Oral Answers to Questions

Baroness Burt of Solihull Excerpts

Monday 13th June 2011 Commons Chamber

[Maria Miller]

The only reason I read the list out quickly was not to incur the wrath of Mr Speaker.

I would like to reassure the hon. Lady that I absolutely understand her point. Indeed, I am meeting organisations representing many people with fluctuating conditions. Importantly, we are also considering the findings of the work capability assessment to see how we can build into the new personal independence payment a way of ensuring that people with fluctuating conditions are well served.

[Lorely Burt (Solihull) (LD)]

13. What assessment he has made of the effects on women born between 6 March and 5 April 1954 of his proposals to increase the state pension age.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Our proposed changes will equalise women’s pension age with men’s more rapidly than previously planned. Under the Government’s proposals, women born on 6 March 1954 will have a pension age of 66 and those born between 7 March and 5 April 1954 will have a pension age of up to a month less.

[Lorely Burt]

I highlight the plight of 33,000 women born in one month in 1954 who will be the worst affected under the pension retirement rules. In total, 500,000 women will be affected by one year or more than expected. When they get their pensions, they will be a lot better off than they would have ever been under the Labour party, but what can we do for women in this particular group, who will have to wait an additional two years for their pension?

[Steve Webb]

My hon. Friend raised this important issue, I think, in last Wednesday’s debate when we were startled when she declared an interest in the question. Were we to address the concerns of that group of 33,000 women, we would find that women born one month before or after—who might be affected by a few months less, but still significantly—would ask for a change as well. The short answer is that to delay the whole thing till 2020, as some have suggested, would require an additional £10 billion to be found. She will understand why that is not possible.

Low-income Households

Baroness Burt of Solihull Excerpts

Tuesday 14th September 2010 Westminster Hall

[Lorely Burt (Solihull) (LD)]

Welcome to the Chair, Ms Clark, for your first chairmanship of a Westminster Hall debate. I am sure that you will always guide us wisely and fairly.

I congratulate the hon. Member for Westminster North (Ms Buck), who spoke with great passion. Her presentation was extremely well researched, but the facts that she presented support her case, which is exactly what one would expect. Liberal Democrats certainly do not take these issues lightly, and we heard in the passionate words of my hon. Friend the Member for Colchester (Bob Russell) that no ideological pleasure is taken from any cut made by the Government.

Liberal Democrats are in coalition because the country is in a financial pickle. We are borrowing £1 of every £4 that we spend, and if we do not do something about it, two main things would happen. First, we would lose our AAA borrowing status, which would mean that we would have to pay more to borrow, which would mean that our economic standing in the world would go down and we would go into economic meltdown, similar to Greece.

[Ms Buck]

I am listening carefully to the hon. Lady, who is making important points. However, the purpose of my debate was to query the Government’s claims, and their practice of requiring a deficit reduction programme to fall disproportionately on the poorest people. I am not sure that what she is saying, important and valid though it is, actually addresses that point.

[Lorely Burt]

I am not sure that what I am saying is not relevant. I shall discuss the effects of the reductions that we will make, but I contest the hon. Lady’s claim that many of them are not fair. Well researched though her presentation was, there are things that she cannot know—a great deal is still to come from the Government.

Much of what has been presented has been based on speculation, and there is a great deal of scaremongering at present. Clearly, as the hon. Member for Cities of London and Westminster (Mr Field) said, people are afraid. The time to become afraid is when we see what the Government are proposing. They are trying hard to make their proposals as fair as possible.

I want to make a second point about why we are doing this—it is the legacy. The hon. Member for Cities of London and Westminster said that we must take a grip of the existing situation. That would apply whatever party were in government. I am declining the invitation of the hon. Member for Westminster North because I want to talk about the issues that she wants to me to raise. She mentioned the report of the Institute for Fiscal Studies. I do not claim to be an expert, but it was selective in what it chose to raise, and it ignores some of the major parts of the Budget, including changes to tax credits, the increase in income tax personal allowance and freezes on council tax. It does not take account of the choices on which measures in previous Labour Budgets to continue and which to reverse, or the effect of future Budgets.

The debate on the effect of Government policy is legitimate, and all parties must be prepared to discuss that, but with respect, the debate is happening too soon. The way in which the vast majority of changes to Department for Work and Pensions policy and savings in the welfare budget will be implemented will not become clear until after the departmental spending review in October. Any debate before then is bound to be based on media speculation, of which we have had sufficient.

