Finance Bill

Debate between Edward Leigh and Cathy Jamieson

Monday 1st July 2013 Commons Chamber

[Cathy Jamieson]

Once again, my hon. Friend makes an important point, particularly in relation to many middle-income earners. The issue of the lowering of the threshold at which the higher rate of tax is paid has perhaps not had as much air time as some other topics, or other cuts that the Government are making, but the reality is that it affects many who would not see themselves as particularly well off, who have worked hard over the years and been promoted in a company or in the public sector, and who are trying to do the right thing for their family, and are feeling the squeeze.

To go back to the point about who will suffer most as a result of the Government’s policies, I emphasise that I know that in many places in London and the south-east, employment is not at the level that it is elsewhere, and incomes are being squeezed, but it is interesting to note the geographic spread.

Perhaps we should not be surprised to see the Tories operating in this way. I recall, on first entering this place, attending a debate on cutting and abolishing child trust funds. I was surprised that the Government thought that was the correct thing to do at that stage. They were once again attacking those who were trying to do the right thing and support their children and families. Under their approach, it is women and families— the very people they say they want to protect—who consistently suffer. The rhetoric and the reality are two very different things. We should perhaps not have been surprised by the Government’s proposals. It is an age-old Tory mantra that the poor—those on the lowest incomes—are expected to work harder; otherwise, they will be made poorer. At the same time, the rich will work harder only if we make them richer. In this instance, there seems to be one rule for the very richest and another for everyone else. This is arguably the same old out-of-touch Tories—this time, sadly, aided and abetted by the Liberal Democrats.

I always like to try to end on a positive note, however, and I come back to the point that the new clause is a relatively mild-mannered proposal. It seeks nothing more than that the Government should use their good offices to gather the necessary information to make an assessment of the impact of the changes and to produce a report. That does not seem an unreasonable request. Indeed, when the Exchequer Secretary to the Treasury was in opposition, he regularly requested such reports and no doubt regularly tabled amendments and new clauses to that effect. He is nodding his head. I hope that he will remember those days, and remember why it is so important to have such reports and assessments. I hope that he will show that he is not only a listening Minister but a Minister who is prepared to act, and that he will accept new clause 8.

[Sir Edward Leigh (Gainsborough) (Con)]

The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) has waxed lyrical at some considerable length about the iniquity of the Government’s seeking to reduce the higher rate of tax, but the question that kept occurring to me was this: if she and her colleagues felt so strongly about this, why were the Labour Government quite happy to keep a maximum higher rate of tax of 40% for their entire 13 years in office?

--- Later in debate ---

[Cathy Jamieson]

I am listening to the hon. Gentleman with interest. I wonder what he would say in response to the Institute for Fiscal Studies, which has pointed out that the rise in receipts may be due to wealthier people trying to avoid the 50p tax rate. It says:

“Receipts in April will have been boosted by high income individuals shifting income such as bonuses and special dividends from 2012-13 to 2013-14 in anticipation of the fall in the top rate of income tax from 50 per cent to 45 per cent.”

Is he suggesting that the right way to deal with people avoiding paying their tax is to reward them with a tax cut?

[Sir Edward Leigh]

It is not a question of rewarding them. The truth is that the more complicated the tax system, the more it is the case that the only people who suffer are middle-income groups, often people in employment on pay-as-you-earn. The rich—the millionaires; let us talk about the group that the hon. Lady is always going on about—will always, through their expert accountants’ advice, seek to avoid paying tax, quite rightly, as it is perfectly legal and proper, and largely they will be successful. The people she is talking about—the millionaires—are precisely the sort of people who have income streams that are very mobile around the world. They are often foreign nationals. Does she honestly think that if we go on piling more and more tax on to these people they will just sit around doing nothing? Of course not; they will seek to avoid paying tax. It is a question not of rewarding avoidance but of accepting the facts of life. She might think it unfortunate—I do not—but we need these risk-takers, entrepreneurs and wealth creators in this country. Unfortunately we are in a highly competitive situation with other countries, particularly Ireland and other low-tax countries. Unless we attract these people here we will not create jobs and investment in the private sector.

We can go back to our comfort zone; we can lie in the warm bath of our own prejudices and dislike millionaires. We would probably all like to be millionaires. None of us are millionaires, unfortunately; we chose to go into public service and we are not going to become millionaires. We can have a pitch at millionaires and think that in doing so we are making ourselves popular with the rest of the population, but unfortunately they will not sit tight; they will simply leave and take that entrepreneurship and job creation away. That is what Tony Blair recognised and that is what we should recognise.

Finance Bill

Debate between Edward Leigh and Cathy Jamieson

Monday 2nd July 2012 Commons Chamber

[Mr Edward Leigh (Gainsborough) (Con)]

Does the hon. Lady agree that child benefit as we have traditionally understood it has had one great advantage, in that not only does it recognise the role of women in bringing up children, but its universality has ensured that there is virtually no fraud or error, and nor does it in any way add to the unemployment or poverty trap?

[Cathy Jamieson]

I thank the hon. Gentleman for making that point. It is important to understand that the fact that this was a universal benefit ensured that everyone who ought to have had it and who needed it was able to get it. When we debated this topic in the House previously, some Members tried to characterise our concerns about these proposals as Labour trying to protect a universal benefit paid to high earners, rather than looking at the overall principled position, and some may try to do so again this evening. I should repeat what I said both earlier this evening and in that earlier debate: that kind of argument does not wash at all in terms of fairness from a Government who have given a tax cut to millionaires while millions of ordinary families are feeling the pinch.

During the earlier debate, I also reminded Members of article 27 of the United Nations convention on the rights of the child, which the UK has signed up to. It outlines the obligations on states to assist parents to meet the needs of their children, and I pointed out that a number of organisations—as well as a number of Members—had highlighted the importance of those obligations. Sadly, that exhortation to make this debate about fairness to children and families seems to have gone largely unheeded, apart from some honourable exceptions. There have been Westminster Hall debates looking at this issue in more detail, in which a number of Members highlighted both the unfairness of the proposals and their practical difficulties.