Capital Gains Tax (Rates)

Andrew Percy Excerpts

Wednesday 23rd June 2010 Commons Chamber

[Diana R. Johnson]

I am sure that that is absolutely right. I must give credit to our civil service. Civil servants advise Ministers and respect the decisions that they make, but the civil service would have been clear if it thought that the assistance should not go ahead because public money would not be protected as fully as it should be.

I was surprised by the vague way in which the Business Secretary talked about the opportunities that his Department will make available in the regions. He cited just two examples: an incentive on national insurance contributions for small businesses and a proposed fund to be distributed in the regions. There were no details of the fund, however, and it is unsatisfactory that businesses and enterprises in Yorkshire and the Humber have to wait to find out what money might be available to them. That is not good government.

I am sorry that the Business Secretary is not in his place, but perhaps I will get some answers to my questions. First, in view of the cuts to Yorkshire Forward, the regional development agency, and the demise of Hull Forward, and given that the Liberal Democrat-controlled council in Hull does not have a great record on regeneration and moving quickly and effectively, how will we be able to promote investment in my city, which still needs public investment to go in, year on year?

Secondly, what will happen to opportunities for those not in education, employment or training with the end of the future jobs fund and cuts to university places? I have the great pleasure of the university of Hull being slap-bang in the middle of my constituency. I am worried about local youngsters in particular not being able to access their local university.

How will the region’s construction sector fare, with council house building schemes being cancelled, road schemes threatened and questions still to be answered about flood defence and protection work? Despite the promised good news on port ratings, will the Humber actually get the investment that the Labour Government had identified for the Hull port area and the use of the site for wind turbine manufacturing? That is under review by the coalition, which is worrying, because it might well put off businesses coming to Hull. With the Typhoon fighter project’s future uncertain, what will happen to the skilled jobs at BAE Systems at Brough?

I see other hon. Members from the Yorkshire and the Humber region in the Chamber. What about the reduction or elimination of the Humber bridge tolls, which we were so close to achieving under the previous Government? Those are all questions that will affect the economic viability of Yorkshire and the Humber, and I want some answers.

[Andrew Percy (Brigg and Goole) (Con)]

I was previously a councillor in the hon. Lady’s constituency, so I consider her a friend. I was interested to hear that we were close to eliminating the bridge tolls. Exactly where had the money for that been identified? Will she confirm that the study started by the previous Government is continuing? To give the impression that nothing is happening on the Humber bridge tolls is not fair. I would very much like an answer to my first question, because some of us think that the previous Government started to talk about the Humber bridge simply because an election was coming.

[Diana R. Johnson]

The hon. Gentleman does a disservice to the fact that long before the general election, there was cross-party working by hon. Members on both sides of the House to make the economic case for reducing the Humber bridge tolls. He will know that the then Transport Minister, my right hon. Friend the Member for Tooting (Sadiq Khan), had decided not to allow the increase in the tolls and a review was being conducted of whether the toll could be reduced to £1. All I was doing was questioning what was going to happen, and I would be grateful if the coalition partners threw some light on the subject. I am sure that all hon. Members are keen to get a satisfactory resolution to that ongoing problem.

I have a few comments to make about what Labour would have done, had we secured a majority at the election. It is clear—the shadow Chancellor made it clear—that of course we need to get the deficit down. Before the election we had legislated to say that we would halve the deficit within four years, and in the Departments work was being done to identify where reductions could be made. I was in the Department for Children, Schools and Families, so I know that areas had been clearly identified, and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) told me that clearly identified savings had been put together in the Home Office. It is wrong to say that the Labour Government had not started work; however, we made it clear that we had to wait until the growth in the economy was secure.

A key issue that the coalition Government have to grapple with is the fact that just making cuts across the board is not the sensible approach. We need to think about what policies we can introduce to spend and invest now so that we can ensure that we save in future. One of the policies very dear to my heart is healthy free school meals, which piloted in Hull but was slashed by the Lib Dem council without the evidence being evaluated. I believe that there is an economic case to be made. Investing in children early on, making sure that they eat healthily and well and do as well as they can in their education, will reap benefits for us as a society later on. I was disappointed to see that the extension of the free school meals pilot has been abandoned by the coalition Government, as well as the extension of eligibility to those in receipt of working families tax credit, which would have made more families eligible to get free school meals for their children. That is very short sighted.

By cutting too deep and too early, we will risk jobs—jobs in Hull, jobs in Yorkshire and the Humber, and jobs nationally. We will have higher welfare costs and less tax revenue. Growth will be suppressed and I think that the deficit will be much worse.

