Finance Bill

Debate between Debbie Abrahams and Harriett Baldwin

2nd reading
Wednesday 13th December 2023 Commons Chamber

[Harriett Baldwin]

The hon. Lady is the honourable exception that proves my rule. She is indeed engaging thoroughly in the debate from the void that is the Opposition Benches this afternoon. The tax on education is her party’s Front-Bench policy to add VAT to school fees. She may not be aware of that policy, but it is not a good one and I recommend that she use her influence to get her Front Bench to drop it.

Let me turn to the excellent remarks made by the Financial Secretary to the Treasury. It is the view of the Treasury Committee that the tax system in the UK is far too complicated. We were concerned earlier this year, as we mentioned in our report, about the abolition of the Office for Tax Simplification, because we want to see the Treasury team look at more ways in which it can simplify the tax system. We also published a report on tax reliefs that identified more than 1,000 tax reliefs in our tax system, many of whose impacts or costs to the Exchequer the Treasury does not even know. They really should be thought of as expenditure lines, and they should be looked at a bit more carefully. Some of the steps announced in these measures, and indeed in last week’s National Insurance Contributions (Reduction in Rates) Bill, will do some good in that regard, and I want to highlight those.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

In relation to what the hon. Member was saying about national insurance, would she like to comment on the fact that, overall, the richest fifth of households will be £1,000 better off on average by 2027 whereas the lowest fifth are set to gain only £200. Does that make it the progressive autumn statement that has been claimed?

[Harriett Baldwin]

I can also attest to the fact that the hon. Lady is the second Labour Back Bencher in the Chamber. That brings the total to the two who are visible to me at this time on the Opposition Benches—[Interruption.] I think that the hon. Member for Mid Bedfordshire (Alistair Strathern) is also providing the shadow Parliamentary Private Secretary role. National insurance is indeed a terrible regressive tax as it stands and I wholeheartedly endorse any measures that reduce that burden and simplify things. The hon. Lady has pointed out that this is work in progress, but I think she should welcome the abolition of class 2 national insurance. That has simplified the national insurance system, and in the spring Budget we had the welcome simplification of the lifetime allowance charge. We also had a great simplification in childcare entitlement with the announcement of a much wider offer of free childcare. These simplifications have been broadly welcomed.

There are further welcome simplifications in this Finance Bill. The Financial Secretary to the Treasury was kind enough to write to me yesterday to summarise his principles for the simplification of the tax system. He wants tax rules that

“have a clear consistent rationale”.

He wants it to be

“easy for taxpayers to get their tax right”.

He wants taxpayers to be able to understand what they need to do “at key life cycle points”, and he wants a tax policy that

“does not…distort the decisions of taxpayers and result in poorly informed choices.”

In summary, the Government want

“the tax system to be simpler, fair and to support growth.”

The Financial Secretary’s letter, which we will be publishing on the Treasury Committee website this afternoon, also outlines further simplifications, which were in the remarks he made earlier. They include expanding the cash basis for small businesses, improving the design of Making Tax Digital, simplifying research and development tax credits, which we welcome, and simplifying capital allowances and making them more permanent. I will draw to the House’s attention to other measures for individuals that he did not highlight. There is an increase in

“the threshold for individuals with income taxed through Pay As You Earn to file a Self Assessment return to £150,000”.

That is important because more and more people would otherwise be caught by the freezing of the thresholds. From April 2024, that threshold will be abolished altogether. There are also simplifications for individual savings accounts in this Finance Bill, as well as measures to simplify customs processes. I think the Financial Secretary’s heart is in the right place on simplification, and there is no question but that R&D tax credits were being abused.

I draw the Financial Secretary’s attention to future opportunities for simplification while welcoming the fact that venture capital tax relief is being extended to 2035, as the Treasury Committee called for in our report. I would love to see the Financial Secretary focus on the unintended disincentives to taking on additional work and additional hours that exist throughout the tax system, at all sorts of income points. We have made huge strides on simplifying it for people on universal credit, making every extra hour of work pay, but once people get into the tax system, there are cliff edges and high marginal tax rates that deter them from working more. I will highlight two in particular.

First, the Treasury Committee is currently holding an inquiry on “Sexism in the City,” and we have had evidence on how we could improve some of those marginal tax rates. The child benefit taper was introduced 10 years ago with my wholehearted support. It was the right thing to do in 2013, but it is now time to look again at how it interacts with the free childcare offer. We should consider the opportunity for simplifying the tax system by getting rid of the taper altogether, as it is a terrible deterrent to the families who get caught.

A person with a lot of children, earning between £50,000 and £60,000, can have a marginal tax rate of over 100%. It has become far too complex, and it is deterring many women from taking on more work. With the childcare offer we now have, it is time to look again.

