Finance Bill

Barry Gardiner Excerpts

Tuesday 6th July 2010 Commons Chamber

[Danny Alexander]

I am grateful for that intervention. I am sure that my hon. Friend will have the chance to raise that point either in Committee or on the Floor of the House when the Bill is considered.

[Barry Gardiner (Brent North) (Lab)]

Has the Chief Secretary analysed the impact of the Budget measures on women? If not, will he commit to doing so?

[Danny Alexander]

I can confirm that we have carried out an analysis of the Budget across the income distribution to evaluate its fairness. We have also conducted an analysis of the impact on child poverty, which is the most important aspect. We have ensured that, even in the toughest Budget since the second world war, there will be no impact on measured child poverty—something that could not always be said of the previous Government’s Budgets.

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[Danny Alexander]

I am going to press on.

[Barry Gardiner]

Will the right hon. Gentleman give way?

[Danny Alexander]

I have given way already to the hon. Gentleman.

Let me turn to the first of the measures in the Bill.

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[Mr Byrne]

That news was somehow absent from the Chief Secretary’s remarks. He and the Chancellor may now think that everything is fine. I know whose verdict I would rely on, and it is not the Chancellor’s.

I do not want to depress the House unduly and I have a little bit of good news—

[Barry Gardiner]

Will my right hon. Friend confirm that the real point is that if we should slip back into a double-dip recession, the coalition’s efforts will be null and void, because they will not have been able to address the deficit as a proportion of GDP?

[Mr Byrne]

That is precisely right and I will have more to say on that in a moment.

I promised a ray of good news among all the bad news and depressed expectations from the business community. A command paper was sneaked out last week. It had barely a press notice—it ran to a grand total of six lines—and there was no written ministerial statement with it. What could justify such secrecy? All is revealed on page 52 of the public expenditure survey, published last week, wherein we discover that Departments under Labour’s management underspent their budgets last year by £5 billion. Anyone would think that the Government wanted to keep that news secret. In a knee-jerk response yesterday, they decided to cover it up by announcing another £1.5 billion of spending cuts instead.

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[Mr Jones]

My hon. Friend says it is a shame that that is no longer the case. I know that when he was a Back Bencher two Parliaments ago he was an assiduous Member, perhaps with the sad anorak tendency of those on the Finance Bill Committee.

[Barry Gardiner]

He used to take notes.

[Mr Jones]

He did. We are now to have all stages on the Floor of the House, which I greatly welcome. I look forward to exploring the Bill in depth in the next few weeks, as I am sure many other Labour Members do.

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[Mr Jones]

Yes, we have been asked directly whether this came suddenly as a shock. The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) has just raised the very clear point that the actual size of the deficit was smaller than projected. No, this is a coalition deal, as we all know, by the push-me, pull-me coalition. We obviously have two leaders who can hardly be told apart in terms of political objectives, and we have some very unhappy individuals, such as the hon. Member for St Ives (Andrew George). When he made his speech trying to justify this in the House last week, he looked very uncomfortable. I feel for him; all I would say is that if he feels so unhappy, he should come and join us.

[Barry Gardiner]

My hon. Friend is making a tremendous speech and I hope he goes on making it for a good deal longer. He talked about the impact of VAT on small businesses, but does he agree that one of the most damaging effects on those businesses in his part of the world will come from the loss of One NorthEast? The very support that businesses in his area require is going to be lost.

[Mr Jones]

Yes, another myth that people have been peddling is that development agencies like One NorthEast were somehow profiting and spending. I will tell anyone what One NorthEast did in my constituency. It helped out a perfectly viable business in the middle of the recession, which could not get a £2 million loan that it needed to be underwritten. When One NorthEast stepped in, 20 extra jobs were created in that small business and another 50 were safeguarded.

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[Mr Jones]

As a member of the Sacriston workmen's club, I have to concur with my hon. Friend. As he knows, following the smoking ban, the change in the way people access alcohol and supermarket price cutting, many such clubs in the north-east of England have been struggling. Many have closed, sadly, in my constituency. We hear a lot about rural pubs, but we hear very little about the Club and Institute Union movement. In many places, including his constituency and mine, those clubs are the centre of the community. Once they have gone, they will not be replaced. The VAT increase will be a severe blow for them at this difficult time, when they are struggling already.

[Barry Gardiner]

My hon. Friend has been most generous in giving way. Before he moves on from VAT, has he had the opportunity to consider the costs to businesses of reprogramming their tills for the change in VAT? My understanding is that many of the large supermarket chains find that that process costs them millions of pounds. That is a real cost to the economy that does not seem to be factored in.

