Frank Dobson
Main Page: Frank Dobson (Labour - Holborn and St Pancras)Department Debates - View all Frank Dobson's debates with the HM Treasury
(9 years, 6 months ago)
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Chris Leslie
I will give way to my right hon. Friend, but first I want to hear a little more of the logic and the ideology espoused by the hon. Member for Wolverhampton South West (Paul Uppal).
Chris Leslie
Again, Conservative Members do not want to talk about the 50p rate of tax. They will find any example of other things. They will talk about the personal allowance or venture capital arrangements, and maybe we will get them on to VAT. We want to know the ideological basis for cutting the 50p rate to 45p. They may have thought that that would suddenly enliven enterprise across the country, but it has not done so.
Frank Dobson
There have been references to the ladder of opportunity. Education and training are a major part of that. It is this Government who have taken away the education maintenance allowance, which allowed large numbers of working class children to stay on at school, at college and in training. Taking that away has shifted several steps out of the ladder of opportunity.
Chris Leslie
It is important that we look in aggregate at the fate that has befallen so many of our constituents since 2010. We have had 24 different tax rises, as well as the effect of wages not keeping pace with prices. Let us look at some of the changes that have taken place since 2010—freezing child benefit, cutting maternity grants, cutting tax credits, abolishing the education maintenance allowance, higher insurance premium taxes, a frozen higher rate threshold, the granny tax, freezing allowances for pensioners and, of course, raising VAT to 20%.
In what must count as one of the most brazen transfers from the least well-off to the richest in recent years, the Chancellor announced in his conference speech a £3 billion strivers tax hit on tax credits until 2018—the same £3 billion sum given away in the tax cut to millionaires. There we have the comparative priorities—£3 billion in a tax cut to the very wealthiest in society, and the same amount taken away from some of the poorest and middle income families.
Andrew Bridgen (North West Leicestershire) (Con)
I welcome today’s Opposition motion, which is an opportunity to show the clear ideological divide between Opposition and Government Members. The Opposition’s motion reiterates their intent to reintroduce the discredited 50p tax rate, which, taken with other policy announcements, such as the so-called mansion tax, clearly demonstrates their willingness to sacrifice the current economic growth and prosperity and, indeed, our nation’s economic future, on the altar of their socialist beliefs. It is probably an attempt to shore up a sort of core-vote strategy—a failing strategy—that will do nothing to increase the nation’s belief in the credibility of either the Leader of the Opposition or the shadow Chancellor.
If we go back to the politics of the 1970s, as the Labour party is proposing, we might want to remember the words attributed to the then Labour Chancellor, Denis Healey who, talking of tax, said that he would squeeze the rich “until the pips squeak”. Social mobility and the ability to move between countries was not as high in the 1970s, but that policy led to what was called the brain drain. I seem to remember from my childhood that, given our economy then, we were regarded as the sick man of Europe, which we are far away from being under this Government’s long-term economic plan.
Frank Dobson
Does the hon. Gentleman acknowledge that average annual economic growth during the Callaghan and Wilson Governments was almost exactly equal to the miraculous levels achieved during Mrs Thatcher’s prime ministership?
Andrew Bridgen
The right hon. Gentleman, whom I much respect, has the advantage of me in years and service in this House. His figures may well be correct—I cannot challenge them with the information I have—but he must look at the economic backdrop of the relative growth of other economies in the world at the moment, and at the challenges that we face, such as the drag of the eurozone. There is no doubt that this Government are set to deliver the highest economic growth of any developed economy in the world this year.
Sir Malcolm Bruce (Gordon) (LD)
The motion seems to me a distraction for a party that has no credible economic policy and wants to draw attention away from that fact. We, as Liberal Democrats, voted for the reduction from 50p to 45p, but on the conditions which we negotiated within the Government, that rich people would pay substantially more in taxes as a direct result. That is precisely what has happened. It ill behoves the Labour party to latch on to a headline figure when its analysis does not stand up. There has been talk about the low wage, low tax economy, but I happen to remember the first two years of the Blair Government, when sticking to Conservative party spending plans meant tens of thousands of experienced doctors, teachers, nurses and public sector workers were thrown out of work by the Labour Government and then had to be re-employed subsequently at much higher cost.
Sir Malcolm Bruce
No, I will not at this time, and I want to let other hon. Members in. That is what happened and I had the debate then.
The point I want to make is that the Labour party has never yet had the will to say sorry to the British people for what it bequeathed to us. The fact is that the economy collapsed by 7% in a single year. It has been a huge heavy lifting task for this Government to rebuild the economy to the point where we now have a strong and balanced recovery. My party’s objective is precisely to have a stronger economy and a fairer society. We believe we have made a very significant contribution to achieving that. In particular, I am slightly surprised at the disdainful way Labour Members treat the raising of the tax threshold, which has been hugely beneficial to many people on low earnings by taking them out of tax.
