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Fairness is key in the tax changes. Far too many people on low incomes pay too much tax. When I was in this place under the Governments of Margaret Thatcher and John Major, people on low incomes paid low tax,
but in the past 13 years, because of the policies of the last Prime Minister, including when he was the Chancellor of the Exchequer, Labour managed to push more people into tax than ever before-people on low incomes who should never have been paying the level of tax they were. Five or six weeks into office, this Government are already taking action in the Budget to deal with the awful situation of people on low incomes having to pay tax.
Geoffrey Clifton-Brown: My hon. Friend is making an impassioned and thoughtful contribution. There was no more cruel example of what he has just said than the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) abolishing the 10p tax rate, because that put so many poor people into paying not only a low rate of tax, but quite a high rate of tax, on relatively low earnings. In contrast, my right hon. Friend the Chancellor has taken a significant number of people out of the tax net altogether with this Budget.
Mr Evennett: That point is absolutely spot on. The Opposition's crocodile tears on these issues are lamentable, because they did not do anything in government. They took away the 10p rate, as my hon. Friend has said, and they pushed people on very low incomes into paying tax when that was unfair. My right hon. Friend the Chancellor made it quite clear in yesterday's Budget that fairness was the underlying key. It was about making sure that everyone pays a fair amount. Those on high incomes will pay more and those on low incomes will pay considerably less. Families, low earners and pensioners have to be a top priority.
In opposition, I was the shadow spokesman on further education and skills, and I believe that training and skills were one of the Labour Government's greatest failings. Our society needs a well-trained work force who can adapt and take on board challenges, such as those facing small businesses, to make sure that they can get employment and worthwhile involvement in order to make something of their lives. One of Labour's biggest failings during the recession was not properly investing in skills so that people who lost their jobs could reskill, upskill, retrain or find new jobs.
Mr Stewart Jackson: I thank my hon. Friend for giving way; he is being extremely generous. Did he see the figures published today that show the shameful legacy of 13 years of Labour government, which is that one in four of our 18-year old boys is a NEET-not in education, employment or training? That is the record of the previous Government.
Mr Evennett: I am grateful to my hon. Friend. It is a lamentable record that almost 1 million young people are classed as NEETs. That is a waste for them and their futures, and for their communities and our economy generally. Those young people have so much to contribute, but they cannot get on in life if they are not given opportunities because they are not trained and do not have the skills. If that is the case, they are unable to do something for themselves, or for their communities and our country generally.
Britain needs to grow stronger out of this recession. It will do so if it can invest in the skills that mean that people can adapt, develop and take advantage of the
new jobs and opportunities that are coming along. This Budget will get rid of over-regulation and red tape, and I hope that it will allow businesses to expand and create the jobs that we need.
Regrettably, we are starting from a weak skills base, with 5 million people in this country classed as functionally illiterate and millions more struggling with basic numeracy and literacy skills. Those are really important reminders of Labour's failure on skills, and they highlight the need for fresh thinking and new ideas. Those are not just figures: we are talking about real people, and we on this side of the House are just as passionate as Opposition Members about providing opportunities for young people to get jobs.
Some of Labour's skills programmes are not working, with Train to Gain providing public subsidy for courses that some employers would pay for anyway. That does not represent getting value for taxpayers' money, but the Budget shows that that is something that the Chancellor of the Exchequer and his team are looking at. This Government want to help people, but they also want to make sure that they are getting good value for the taxpayer.
Richard Harrington (Watford) (Con): I thank my hon. Friend for giving way. The House should be aware that, although the statistics show that 550 young people are claiming jobseeker's allowance in my constituency of Watford, there are plenty of training schemes. However, the problem-into which I am currently carrying out research-is getting young people to go on those schemes. Money is being spent, but I am afraid that that is happening in the usual irresponsible way that was sanctioned by the former Government. As my hon. Friend noted, the important thing is to ensure that the money is spent wisely, but that will require a lot of work.
In view of the time and the fact that other people wish to speak, I shall draw my remarks to a conclusion. Yesterday, my right hon. Friend the Chancellor said that this was a Budget to show the world that Britain was open for business again, and I believe that he was right. The measures included in it will ensure that our country and all of its people are on the road-a rapid road, I hope-to recovery and prosperity.
This country has a potentially great future. What we need are the Government and the measures to encourage that development so that we can make progress along that road. I believe that we have that in this new coalition Government. I think that we are on our way, and that this Budget is an important step to ensuring the future progress and success of our economy.