[Mr Jones]

My hon. Friend makes a good point. There will be a cost not only to large businesses but to small businesses. That brings me neatly on to the British Retail Consortium, which has grave concerns about the VAT increase. It recently said that it could cost up to 163,000 jobs and affect some £3.6 billion of spending. Again, in many communities those jobs are vital. This is on top of the very difficult economic climate that businesses are facing. In my constituency, retail-led development is a catalyst for regeneration. If, for example, the new Tesco in Stanley does not go ahead because of these proposals, it will have a knock-on effect on the regeneration of an entire town.

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[Barry Gardiner (Brent North) (Lab)]

Albus Dumbledore in “Harry Potter and the Chamber of Secrets” said:

“You see, Harry, it is not our abilities in life, but our choices that tell us who we really are.”

When my right hon. Friend the Member for Edinburgh South West (Mr Darling) rose in this Chamber as Chancellor at 12.32 pm on Wednesday 24 March, he could look back on a year in which global recession had not turned into depression, in which unemployment, although too high, was less than had been predicated a year earlier when the recession began, and in which the United Kingdom was now infinitesimally but incrementally moving from recession to GDP growth. He faced tough choices: how to bring borrowing down without strangling growth, and how to reduce the deficit without crippling front-line public services and punishing the most vulnerable people in our country. Those choices were not easy, but they were necessary.

When the current Chancellor, the right hon. Member for Tatton (Mr Osborne), rose in this Chamber at 12.33 pm on Tuesday 22 June, he did so against the background of a further quarter of small but positive growth and a report from the Office for Budget Responsibility that predicated £30 billion less public sector borrowing. Despite that improved situation, however, he said that he did not face any choice. He said:

“This is the unavoidable Budget.”—[Official Report, 22 June 2010; Vol. 512, c. 166.]

No; this is the Budget of Tory masochistic fantasy. Right-wingers are delighted with what they see, in this Finance Bill, as the arms of the state being rolled back. They are delighted by the thought of 600,000 jobs being cut from the public sector. They are salivating at the thought of spending less on welfare at the very time when they cast 600,000 more people into the welfare net. Where is the sense in that? Oh yes, this is a Finance Bill of choice for the Tories, and in life it is

“our choices that tell us who we really are.”

[Ann McKechin (Glasgow North) (Lab)]

Is it not ironic that one of the main beneficiaries of this particular Budget will be our banks, which are among the biggest payers of corporation tax in the country? The Government have chosen not to tax bankers’ bonuses this year, despite clear public outrage at the level of bonuses that are still being paid.

[Barry Gardiner]

Not only has my hon. Friend made a perfectly apposite point, but she has made it better than I could ever possibly do. I can only agree with her.

[Jim Fitzpatrick]

If my hon. Friend is going to be so complimentary to those who intervene, how can I resist? Will he explain his perception that this is a Budget of choices? Is he going to refer to the analysis by the Institute for Fiscal Studies, according to which it is a Budget of choices and the Government made the wrong choices, or is this entirely his own analysis?

[Barry Gardiner]

My hon. Friend is absolutely right. The Institute for Fiscal Studies has made some damning comments about the regressive nature of this Finance Bill.

Should it be passed in the House of Commons, the Bill will be unavoidable in its own way. Consider the carer, middle-aged herself but looking after her ageing, frail parents. She will not be able to avoid seeing her carer’s allowance cut by £90 a year over the next five years. Consider the family of five living in Brent, already struggling to find the difference between what the landlord insists is a fair market rent and their housing benefit payments each month. They will not be able to avoid eviction as the Finance Bill cuts housing benefit. Consider the severely disabled sufferer from Crohn’s disease. She will not be able to avoid losing £300 a year as the Bill cuts support year on year.

Consider the young couple starting their life together, moving into and trying to furnish their flat. They will face the costs of conveyancing solicitors, new fridge, new washing machine, new carpets, new sofa, new telly. This is certainly the unavoidable Finance Bill for them, with an extra 2.5% on every item. It is the unavoidable Finance Bill for the poor, for the disabled, for those on housing benefit, and for carers. A clear choice has been made by the Conservatives to cut an extra £40 billion on top of the £78 billion announced already.

[Dr Sarah Wollaston (Totnes) (Con)]

I would like to ask the hon. Gentleman whether he realises why all these very sad cases are unavoidable. It is because we have a national debt of £1 trillion. I was looking at what that means. If every pound were a second, that would be 31,546 years and we would all be sitting here for a very long time.

[Barry Gardiner]

rose—

[Mr Speaker]

Order. Before the hon. Gentleman responds to that intervention and resumes his speech, I remind him that he is perfectly entitled to talk about vulnerability if he so wishes, but he must relate it to the matters within the Bill and he has an extensive choice from which to select.