I have to say that I am astonished that the motion refers to the 10p tax, which has been nothing but a source of political embarrassment and division for the Labour party ever since it was thought up, invented and abolished by the Labour party. It is not clear to me whether Labour Members want to replace the 0p rate by a 10p rate, which of course means that what we are talking about is a tax increase, or whether they will follow the advice of the IFS, which says that raising the tax threshold is a much more efficient way of delivering benefits to poor people than a 10p rate. That is why we have supported raising the threshold and delivered it.
Frank Dobson (Holborn and St Pancras) (Lab)
I support the motion, because I think it is about time that the rich paid a fairer share of income tax. They have been getting away with 40%, 40p in the pound, for far too long—[Interruption]—since 1988-89. Let me point out to Government Members, who usually rant on about the wonders of the Thatcher Government, that the top rate of income tax came down to 40p only after Mrs Thatcher had been Prime Minister for nine years. For nine of her 11 years in office, the top rate was 60%. The standard rate of income tax was 30%, also for eight or nine years. To describe the 50p rate as an easy choice, the product of socialist beliefs, and bashing the rich is ludicrous. When Government Members portray that rate—which is lower than Mrs Thatcher’s top rate—in such terms, it shows that they are actually harsher than Mrs Thatcher.
My colleagues have talked about the impact on people who are badly off, but I want to draw attention to the major beneficiaries, most of whom are in banking or associated finance businesses. They have benefited not just from this tax cut, but from the taxpayer bail-out of their useless, greedy, stupid, incompetent banks. They have benefited more than anyone else from quantitative easing. At the same time nurses, teachers and doctors have been faced with—
Frank Dobson
No, I will not, because others wish to speak.
Let me make it clear that the Labour Government did not bring down the top rate of income tax to benefit the richest and at the same time freeze the pay of nurses, freeze the pay of doctors and freeze the pay of teachers, while at the same time the bankers got their bonuses. At HSBC, which lost £27 billion in the credit crash, Barclays, which lost £8 billion, and Lloyds, which lost £5 billion, bankers’ bonuses have risen, in 2012 and since then. At HSBC, 239 people are currently receiving £1 million or more a year. The worst off received a £40,000 tax benefit, and most will have received £100,000. For example, Mr Stuart Gulliver, chief executive of HSBC, apparently receives £32,000 a week in what are described as “special allowances”. I do not even know whether he pays tax on those special allowances, but that means that he receives, each week, an amount that is close to the national average annual income that is over and above his pay, yet Members on the Government Benches object to the idea that he should pay 50p in the pound tax on that. All I can say is that, following his and his predecessor’s efforts, he obviously has to spend a lot of time trying to minimise the amount of money he has to set aside to pay off for swindling exchange rates and to pay off for the consequences of money laundering and what happened with LIBOR and, generally speaking, in organising an outfit that might be described as the tax avoiders’ alliance.
We have heard talk of behavioural change reducing the possible income from a 50p rate of tax, but these bankers are really good at behavioural change. They do nothing else. They organise all the way around the world, helping people to avoid tax. With the exception of Lloyds, more than 30% of the subsidiary companies of these banks—in some cases these companies exceed more than 1,000 in number—are located in tax havens, and they are not located in tax havens just because the weather is better; it is because they are involved in promoting tax avoidance.
Bankers also say that their pay is a compensation package. I have checked the Oxford dictionary and compensation means recompense for loss, injury or suffering. What have any of these bankers experienced in the way of loss, injury or suffering? It is the rest of us who have had to experience loss, injury or suffering as a result of their stupidity leading up to the financial crisis. Their incompetence and greed inflicted loss, injury or suffering on the rest of us. I thought at one point that it was a perversion of language to use the word compensation in such circumstances, but I actually believe it is a perversion of mindset. They have obviously concluded that they should be compensated for inflicting loss, injury and suffering on the rest of us.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Will the right hon. Gentleman give way?
Frank Dobson
No, as I shall finish shortly.
None of these people would have any difficulty finding an extra 5p or even 10p in the pound on their income tax.
Barbara Keeley (Worsley and Eccles South) (Lab)
Will my right hon. Friend give way?
Barbara Keeley
I wanted to intervene because my right hon. Friend is talking about behavioural change among bankers, but Government Members were shaking their heads and tutting when we were referring to disabled people, and I—[Interruption.] Yes they were; they were doing so when we referred to disabled people being hit by this Government and their priorities. Does my right hon. Friend agree that one group of people who cannot change their behaviour are the 60,000 carers who are required by this Government to pay the bedroom tax? They cannot change their behaviour: they cannot work; they cannot change their hours. Some people can afford to pay 5p or 10p extra in the pound, but people who are being hit badly—disabled people and carers—cannot do so.
Frank Dobson
I entirely agree with my hon. Friend.
My final point is this: the bulk of people who will benefit are in the banks and the rest of the finance industry. This is a very privileged industry, because every other industry in the country has to pay a 20% transaction tax, which is known as VAT, yet the City businesses pay virtually no transaction tax. I think if we want to raise some more money we ought to be introducing a transaction tax in line with what Mrs Merkel has been suggesting.