Income Tax
Debate between Geraint Davies and Andrew Bridgen(9 years, 6 months ago)
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Geraint Davies (Swansea West) (Lab/Co-op)
It is a great joy to follow the hon. Member for North West Leicestershire (Andrew Bridgen). He told me that he is capable of generating energy out of potato peelings, and he certainly illustrated that today. I am also pleased to follow my hon. Friend the Member for Stretford and Urmston (Kate Green), who made a point about the inequality imposed by the Government’s economic policies. Given the inequality between men and women’s earnings, if women earned the same as men—they do not—I understand that they would basically be working for free from today onwards. That is the level of inequality we face.
It is all very well talking about raising tax thresholds. Everybody likes that, I guess, but as has been pointed out, it is not a panacea, certainly not for people who are moving in and out of work on zero-hours contracts—the 1.1 million people moving in and out of benefits—and having to go to food banks and so on, or those who cannot get jobs regularly. While many people welcome raising tax thresholds, it is costing us £11 billion a year. I mention that because it has been suggested that the measure under discussion today, the 50p tax rate—the static value of which is supposed to be £3 billion—is somehow insignificant and incidental, but it is still a significant figure, given the money the Government are giving away in raising tax thresholds.
Today the Prime Minister said again that he will be giving away £7 billion—there will basically be cuts in public services to pay for more tax giveaways. We are moving now to a situation where the Tories are saying, “Public services bad; tax cutting good” and many communities are feeling the pinch as a result, which is unfortunate.
During Prime Minister’s questions, the Prime Minister said that it would be “immoral” to rack up debt and leave it to our children as an inheritance, yet I put it to the Minister that the Government are doing precisely that. Their economic strategy is generating a low-income, low-wage economy, at the same time as pushing up the tax thresholds, which people have welcomed. The net outcome is that income tax receipts are going down. Instead of going up by 7%, they have risen by 0.1%, and the tax and national insurance increase that was supposed to continue to rise is £13 billion short this year.
The deficit reduction that the Chancellor planned for the autumn statement will be £11 billion down. Why? Because he predicted that wages would rise by 2.5% and they have risen by 0.5%. And why is that? As I mentioned, it is about insufficient investment from banks in productivity, and cuts to benefits for students or fees for sixth formers. In addition, the infrastructure that generates productivity and higher wages is being undermined, so the tax take is getting worse. Under Labour, 55% of the economy was debt; it is now about 75%. Borrowing under this Government over the past four years has been more than in 13 years of a Labour Government. It is a complete catastrophe.
Geraint Davies
I will give way to the hon. Gentleman in a moment. He was banging on about the 1970s, but let us remember more recent history and the fact that in the 10 years to 2008, the economy grew under Labour by 40% before we met the banking disaster. Two years on, thanks to the fiscal intervention of Brown and Obama, it was growing again by 2010. We have been flatlining since then because of the economic incompetence of the hon. Gentleman and his colleagues.
Andrew Bridgen
Perhaps I can drag the hon. Gentleman back to today’s motion and Labour’s wish to bring back the 50p tax rate. What does he say about the comments of Lord Myners, a Labour peer, who said of the shadow Chancellor:
“The economic logic behind his thinking would not get him a pass at GCSE economics…he takes us back to old Labour and the politics of envy”?
That was in The Daily Telegraph on 25 January 2014.
Jobs and Social Security
Debate between Geraint Davies and Andrew Bridgen(11 years, 5 months ago)
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Geraint Davies
We are seeing the perverse irony that the welfare bill is going up and up, with more people going into dependency, because the environment for job creation is not there. Meanwhile, the Government’s one-string solution is simply to give people less and less, when the focus should be on how to create new jobs, so that we can help people to get and sustain a job.
Another example—other than the targeting of under-25s who tend to have children and the escalation of child poverty into intergenerational poverty—is the empty bedroom tax. This is another horrendous idea whereby poor people—they are poor by definition as they are on housing benefit—who have an empty bedroom will lose about £7.50 a week, or £15 if they have two empty bedrooms. For example, a couple with two children, one of whom wants to go to university or get a job, will clearly have an incentive to say, “Don’t go to university,” or “Don’t leave home to get a job”—“Don’t ‘get on your bike’”, as Lord Tebbit would have it—“because, if you do, we shall end up being taxed £7.50 a week.”