--- Later in debate ---

[Chris Williamson (Derby North) (Lab)]

I congratulate the hon. Members for Harrogate and Knaresborough (Andrew Jones) and for Carlisle (John Stevenson) on making their maiden speeches today.

A week before the general election, the Prime Minister said:

“The test of a government is how it looks after the most vulnerable, not just in good times but also in bad”.

On April fools’ day, he told BBC News that the Conservatives’ plans did not involve an increase in VAT, and when speaking on “The Andrew Marr Show”, the Prime Minister also said that

“any cabinet minister…who comes to me and says, “Here are my plans” and they involve frontline reductions, they’ll be sent straight back to their department to go away and think again.”

That prompts the question: why did he not ask the Chancellor to think again about his dreadful Budget—a Budget that will result in the quality of life of Britain’s most vulnerable people being sacrificed on the altar of Tory dogma, a Budget that will result in massive reductions in front-line services, and a Budget that will lead to a colossal increase in unemployment? It is less than seven weeks since the Prime Minister made those solemn pledges, but the Chancellor’s proposal to increase VAT is making a fool out of him.

We must not forget the Deputy Prime Minister either, who said that he wanted to “hardwire fairness” into society. However, increasing VAT does not hardwire fairness into society; on the contrary, it short-circuits fairness, because it hits the poorest families twice as hard as the richest. Britain’s richest families spend just 7% of their disposable income on VAT, while the poorest spend almost 14%. How fair is that? The truth is that it is not fair at all. Cutting tax credits, freezing child benefit, slashing housing allowances, cancelling the help in pregnancy grant and chopping free school meals are not fair either.

No doubt the Liberal Democrat members of the coalition Government will point to the increase in tax thresholds that they wrung out of the Chancellor as evidence of their influence. However, the sad fact is that the meagre increase that they secured will make little difference to low-paid workers and will be more than offset by the regressive measures that the Chancellor announced yesterday. Worse still, many of the workers who might benefit from the modest uplift in tax allowances will end up losing their jobs if the Liberal Democrats vote through the Budget.

Of course, the Prime Minister and the Chancellor insist on repeating their quasi-egalitarian mantra, “We’re all in this together.” Needless to say, it is nonsense, and it has overtones of the infamous scene in George Orwell’s “Animal Farm” when the animals realise that the pigs have changed the seven commandments to read:

“All animals are equal but some animals are more equal than others”—

or, to put it another way, “We’re all in this together, but if you’re poor, you’re in it a lot deeper than others,” such as the numerous millionaires who sit on the Government Benches.

Increased unemployment will force more people on to state benefits, which will put pressure on the size of the national deficit, which the Chancellor claims to be so concerned about. However, unless he has a damascene conversion, I suspect that he will respond to the failure of his economic prospectus by making even deeper cuts in welfare provision, as happened in the 1930s and 1980s. No doubt he will try to justify his failure by repeating his Orwellian mantra, but the reality is that it will not be his former Bullingdon club colleagues paying the price of that failure. No, it will be Britain’s poorest people, who will be in it up to their necks.

Of course, the Tories have form on that. I saw what they did in the 1980s to proud working-class communities in constituencies such as mine all over the country. They caused mass unemployment, slashed welfare provision, decimated front-line public services and did not stop cutting until they were thrown out of office in 1997. They even used another Orwellian ploy: to blame the unemployed for being out of work, labelling them as “scroungers”. Indeed, I see that the Prime Minister was at it again over the weekend when he talked about “welfare scroungers”. The Chancellor joined in the Orwellian chorus with his “Ministry of Truth” description of his Budget as a “progressive Budget”.

[Andrew Percy]

I have a quick question for the hon. Gentleman. Can he tell us whether unemployment in his constituency was higher or lower at the end of 13 years of a Labour Government?

[Chris Williamson]

Unemployment certainly fell in my constituency in the 13 years of the previous Labour Government. I will tell the hon. Gentleman this as well: thanks to the measures that they put in place, poverty was reduced in my constituency, people enjoyed the national minimum wage and were able to get health treatment far more quickly than previously, and children were not taught in overcrowded schools, so let us have no more lectures from him.

Let us never forget that everything that I have described has only been made possible by the vacillating Liberal Democrats, who say one thing then do another. Less than seven weeks ago, the Deputy Prime Minister said that his party represented a new kind of politics, with fresh ideas. What we got was a party supporting reactionary right-wing policies instead. Fewer than seven weeks ago, he was apparently opposed to the self-same right-wing policies that he now endorses. This is what he told his party conference on 23 September last year:

“We know what happens when you simply squeeze budgets, across the board, until the pips squeak. We know, because we lived through it before, under the Conservatives. We remember the tumble-down classrooms, the pensioners dying on hospital trolleys, the council houses falling into total disrepair. We remember, and we say: never again.”