[Barry Gardiner]

Thank you, Mr Speaker. I am tempted to take up the length of time that the hon. Lady mentioned, but I fear that the House needs to come to a close. A clear choice has been made by the Conservatives to cut an extra £40 billion on top of the £78 billion announced in March. They have made a clear choice to cut £11 billion out of tax credits and benefits. A clear choice has been made by the Liberal Democrats not just to drop the VAT bombshell that they warned of, but to act as navigators and pathfinders for the Conservatives to deliver it perfectly targeted. That regressive tax does the most damage to the poorest. It is regressive, not progressive.

“We will not have to raise VAT to deliver our promises”,

said the Deputy Prime Minister before the election. Indeed not—the Liberal Democrats will have to raise VAT to deliver the Tories’ promises. What an apology for a fig leaf.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

With regard to my hon. Friend's list of all the people who will not be able to avoid paying the increase in VAT, is he aware that many community halls in my constituency and across the country will also be forced to pay it as they are not able to claim exemption from VAT owing to the arrangements that they face?

[Barry Gardiner]

My hon. Friend is entirely right. That is a real problem for clubs and small businesses that are not able to reclaim VAT back. It is yet another tax on business.

[Ms Angela Eagle]

Does my hon. Friend share my astonishment that Members on the Government Front Bench seem to be ignorant of the fact that VAT has to be paid by charities?

[Barry Gardiner]

Not in the slightest. Why should I be surprised? It is what I would expect of Government Front Benchers.

The Child Poverty Action Group has passed its judgment on this “unavoidable” Finance Bill:

“This is a disappointing budget for child poverty and increases the risk of the government failing to meet its 2020 goal of ending child poverty.”

It says:

“The increase in VAT is a regressive measure which will impact hardest on poor families.”

Robert Caro, the great biographer, once wrote:

“It is said that power corrupts: what is more true is that power reveals.”

With the Liberal Democrats, power has certainly revealed. No longer can anyone be excused for thinking that the Lib Dems are progressive and principled. They are regressive, ruthless and prepared to sell out any policy for a whiff of office.

In the course of debate over the past week, Government Members have repeatedly asked Labour Members what we would do. They have suggested that they have taken the unavoidable and necessary action, whereas we would have taken none at all. So I refer them to the Red Book in March, where my right hon. Friend the shadow Chancellor set out the swiftest and most straightforward deficit reduction plan that then existed in the G7.

The plan proposed: £3.5 billion of savings by freezing public sector pay—but that of the better paid, rather than of the poorest public sector workers; £1 billion of savings from public sector pensions; £18 billion of savings to capital spending; £11 billion of savings from Whitehall reform; £19 billion in new tax rises; £14 billion of savings from reduced benefit payments as unemployment came down; and £5 billion of savings from programme cuts.

[Mr Kevan Jones]

The right hon. Member for Uxbridge and South Ruislip (Mr Randall) is chuntering from a sedentary position and trying to intervene on my hon. Friend. Does my hon. Friend agree that the people who are going to be affected by the VAT increase will be those in the retail trade, in which I understand the right hon. Gentleman has an interest?

[Barry Gardiner]

My hon. Friend is entirely correct. I believe that the point may have been made earlier. [Interruption.]

[Mr Speaker]

Order. Before the hon. Gentleman continues, may I gently say to the right hon. Member for Uxbridge and South Ruislip (Mr Randall) that we do not need sedentary interventions from him and we do not want to get into a general debate about the merits or otherwise of Randalls as a department store, interesting though that may be?

[Barry Gardiner]

Mr Speaker, I will forgo that offer, tempting though it may be. However, I will try to respond to my hon. Friend the Member for North Durham (Mr Jones), who is entirely correct to say that retailers will also suffer from this measure. Large retail operations, such as supermarkets, will particularly suffer because they have huge costs to meet in changing their tills over to cope with the VAT changes.

We made our choices too. They were hard choices, but they were not regressive choices, and they protected the poorest and the vulnerable. We chose to raise duty on cider to the same level as that on other alcohol. The Liberal Democrats opposed that choice in March—in fact, it was the only choice that they opposed then. Their choice is to reverse that duty in this Finance Bill, to put 8% less duty on cider and to increase VAT by 2.5%; scrumpy today, child poverty tomorrow is the Liberal Democrats’ great rallying cry for the 21st century. This is their tax priority for the new politics of collaboration. Albus Dumbledore was right: it is not our abilities in life but our choices that tell us who we really are. My choice is to oppose this pernicious Bill.