One reason for the consultation on departmental spending is to ensure that the difficult decisions are not made lightly, and that any cuts are made in a way that protects those on the lowest incomes. Alongside the cuts is a radical programme of core Liberal Democrat policies specifically targeted at people on low incomes—the income tax pledge, the pupil premium and the re-linking of the basic state pension to earnings. However, in the coming weeks and months, the Government must ensure that they focus on ensuring that those groups most likely to be on low incomes are protected, specifically disabled people, older people, young people and people who are long-term unemployed.

[Kate Green]

It is absolutely right to want to protect the most vulnerable, and I am grateful to the hon. Lady for mentioning the disabled, but are we not already seeing increasing numbers of disabled people going through the new work capability test for employment and support allowance and being found to be ineligible for that benefit, and being pushed on to the lower level of jobseeker’s allowance? Can we expect that position to become even more of a problem as existing incapacity benefit claimants are put through the test and perhaps experience the same outcome? Is that not a cause for concern, particularly when there is an exceptionally high number of appeals against work capability tests, many of which are proving successful?

[Lorely Burt]

The hon. Lady makes an important point, but the issues to which she refers began under a Labour Government, which she supported. We must be sure that the tests that are imposed on people are absolutely fair.

Several hon. Members mentioned housing benefit. The proposals have not yet been fully created, and it is not yet possible to say what impact they will have on low-income households. However, any cap on maximum local housing allowance payments must ensure that those with large families are not unfairly discriminated against, and I hope the Minister will speak about that.

I shall conclude on a slightly more positive note, by mentioning some of the positive changes for low-income households. On the income tax threshold, we have increased the personal allowance by £1,000, so 880,000 people will come out of tax altogether and 23 million other taxpayers will benefit by £170 million a year.

We have discussed the child element of tax credits, and some hard decisions have been made so that the poorest families will benefit much more than those who can afford to bear the burden. In addition, the coalition Government will increase the personal allowance to £10,000 per annum, which the Liberal Democrats pledged in their manifesto, and will lift the poorest 3 million people out of income tax altogether.

The Government are consulting on the pupil premium to determine the exact figure for it. It will attach additional funding to children from low-income households and will dramatically improve the life chances of children from families that fell into a poverty cycle under the last Government.

With the re-linking of pensions to earnings, pensioners will finally receive a fair deal with no more 2p—or whatever it was—increases in their pension. Under the triple lock proposed by the Liberal Democrats, the basic state pension will rise in line with prices or inflation, or by 2.5% a year, whichever is highest.

The consultation is taking place. The theory and principle to which we adhere is that savings may be made on benefits through large-scale simplification. The consultation paper proposes a universal credit to replace the main three forms of benefit support—jobseeker’s allowance, employment support and income support—as well as other sorts of benefit. We will allow a uniform taper rate so that when people find work, benefits will be withdrawn in line with earnings. I agree that the previous Labour Government tried hard to resolve the poverty trap, and the taper may be a solution to ensure that it will always be profitable to go to work.

The division between rich and poor increased under the previous Labour Government. Throwing money at the problem has not provided the solutions that they and everyone wanted. I hope that in the dire financial straits facing the country, the present Government will be imaginative in creating a fairer way of ensuring that people achieve prosperity and work in the best possible way.

Capital Gains Tax (Rates)

Baroness Burt of Solihull Excerpts

Monday 28th June 2010 Commons Chamber

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Members for Thurrock (Jackie Doyle-Price), for Airdrie and Shotts (Pamela Nash), for Maidstone and The Weald (Mrs Grant) and for East Surrey (Mr Gyimah). I agree with the hon. Member for Hartlepool (Mr Wright) that they bring inspiration and enthusiasm to the House. We are all here to try to make things better, and I am sure that all of them will play their part.

The coalition Budget has been described as tough but fair, and hon. Members on both sides of the House will certainly agree that it is tough. Why does it have to be so tough? It is tough because we are borrowing £1 in every £4 that we spend, because we owe £22,400 for every man, woman and child in this country and because, thanks to Labour, we have one of the largest budget deficits in the whole of Europe, so we must take the action that Labour dodged. Now that the OBR has been formed, we know the true scale of the problem that we face, and we have worked it out so that no one can fix the figures anymore.

[Mr Anderson]

Does the hon. Lady disagree with the OECD, which said that the previous Government’s actions prevented this country from going from a recession into a depression? If those actions had not been taken, we really would have been in a mess.