In an interview with Jeremy Paxman on 12 April this year, the Deputy Prime Minister said:

“Do I think that these big cuts are merited or justified, at a time when the economy is struggling to get to its feet? Clearly not.”

That is what he said at that time.

Millions of people who rejected the Conservatives’ right-wing policy prospectus were seduced into voting for the Liberal Democrats by the Deputy Prime Minister’s rhetoric. People actually believed that the Liberal Democrats represented progressive values. How wrong they were. People now see that the reality is very different from the Deputy Prime Minister’s rhetoric. People see that he is now so determined to appease his Conservative masters that he is even prepared to sacrifice his own constituents by opposing a Government loan to Sheffield Forgemasters.

That is nothing new. The Liberal Democrats and their predecessors in the Liberal party have assisted the Conservatives into power in four out of the last seven general elections. It is thanks to the Liberal party splitting the centre-left vote in 1983 and 1987 that Margaret Thatcher was able to secure two landslide election victories. Then the Liberal Democrats did the same thing in 1992, forcing the country to endure another five years of Tory rule. The truth is that they are not a progressive party at all; they are merely a collection of self-indulgent political loners.

All the post-war progressive legislation has been introduced by Labour Governments often in the teeth of fierce opposition from the Tories and sometimes the Liberals, too. Examples include the NHS, the welfare state, comprehensive education, equal pay, civil partnerships, the national minimum wage, Sure Start, the ban on fox hunting, and the Open university, to name but a few.

--- Later in debate ---

[Mary Macleod]

I understand what the hon. Gentleman is saying, but I have been in business for 20 years, and I could cite plenty of others, including Richard Lambert, director general of the CBI, and the OECD, which says the Budget is far-reaching and courageous, so we need to have a balanced view.

I believe very strongly in the enterprise-led economy that we have put in place, and we have the building blocks in place to support future industry. That is why I was pleased to hear that spending on many capital investment projects will go ahead. Naturally, I will put in a request for Crossrail, a much needed capital investment for London.

Secondly, we also have to tackle the excess costs. This Budget has tried to create the right infrastructure for the future, but it is vital that we tackle the excess costs within our economy and get control of the welfare state. I have received letters from, and spoken to, constituents who feel it is unfair that they have worked hard all their lives and have paid taxes and are living in modest circumstances, whereas others are not working and are being supported by the state in accommodation way beyond anything they could envisage for themselves. As the Chancellor said, some of these benefits have got completely out of control, and we must review these costs.

The Chancellor was also right to point out the waste that the benefits culture engenders, not only in a financial sense to the state, but in terms of the loss of talent from individuals themselves and the ongoing impact on self-esteem and stress on family life to which living in workless households can lead. I therefore welcome the proposals that the various welfare to work schemes will be combined and simplified to support people back into jobs. It is vital for the revised scheme to be as flexible and creative as possible, particularly when looking at ways to bring groups such as lone parents whose children are at school back into the work force.

Thirdly, I want to comment on departmental budgets, which will focus the minds of many of us here in the next few months. I certainly support the target of making savings of 25% in those budgets over the next four years. I have spent many years in business cutting costs in operations around the world and I feel that the 25% figure is challenging and tough, but definitely achievable and necessary.

Fourthly, I want to mention a group in our society who are often overlooked and about whom I am often reminded by my constituents—pensioners. We all know the facts about how many of us are living and thriving into old age these days, but after 13 years under Labour there are still 1.8 million pensioners living in poverty. Many of my retired constituents feel that the contribution that they have made throughout their lives to our economy and society as a whole is not recognised as they struggle to live on their pensions or, if they save money, as they are penalised by taxation policies that seem unfair. I am delighted that we will now be able to restore some of that respect for our older citizens by putting in place the link between pensions and earnings from next April, and through the triple-lock guarantee.

I met one of my spritely 70-year-olds the other day at a surgery. He asked for the Government’s support in helping him to go on working. He said, “I’m fit and well, I love my job, I’m perfectly able to carry on working and I want to be able to continue to do so.” I hope that I will be as energetic as him at his age, and I should like us to take people like him into account when we consider the future of the retirement age.

[Andrew Percy]

My hon. Friend talks about support for older people. Does she agree that one of the biggest costs for elderly people in the past 13 years has been the doubling of council tax that we saw under previous Governments? In north Lincolnshire, that was done year after year by the Labour council.