Capital Gains Tax (Rates)

Mark Durkan Excerpts

Monday 28th June 2010 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

It is a privilege to follow the hon. Member for East Surrey (Mr Gyimah). He not only reflected on the beauty of his constituency but let us know that, just because people live in idyllic settings, that does not mean that their family or work circumstances are ideal. He has also given us a trailer for the many lively contributions he will make in this House, seasoned with strong personal reflections, which many Members will have taken on board.

Claims have been made that, with the coalition Government, we have a new politics. That new politics, we are told, is about honesty and rebuilding trust. However, we have at the heart of the Budget the departure of honesty, with parties justifying doing what they said they would not do. Parties campaigned to get votes on the basis that the last thing we wanted was a VAT increase, but it is the first thing imposed by this Budget. It is a Tory Budget with Liberal Democrat accessories. I concede that some of those Liberal Democrat accessories are attractive—and that is part of the political calculation behind the Budget—such as the triple guarantee on pensions, which is there so that the coalition can say to Labour opponents, “We have done something that you didn’t do, we have restored the earnings link and better.” I regret that Labour Ministers did not listen to all their Back Benchers during their 13 years in government and do something about the pensions earning link.

We need honesty all round. I welcome the intensity that is coming from some of my hon. Friends on the Labour Benches, but I hope it comes with a measure of honesty, point by point.

[Simon Hughes]

The hon. Gentleman’s views are much respected, but may I say that I was always clear on this point? We did not want a VAT increase, although we had it under the last Government when it went up and then came down again. We were hoping that it would not happen, but certainly I said—as did all my colleagues, as far as I know—that it could never be ruled out. For many of us, the current position is that it may be one of the least worst options.

[Mark Durkan]

I am not sure if that was the least worst defence of a significant U-turn on a significant campaign issue. People did not just imagine that the Liberal Democrats campaigned aggressively on the issue of VAT increases, so to mount new politics on the basis of honesty and trust against that background is dangerous indeed.

I acknowledge that the Budget has Liberal Democrat accessories that are attractive, as are other aspects, such as the increase in personal allowances. But Liberal Democrats perhaps need to consider that this may be as good as it gets in the coalition. I recall a famous observation in Irish politics by a member of the Irish Labour party. Some time next year, the self-image of Liberal Democrats will change. They will realise that they are no longer in the vanguard of social justice and civil liberty, but instead have become the mudguard of a hard cutting Conservative Government. That will be their role in this Government.

It is not the case that the whole Budget is wrong, and from a study of the Budget notes it is significant how many of the measures build on aspects of the Finance Act 2009 and other Acts passed in the last Parliament. There are tweaks here and there, of the good, bad and neutral variety, but we should not pretend that there is no continuity. When the Chancellor made his statement, he said we would not have to look anywhere else for the Budget, because we would get it from him. He said that there would be no details hidden in the Red Book. However, when we compare his speech with the Red Book, we see that it is littered with phrases such as “We will produce proposals on this”, or “Other proposals will be published after we have the spending review in the autumn.” The details are all to come elsewhere, so we did not actually get them straight from the Chancellor.

This Government gave us some show-cuts on 22 June. Those cuts were for purely presentational purposes to show that this is a new Government, and to try to mark difference. The Chancellor even told us last week that that was one of the messages he wanted to go out from the Budget, so that people would know there was a difference. That is why the shadow Secretary of State was right to say that the Budget had an underlying ideological push. The scale of the cuts that will come in the autumn is there to drive a political narrative that pain has to be imposed, change will happen and those who do not like it should blame Labour, rather than the Government who are imposing that change. That is the narrative that the Government want, and that is why significant cuts will come in the autumn.

Where will we be then? The poor, who are being asked to pay more in VAT, will then see the services on which they rely squeezed. That is when the full toll of this Budget will be felt, contrary to what the Chancellor told us about getting it straight from him on the day in his statement. We know that this will be pain and penury by instalments, over time, so that they can maintain the narrative of blaming it all on Labour.

I agree with the hon. Member for Gainsborough (Mr Leigh) about the need for a Budget committee in this House. When we consider the scale of the banking issues that this House has to deal with, they should not all be left to the Treasury Committee. The scale of the public expenditure issues we will have to cope with means that we need a discrete Budget committee that has a full and proper handle on them, as well as one for the banking issues. If we are serious about giving priority to cutting waste in government, we should also have a committee that tests Government expenditure in real time. The Public Accounts Committee looks at spending post hoc, and there is nobody who challenges spending plans in real time. We do not have a committee that permanently interrogates waste in government, proofing for good priority and busting waste, but that is what we need. There is no point setting up ever more independent offices of this and independent offices of that, when we do not give this House the tools it needs to provide joined-up scrutiny. We hear a lot about joined-up government, but we do not have joined-up scrutiny. We should take added measures, on top of those put through in the last Parliament.

I urge the Government to lead us in changing the Budget by reclassifying the Budget lines, so that we have one for front-line services, say, and one for spending that does not go fully to front-line services but broadly supports them. We should have three or four, but no more than five, classes of Budget line so that we know immediately if a measure affects front-line services or just administrative spend. We could then be more honest when we say that we are defending front-line services, because we would have a Budget information system that allowed us to do just that.