[Lorely Burt]

The hon. Gentleman makes a fair point. Indeed, the Liberal Democrats supported some of the steps that the Labour Government took, but that does not allow Labour Members to wash their hands completely of this country’s financial state.

[Dr William McCrea (South Antrim) (DUP)]

But can the hon. Lady and her colleagues wash their hands of the fact that although they opposed a rise in VAT during the election, they will now go through the Lobby to support it? Surely that is hypocrisy.

--- Later in debate ---

[Lorely Burt]

I am glad that the hon. Gentleman raises the issue of VAT. If he has a little patience, I shall address that fully in just a moment.

I applaud the fairness factors in the Budget, many of which were suggested by Liberal Democrats. The £1,000 increase in the threshold at which people start to pay tax will bring 880,000 people out of tax altogether and benefit 23 million people on low and middle incomes. That increase is the first step towards a Liberal Democrat manifesto pledge. The tax on banks will not affect small banks, but it will allow tax cuts for other types of business to be introduced. The changes to capital gains tax will mean that top earners pay 10% more, although there will be thresholds so that others pay at a lower rate. The rate of 28% is not as high as Liberal Democrats might have gone, but the Government have been advised that 28% is the highest rate that can practically be set before revenue starts to be lost, so that is fair enough.

Pensioners have already been discussed today. They will benefit from the earnings link and the triple lock, which will mean that they receive an increase reflecting earnings inflation or 2.5%. No Labour Member has managed to explain why the Labour Government did not restore the earnings link over 13 years, and never again will we have the disgraceful situation of pensioners receiving a 75p increase, as Labour proposed. Child poverty is addressed through an extra £2 billion for child tax credits, and the pupil premium will help the most disadvantaged children.

This is a Budget for business. Business is the engine that will drive us out of the recession, so we have put our emphasis on ensuring that we have cuts rather than taxes, with a 77:23 split.

The hon. Member for Hartlepool said that this was not a green Budget, but there are good incentives for low-carbon investment through the reform of the climate change levy, the proposals on which will come in the autumn. We also have the green investment bank and the green deal for households, which will enable households to make improvements that will pay for themselves over time.

The reduction in corporation tax also shows that this is a Budget for business. In addition, we are pumping money into Royal Mail, which did not happen under the previous Government. The Budget contains nice little touches such as entrepreneurs relief. It does not involve any indexation or a taper, and the amount that retiring entrepreneurs can enjoy has increased from £2 million to £5 million.

The national insurance threshold increase in 2011 will take 650,000 people out of national insurance altogether. What a contrast that is to Labour’s proposals for a tax on jobs. The enterprise finance guarantee scheme is being extended to 2,000 businesses. Under the regional growth fund, I look forward to our pumping money into the regions, meaning that we are no longer a London-centric Government. We will ensure that the regions get the kind of support they need, especially for new businesses.

Of course, there have been hard choices. The hon. Member for South Antrim (Dr McCrea) talked about VAT, and it is regressive. The hon. Member for Airdrie and Shotts said that we did not know the meaning of that word, but we really do. However, our VAT rate is still below the average for Europe.

[Ian Swales]

Is my hon. Friend aware that after Thursday, when Spain increases its VAT rate by 2%, only Cyprus and Luxembourg will have a lower rate of VAT than we do?

[Lorely Burt]

My hon. Friend is right and I am grateful for his helpful intervention. We must put all these things into perspective. The existing exemptions will apply to items such as food and children’s clothing. My hon. Friend the Member for St Ives (Andrew George) has tabled an amendment about VAT. He is rightly worried about the effect of the VAT rise on particular groups, but I point out that the Red Book states of the chart on page 67 to which he referred:

“Chart A3 shows that the top expenditure decile will lose almost 15 times more, in absolute terms, than the bottom expenditure decile from changes in indirect taxes.”

The increase is not nice, but we feel that it is appropriate.

[Several hon. Members]

rose—

[Lorely Burt]

I am sorry but I cannot take any more interventions.

We have talked about welfare throughout today’s debate, but I should point out that the welfare bill was set to rise to nearly £200 billion and we just cannot afford that. The autumn spending review will treat those most in need as a priority, and although we will make cuts, we will cut carefully. This year’s Labour Budget included plans for £44 billion of cuts and tax rises, but the previous Government did not say how they would raise that money and what taxes they would have increased. Until Labour Members are prepared to tell us what they would have done, they have no right to criticise this coalition Government.