. When Labour Members attempt to amend the Budget to do justice for the group that still has not been fully compensated for the 10p change, will we be able to depend on the support of the Opposition?

Mr. Hammond: I am grateful to the right hon. Gentleman for his intervention and interested to hear that he is still pursuing the issue. It occurred to me as I prepared my speech that I had not heard from him on that subject. We will, of course, consider carefully whatever he presents, but he will have to recognise the difficult fiscal circumstances.

Mr. Field: I am sorry that the hon. Gentleman does not know what is happening. We have made it plain on the Order Paper; an early-day motion has been signed by those Labour Members who wish to see full justice for the group of low-paid workers who lost out with the abolition of the 10p tax rate.

Mr. Hammond: I promise the right hon. Gentleman that I shall look carefully at his proposals. In disappointing contrast to last year, we have not had the opportunity of a discussion ahead of the debate on the Floor of the House to consider what we can do together to press the Government on these matters.

A quick glance at the record of last year’s Second Reading debate will suggest that we do not need to take the words that we have just heard from the Chief Secretary too seriously. Last year, she told us that it was impossible to change the personal tax system and personal tax rates in-year, but when it became politically beneficial to do so, she found a way. She told us that the British economy was well placed to weather the global storms, that claimant count unemployment was at its lowest for 30 years and that the UK would be the fastest growing economy in the G7. It seems that hubris is capable of human-to-human transmission, at least in the closed confines of a political bunker.

The Chief Secretary also told the House last year that the Government were using the flexibility of the fiscal rules to borrow more in a sensible and sustainable way. What she did not say was that shortly after the Finance Bill became law, the Government would use the flexibility of the fiscal rules to abandon them altogether before they were comprehensively shattered by the growing crisis in the public finances that will be this Administration’s legacy.

If we fast forward to this year, we may be making modest progress, because I do not think that I heard the Chief Secretary describing the £175 billion that the Government will borrow this year and the £173 billion
6 May 2009 : Column 191
that they will borrow next year as sensible and sustainable. Last year it was the denial Budget—no one would be worse off as a result of the abolition of the 10p tax rate—and this year it is the distraction Budget, with a subliminal message that taxing the rich can resolve the gaping hole in the public finances as the Government desperately try to divert attention from the reality of the Chancellor’s package. It is a reality of tax rises for the many not the few and of spending increases before an election to mask a programme of massive cuts afterwards. The Budget has a £45 billion hidden tax bombshell aimed at the many and timed to go off after the general election that even this serially unelected Prime Minister will be forced to concede to the British people by this time next year. That is £1,430 per family of extra annual taxes, and I confidently predict that he will not remind the public of that in the run-up to that election.

Mr. Brooks Newmark (Braintree) (Con): Does my hon. Friend not share my concern that the vast majority of tax increases brought in by this Budget will fall not on millionaires or even those earning more than £150,000, but on individuals and families earning £19,000 or more?

Mr. Hammond: My hon. Friend is right, and as I made clear earlier in my intervention on the Chief Secretary, when it is possible to repeal any Labour taxes our priority will be to repeal Labour’s tax on jobs, which will hit people on £20,000 a year or more just as the economy is coming out of recession—if we believe the Chancellor’s forecasts.

Dr. Palmer: Is the shadow Chief Secretary saying that if a Conservative Government were elected next year, they would immediately abolish that?

Mr. Hammond: Sadly, I can make no such commitment. We do not know what the state of the public finances will be next year. The track record of forecasting by the Treasury over the past 12 months suggests that recovery might be very far distant from what is predicted in the Red Book, published just a couple of weeks ago. However, our priority for reducing taxes will be the tax that most affects the many, which is the tax on jobs.

Mr. James Plaskitt (Warwick and Leamington) (Lab): The hon. Gentleman has referred several times to what he describes as the difficult fiscal circumstances. Given that that is how he sees them, why do the first votes cast by his party and by him in Divisions on the Budget add £6 billion to the projected Budget deficit?

Mr. Hammond: They do not. In the course of the debate on this Bill—in the Committee of the whole House and in the Public Bill Committee—the hon. Gentleman will discover the alternative solutions that we propose on fuel duty, corporate taxes and so on, which will explain how we would fill that gap. We are certainly not making irresponsible pledges, as I have made clear to the hon. Member for Broxtowe (Dr. Palmer).

This goes beyond the extra taxes that will hit ordinary families. The public capital investment programme will also be halved over the next five years. I ask the House to listen to what the Chief Secretary said in last year’s Second Reading debate:


Next Section Index Home Page