The Government's mantra is that this Budget is both unavoidable and fair, yet more and more evidence demonstrates that exactly the opposite is true. In reality,
this Budget is neither unavoidable nor fair: instead, it is a massively failed opportunity to shift the economy into the greener, fairer direction that we need.
Devastating public spending cuts of the kind announced yesterday are not unavoidable. They are not some kind of economic inevitability, but an ideological choice. The reality is that there has been no public debate about the choice between tackling the deficit through cuts or through progressive and radical tax reform. Quite simply, that case has not been put.
That is hugely significant, because the fact that these cuts will have an enormous impact on generations to come means there needs to be a national consensus that they are the right way forward. There is not that national consensus; there is a growing sense of anger and disbelief about the scale of the cuts proposed, as well as a growing sense that the Government have been economical with the truth.
Let us be clear: we are not in the same position as Greece. Our cumulative national debt is not large by international standards. The structure of our debt is very long term-about 14 years. Much of this year's debt will be sold to British-domiciled individuals and companies, so the international sovereign debt crisis has much less impact on us. Those are the truths of the situation.
Sajid Javid: The hon. Lady said that our sovereign debt situation is not as bad as that of Greece. We do not just have to use Greece as an example; other countries have faced drastic situations and austerity measures. It is not reasonable to look at the size of the debt as a proportion of GDP; we also have to look at the amount of debt we have been issuing, borrowing £3 billion a week to help fund it. I am sure the hon. Lady is aware that last year the former Government printed about £200 billion in cash and borrowed about £225 billion on the gilts market. The only other country with a similar policy was probably Zimbabwe, so I am sure she is not advocating that we continue in that way.
Caroline Lucas: I thank the hon. Gentleman for his contribution, but if the then Government had not done that our situation would have been an awful lot worse. Many commentators are saying that this is a time to be investing, not taking money out of the economy. Our current situation would have been much worse if we had not had that stimulus at that time.
Despite what the Government say, we are not all in this together. Some people had more responsibility for the crisis than others and some benefited more from the boom that preceded it. It seems to me that those who enjoyed the largest benefits should pay the highest price. We need progressive tax reform. Increasing the tax take from those most able to pay it and helping lower earners by reintroducing the 10% tax band now would be a good start, both in raising revenue and in addressing inequality.
If we are looking for ways to find more revenue, let us bear in mind the huge extent of tax avoidance, tax evasion and unpaid tax in the UK. The figures are truly staggering. Her Majesty's Revenue and Customs admits that tax evasion and avoidance together come to almost £40 billion a year, and in November 2009 it admitted that £28 billion of unpaid tax was owing. Shocking as those figures are, some experts out there suggest that
the total target for necessary action to collect tax due and owing could be more than £100 billion a year. Why do we not see more efforts to go after that kind of money?
There are a range of options for changing the UK tax rules progressively so that more than £40 billion of additional taxes could be raised each year by the end of the life of this Parliament. With tax-collecting efficiency savings, that would deliver more than £60 billion of tax revenues for the UK, thus preventing any need for cuts to public services.
I say that not because I think we should introduce all those tax measures-certainly not straight away-but to prove that we have a choice. Spending cuts are not the only way to address the deficit. Fairer taxation has never even been put to the public as an option. That is a betrayal.
Jacob Rees-Mogg: Is the hon. Lady aware that if the tax rises she proposes were introduced, we would have the highest ratio of tax to GDP that this country has had in 40 years-7% higher than the record achieved under Margaret Thatcher's Government?
Caroline Lucas: We also have a country that is at its most unequal at any time since the second world war. If someone asked me whether I would like either progressive tax reform or a much more equal society, I know which I would choose, because so much evidence suggests that unequal societies are not just incredibly damaging for those at the bottom of the heap, which is fairly clear; they are corrosive for everybody in society. Books such as "The Spirit Level" have demonstrated just how corrosive inequality is for everybody in terms of health outcomes and general well-being. I am happy to say here and now that I would much rather see an equal society. Of course, that is something the coalition Government told us the Budget was all about. It was supposed to be a fair Budget.
What choices were made? Let us be clear again that they were political choices; they were not inevitabilities. It was a political choice to make effective cuts to child benefit, the child tax credit and child tax funds that, together, cost £2.5 billion. Those cuts could have been avoided if, for example, the Chancellor had chosen not to cut corporation tax. It was also a political choice to increase VAT-a tax that hits the poorest hardest and that both Government parties said they were not in favour of increasing.
Raising the income tax threshold as some kind of compensation does nothing for the poorest households that do not pay income tax anyway, since in any given year about one in four families contains no income taxpayer at all. Uprating future benefits and tax credits only in line with consumer price inflation, rather than retail price inflation, will have a dramatic effect in increasing inequality in society. If we add to that the severe cuts in housing benefit, which will have a devastating impact on areas where significant numbers of people depend on it, such as my constituency of Brighton Pavilion, we can see that the menu we are being served up is very damaging indeed.