A man who came to my surgery a couple of weeks ago told me that he was receiving disability living allowance, that he had a second bedroom—he used it for painting, as it happens—and that he did not have a job. Indeed, he was not a person who could have got a job. After he had paid his utility bills and all the rest, his disposable income was £20 a week. He will now lose £7.50 as a result of the bedroom tax, and next April the Government will cut the council tax rebate by 20%, which amounts to about £5 a week. His disposable income will then be down to £8 a week, which will have to cover his food, clothing and leisure.
This despicable and, in my view, socially criminal activity generates very little money from those who can least afford it, and one of the by-products will be mass homelessness. I have been a leader of a local authority, and I know that local authorities usually build family-size housing. Someone living in a two-bedroom flat or a three-bedroom house that ceases to be full when the children leave home will lose housing benefit and will then be evicted if he or she goes into arrears. Where do such people go when a local authority has not built enough one-bedroom accommodation because it is supposed to cater for families?
What if a child wants to come back from university, or to visit the family? What if there is a split in the family and the child needs to move from one place to another? The bedroom tax will cause massive disruption to communities in areas like mine throughout the country and disfigure the opportunities for us to create new jobs and get back on a sound track towards economic recovery.
Andrew Bridgen
Will the hon. Gentleman not concede that better utilisation of the social housing stock and an increase in its capacity will give us an opportunity to reduce homelessness?
Geraint Davies
I have been the housing chair for London and for Croydon. I know that it is possible to devise strategies involving incentives to encourage people to move to smaller homes—and, of course, as people die over time, housing is recycled in any case—but the suggestion that a group of people in social housing should be evicted once their children have grown up and that, because suitable housing does not exist in their own communities, they should be moved around is not only despicable but completely counter-productive. It is economically insane as well as socially immoral.
Budget Responsibility and National Audit Bill [Lords]
Debate between Geraint Davies and Andrew Bridgen(13 years, 1 month ago)
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Geraint Davies
I am grateful for your guidance, Mr Deputy Speaker, because I would not want to be tempted in the least. I will resist temptation.
The focus of the amendment is very much on the important area of growth. As I have mentioned, the important opportunity is to refocus our entrepreneurial activity on export-driven growth. For example, in the Budget tomorrow the Chancellor might announce tax breaks for investment in small and medium-sized enterprises, which I would welcome. I do not think that he will, because he does not particularly care about SMEs; he will just say something about not giving mothers and fathers rights to see their children. The fact is that, with regard to the engines of growth, the liquidity has been taken out by the banks, which are just rebalancing their balance sheets. They should be pressurised into providing the fuel to allow the entrepreneurial engine to move forward, because so many companies have full balance sheets but no cash flow because the banks are letting them down.
It would also be a good idea to have a tax break for investment in SMEs in order to push things forward, as that way people could put in their own money and it would produce a better rate of return from the point of view of the business and venture capitalists. I do not think for one moment that the Chancellor will announce such a tax break—he does not have the imagination—but if he did, that could be factored into the growth figures for the OBR, because obviously the money we would spend on the tax break would be recovered from business growth, particularly if it was targeted at export-driven, high-quality manufacturing.
Andrew Bridgen
Does the hon. Gentleman believe that the OBR, had it existed before the financial crisis, would have been able to tell the previous Government that much of the growth they were claiming was actually a mirage? That growth was driven by a Government who were spending more than they were gaining in taxes and so creating a deficit. To pick up on a point made by the hon. Member for Bassetlaw (John Mann), they were also exporting manufacturing jobs to the far east and importing cheap goods, which was having a deflationary effect on our economy, allowing interest rates to be kept artificially low and feeding a housing bubble that was getting ever bigger. When it burst, that was when it all happened.
Geraint Davies
I am glad that the hon. Gentleman is wearing a badge saying that he has a GCSE in economics, but I doubt it.
On a serious point, I have already accepted that prior to the financial crisis there was a marginal deficit to be confronted, and it was going to be confronted through growth initiatives. We have since had the financial crisis, and the important thing now is to move forward with ideas for investing in growth. Clearly, there are big questions on tax and spend and where those will be deployed. Many new ideas might emerge in the Budget, such as a windfall tax on the energy giants, whose profit margins have suddenly increased by 38% because they did not adjust their prices when costs changed and so ripped off Britain’s consumers. That is obviously a legacy of the previous Conservative Government’s privatisation and the lack of controls.
There is money available to invest in growth and services and to close the deficit gap. The point about the amendment is that we must put growth centre stage, as that will enable us to move forward in a balanced way, rather than in the narrowly defined way that the Government prescribe. With those thoughts, I will give other Members the chance to make their own unique contributions.