I also want to throw the evidence from our “Sexism in the City” inquiry into the mix. The City has the highest pay and, indeed, the highest pay gap in the country. Some of the best paid careers for women are in financial services, but we hear time and again that, because of the tax-free childcare cut-off at £100,000, some women are choosing to work less than a full week. The freezing of the thresholds is having side effects. As the Financial Secretary thinks ahead to next year’s fiscal events, I urge him to consider those two potential simplifications.

Finance (No. 2) Bill

Debate between Debbie Abrahams and Harriett Baldwin

Report stage
Tuesday 20th June 2023 Commons Chamber

[Harriett Baldwin]

I thank my right hon. Friend for that intervention, which made me think immediately of the measures in this Bill on the increased rate of corporation tax. That in itself is controversial, but we now have these ladders between 19% and 25%. Our Committee would be interested to see the letter that the Financial Secretary has undertaken to write to us annually include an assessment of not only new measures such as that on the behaviour of businesses—I highlighted the impact of the VAT measures just now—but of the existing body of tax law. As with the simplification of the lifetime allowance, we must ensure that this Treasury and these Treasury Ministers focus relentlessly on how they can simplify the complexity and the behavioural signals that our tax system is sending, which are deterring people from entrepreneurialism, taking on extra work and earning higher incomes. With that, I am happy to have spoken to those two amendments.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I wish to speak to my new clause 3, which would compel the Chancellor to assess the impacts of the Bill on poverty and inequalities, and, subsequently, our health. It states:

“The Chancellor... must review the public health and poverty effects of the provisions of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) The review must consider—

(a) the effects of the provisions of this Act on the levels of relative and absolute poverty across the UK…

(b) the effects of the provisions of this Act on socioeconomic inequalities and on population groups with protected characteristics as defined by the 2010 Equality Act…

(c) the effects of the provisions of this Act on life expectancy and healthy life expectancy across the UK…

(d) the implications for the public finances of the public health effects of the provisions of this Act.”

Most notably, it must consider those implications on the NHS. So the ask is simple: that the Government should disclose their evaluation of the impact of their economic policies on the health of our constituents—that is it. It is fairly straightforward, and I think we are all aligned on that; these are ambitions the Government have professed to have in their levelling-up agenda. My new clause would contribute to that and to the achievement of the reduction in health inequalities to which the Government say they aspire. They should have nothing to fear from the transparency that this new clause would bring.

As we know, there is overwhelming evidence that socioeconomic inequalities are the key determinants of our health and, consequently, our health service use; inequalities in income, wealth and power will determine how long we are going to live and to live in good health. It is, therefore, only reasonable that the Government report on how the Finance Act will have an impact on those inequalities. For example, life expectancy for men is four years lower in Oldham than it is in the Prime Minister’s constituency. In the past 13 years, Oldham Council has had £230 million in funding cut from its central Government funding—that is 29% of its total budget in 2010. It has received funds through the competitive bidding processes for the towns fund and levelling-up fund totalling £44 million. A GCSE in maths is not required to see the shortfall there. However, in Surrey, where the Chancellor is an MP, people have seen their council budget cut by just 8.3%. The issues are clear when we compare that 8.3% with that 29%.

How can it be right that in the sixth richest country in the world people are dying younger because of their socioeconomic position? Poverty and inequality are not inevitable; they are political choices that can have deadly consequences. The pandemic revealed that stark reality, exposing how our structural socioeconomic inequalities impacted on who was infected by covid and their experience of the disease. People on low incomes were more likely to be infected and to die of covid; within that, and at every other level of the income hierarchy, people of colour and people with disabilities were disproportionately represented in case numbers and deaths. If we are to prevent the same mistakes from happening, the Government must listen. If they do not listen to me, they should listen to Professors Sir Michael Marmot, Clare Bambra and Kate Pickett, and to countless others. There is overwhelming evidence to show that structural inequalities in our country drove the unequal death toll from covid.

Michael Marmot revealed that instead of narrowing, health inequalities, including how long we are going to live and to live in good health, were getting worse; prior to covid, our life expectancy and healthy life expectancy was getting worse. Most significantly, his analysis showed that unlike the situation in the majority of other high-income countries, our life expectancy was flatlining. For the poorest 10% of the country, including in my part of the world, it was actually declining, with women being particularly affected. He showed that “place matters”; living in a deprived area in the north-east was worse health-wise than living in an equally deprived area in London.