Let us remember that the vast majority of people who claim housing benefit are pensioners, people with
disabilities or who care for relatives, or hard-working people on low incomes. As the director of Shelter has said,
"If this support is ripped out suddenly from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness."
If we add to that-if that were not enough-the impact of swingeing public spending cuts, we see a hugely bleak picture. Unemployment will grow, and anyone who leaves school or college in the next five years faces a grim future.
Of course, meanwhile, the rich have been largely let off. That is why we have seen the coverage we have seen in the Financial Times and everywhere else, with people saying that they are breathing a sigh of relief because the Budget did not hit them as hard as they thought it might. The rich will hardly notice the VAT increase. The bank levy is puny-less than half the £5 billion to £8 billion originally predicted-and is a fraction of City bonuses. That is not unavoidable; it is a political choice. The Government could have introduced a Robin Hood tax to raise billions-they did not. That was another political choice.
Unprotected departmental budgets will be savaged. Local government will need to slash services if it is to freeze council tax. Public servants, who did nothing to cause the slump, are being asked to bear an unfair share of the burden. Again, one thing we can say for sure is that we are definitely not all in this together. People on middle and low incomes have done much worse than expected, and the rich have been let off much of what they feared, but we will all suffer from an economy that now has a very real risk of going into a double-dip recession.
Many Opposition Members have talked about the importance of listening to commentators, such as Noble prize winner Joseph Stiglitz or David Blanchflower, about the real dangers of that double dip. David Blanchflower is one of the very few people who saw the recession coming. We should listen to his warnings now. The economy is still fragile. Today's measures will certainly slow recovery and could well stop it in its tracks. Even Martin Wolf says in today's Financial Times that we should be printing more money, rather than taking it out of the economy.
I should like to suggest that the real way out of the crisis, as well as fairer taxation, is through a major Government investment in the green infrastructure that this country so urgently needs if we are to emerge stronger from the recession than we were when we went into it. My party has called for the introduction of a green new deal-a massive and sustained investment in energy efficiency and renewable energy generation, which would create hundreds of thousands of new jobs, as well as cutting carbon emissions and making our economy more sustainable.
Let me give an example. Greens on a council in the north of the country brought an idea to the table that was accepted by the council and is being rolled out. Essentially, they leveraged some money from the energy companies and matched it with some council funding, and they are now rolling out free insulation for 40,000 homes in that area. That is not only cutting emissions, but saving average families about £150 a year on their fuel bills and creating 200 jobs. That sort of programme needs to be rolled out country-wide.
"a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy".
The coalition's first Budget offered little more than a passing reference to the green investment bank, just a few lines about future reforms to the price of carbon dioxide and a renewed promise on energy efficiency, so where exactly is this famous full programme of measures? I searched in vain, but instead I saw old style, big picture macro-economics, with a 4% cut in corporation tax over the Parliament and a regional growth fund for new businesses from next April that will provide
"a stable economic foundation for private sector growth".
I am not against that, but what kind of growth are we talking about? Where is any commitment to sustainability in the vision for growth? What about the commitment to the green investment bank, which is urgently needed to drive £2 billion into clean energy by 2020? Apparently, we are going to have to wait, as there was no particular urgency on the green agenda in the Budget.
"detailed proposals on the creation of a Green Investment Bank"
after the spending review, but we have heard that before. We are told that the Government are considering a wide range of options, but there is no confirmation of legislation and no mention of capitalisation. With nothing in the Budget on the green deal for households, we must wait for this autumn's energy security and green economy Bill. The low-carbon industrial strategy already appears to have lost urgency and direction.
The Chancellor talked a great deal yesterday about the crisis of national debt, but he barely mentioned the much bigger and more dangerous crisis of climate change. When the coalition Government were formed, Ministers said they would be the greenest Government ever. As I pointed out at the time, that, sadly, would not be very difficult, given Labour's lamentable record, but it does not look as though serious steps are being taken to make this a green Government either.
The Budget is economically dangerous, socially divisive and completely lacking in any kind of vision for sustainability. Tragically, an opportunity has been missed to introduce something genuinely progressive, such as a Robin Hood tax on financial transactions, measures to increase employment and cut emissions through a green new deal, and measures to introduce fairer taxation-in other words, measures to take us closer to the fairer, greener Britain that the coalition says it wants to achieve, but from which, after the Budget, we are further than ever before.
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