Sir Michael also emphasised that it is predominantly the socioeconomic conditions that people are exposed to, not the NHS, that will drive their health status and how long they will live. Analysing the abundant evidence available, he attributed the shorter lives that people in poorer areas such as my north-west constituency are predominantly living to the disproportional Government cuts to local public services, support and income that they have experienced since 2010—and then the pandemic hit. As the National Audit Office and others have outlined, it was always a question of when, not if, there would be a pandemic. Like many of us, Sir Michael has pointed out that the Government’s hubris can be seen not only in their pandemic management but in the high and unequal covid death toll. Improving our health and wellbeing must be a priority of this Government and an outcome of our economic—and other—policies.

Oral Answers to Questions

Debate between Debbie Abrahams and Harriett Baldwin

Tuesday 4th December 2018 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

6. What recent steps he has taken through the UN and other international organisations to tackle refugee crises.

[The Minister for Africa (Harriett Baldwin)]

The UK has been working with the United Nations to agree a global compact on refugees, which is set for adoption by the end of the year. It provides a comprehensive global framework that goes beyond life-saving humanitarian support, enabling a longer-term response, offering refugees a viable future.

[Debbie Abrahams]

The UN’s global compact on refugees is indeed welcome—it recognises our common humanity and interconnectedness—but I am concerned that it is non-binding. How will the Government work to strengthen it? Will the Foreign Secretary and Home Secretary work together to review our restrictive rules, which prevent refugee families from being together?

[Harriett Baldwin]

I am glad that the hon. Lady welcomes the UK’s role, and I assure her that the UK has been fully engaged throughout the whole process since the United Nations agreed to move forward on this issue. We have been working on the wording and the direction of travel, to make sure that it is an agreement that can work for the whole world.

Oral Answers to Questions

Debate between Debbie Abrahams and Harriett Baldwin

Tuesday 7th June 2016 Commons Chamber

[Harriett Baldwin]

I welcome this question because our financial services sector is not only our highest-paid sector, but the one with the widest gender pay gap. That is why we launched the Women in Finance charter, and we are asking all financial services firms to implement the recommendations in the excellent review by Jayne-Anne Gadhia, the chief executive of Virgin Money, on the representation, or rather the under-representation, of senior women in financial services.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

The Government have made significant public spending cuts affecting disabled people, including nearly £30 billion of cuts in social security to 3.7 million disabled people. Given that disabled people are twice as likely as the general population to be living in poverty, how many more disabled people will be living in poverty by 2020?

National Insurance Contributions (Rate Ceilings) Bill

Debate between Debbie Abrahams and Harriett Baldwin

Tuesday 15th September 2015 Commons Chamber

[Harriett Baldwin]

My remarks will be so short that hon. Members will need to intervene quickly with their points of clarification on this five-clause Bill. The hon. Lady will be aware that in the summer Budget the Chancellor announced that we are asking the Office of Tax Simplification to look at class 2 and class 4 contributions. We are expecting that consultation, which opened on 21 July, to inform the Budget next year. She asks a sensible question and I welcome her curiosity.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Can the Minister clarify what assessment she has made of the number of self-employed people who may apply for an exemption from paying class 2 contributions, especially as at least half of the increase in employment is self-employed people and, on average, self-employment incomes have fallen to less than £10,000?

[Harriett Baldwin]

We are very pleased that we are backing those who want to take a chance, start their own business and become self-employed. In fact, we have taken measures in previous Budgets to simplify the process so that self-employed people can consider making those contributions alongside their self-assessment.

--- Later in debate ---

[Harriett Baldwin]

I thank my hon. Friend for making that excellent point. The Government want to back small businesses, entrepreneurs and those who want the certainty over the next five years that if they employ four people on the new national living wage, they will not have to pay any national insurance because of the employment allowance.

[Debbie Abrahams]

May I press the Minister on the point I made in my earlier intervention, which she did not actually answer? What assessment has she made of the number of self-employed people who earn so little that they could apply for an exemption from class 2 national insurance contributions?

[Harriett Baldwin]

When one starts out in business, it is often the case that one earns a small amount, but it is those fantastic people who start businesses, often at their kitchen table, whom the Government are trying to back with the measures in the Bill, which will give them a certainty that they would not have if Labour were in charge.

Royal Bank of Scotland

Debate between Debbie Abrahams and Harriett Baldwin

Thursday 11th June 2015 Commons Chamber

[Harriett Baldwin]

I thank my hon. Friend for a good question that reminds us not only of the failure of the banking regulatory system under the previous Government, but of the rewards for failure. Labour allowed Fred Goodwin to walk away with an enormous pension and a knighthood.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I welcome the hon. Lady to her new role, but gently remind her that the current debt to GDP ratio is 80%, which is 20% higher than it was after a global economic crisis and our recapitalisation of the banks. On the current RBS share price, there would be a loss to taxpayers of £13 billion, if all the shares were sold today. Is this not incredibly insensitive to the millions of disabled people waiting for personal independence payments and to the carers who have seen £3.5 billion cut from social care and who are really struggling in this, carers week, and will she confirm that the Government will sell RBS only at a profit to the taxpayer?

[Harriett Baldwin]

The hon. Lady’s question started off very well by acknowledging the risks of high public debt. It is incredibly important for those people whom she rightly draws our attention to that we have a strong and healthy economy, and a strong and healthy financial sector is part of the solution. I am not sure, however, whether she is arguing that we should borrow more for longer by holding on to the shares for longer.

Pensions Bill [Lords]

Debate between Debbie Abrahams and Harriett Baldwin

Monday 20th June 2011 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Like other Members, I am encouraged by the agreement across the Chamber, particularly on issues related to fairness that mostly affect women. We agree, for instance, that we are all living longer and therefore need to extend our working lives. Contrary to what the hon. Member for South Dorset (Richard Drax) said, the last Labour Government took that into account in the Pensions Act 2007, following the recommendations of the Turner commission.

My right hon. Friend the Member for Croydon North (Malcolm Wicks) made a relevant point about variations in life expectancy connected with socio-economic inequalities, and about the time for which people in a healthy condition can expect to live. I agree that more research should be done on that.

[Harriett Baldwin]

The hon. Lady mentioned the steps that the last Government took to deal with increasing longevity. Does she agree that the figures produced by the original Turner commission suggest that things are moving much faster than was anticipated even in 2004, and that since then longevity has increased by at least a year?

[Debbie Abrahams]

I think that the hon. Lady is referring to the average. It is important for us to consider not just the average, but how the figure is spread across different socio-economic groups. It does not explain or excuse the Government’s failure to protect the women who are being detrimentally affected by the acceleration of the equalisation of the pension age.

As many people have pointed out, this is about fairness. We must focus on what is right, and the Bill fails the fairness test. Many figures have been cited in relation to what the Bill means nationally. Half a million women will have to wait more than a year longer to receive their state pensions, 300,000 will have to wait an additional 18 months, and an unfortunate 33,000 will have to wait a further two years. Moreover, the Government will increase the state pension age for both men and women to 66 in 2018.

I asked the House of Commons Library to conduct an analysis of the impact in my constituency. I discovered that 4,300 women and 3,800 men would be affected, and that approximately 200 women would experience a notional loss of income from their state pensions of up to £10,700. I have been contacted by dozens of women in my constituency who have been working since the age of 14 or 15, including one called Linda Murray. She gave me permission to use her name. She was born in 1954, and left school at 16 to start work. She wrote:

“I have never had a job that provided a pension or had the means to provide one for myself. I have worked full-time apart from a few years when I worked part-time while helping to look after my mother who needed 24-hour care. For most of my working life I expected to receive my pension at the age of 60. However when the age started to rise I accepted this, as did everyone else. My retirement date was set at 64. I now work 47 hours a week in a dry cleaners and it is hard manual work. Due to my personal circumstances, full retirement is not an option for me, at least for a few years, but I was planning to greatly reduce my hours. I know that I won’t be able to continue working as I am now until I’m 66.”

Many Members have mentioned that that is hard to do because of the physical wearing out of the body.

Linda continues:

“But my take-home pay is £267 a week—how am I going to be able to save enough from this to be able to work part-time when I’m 64?...This proposal is ill thought-out and cruel. It’s unfair to move the goalposts for a second time. Women of my age have worked hard and honestly and don’t deserve to be discriminated against in this way. We accept the need to equalise the retirement ages but it should be done in a fair way. I feel that this Act will create an underclass of women unable to continue in their present employment, unable to find another job and denied the pension to which they are entitled. In an interview in The Daily Telegraph…David Cameron said that a sudden rise in women’s retirement age was out of the question.”

So that is another broken promise. There are hundreds of women with similar stories, and there is considerable cross-party agreement that we need to do something about this. I therefore hope that Ministers are listening.

Another fairness issue is the switch from the retail prices index to the consumer prices index. The Department for Work and Pensions impact assessment produced figures that again suggest that the burden will shift from the Government and employers to the individual. Some £500 million will be taken from the Pension Protection Fund.

My final point is about the increase in income thresholds for automatic enrolment into occupational pensions and the delay in that regard. The former Labour Government introduced that measure in the Pensions Act 2008, but the current Government are restricting access to it by both increasing the threshold from £5,000 to almost £7,500 and introducing a three-month waiting period. Again, women and people in low-income jobs will be particularly affected. Indeed, the impact assessment suggests that those who will be most detrimentally affected will be women, people on low incomes, ethnic minority groups and people with disabilities.

We must not allow our pension system to be reformed in a way that pushes pensioners deeper into poverty. Labour did a lot to reduce inequalities—although I would have liked us to have done a lot more—but these reforms will make them worse.