Robert Halfon
Main Page: Robert Halfon (Conservative - Harlow)
Catherine McKinnell
My hon. Friend makes a powerful point. Another point to remember is the disproportionate impact that this Government’s tax and benefit changes have had on the lowest earners—and on the middle earners, too.
Let me get back to members of the Conservative party. Linda Pailing, for example, the deputy chair of Harlow Conservative party—I see the hon. Member for Harlow (Robert Halfon) in his place—put it very starkly, targeting her criticism squarely at the Prime Minister. She said:
“The national swing took us down and that is purely to do with what Cameron and his cronies are doing with the national party. The voters are disillusioned with Cameron himself. They don’t like the fact that he didn’t keep the 50p tax. This has really grated and people feel here that he is not working for them, he is working for his friends.”
I could not have put it better myself.
There could have been some acceptance of the Government’s approach—at least among their own supporters—if the 50p tax cut policy had boosted confidence and stimulated economic growth, which is the only thing that could turn the situation round for those feeling the squeeze, yet it has done precisely the opposite. The approach has not only failed to address the lack of confidence in the economy but compounded the lack of confidence in this Government. What kind of right-minded Chancellor or Prime Minister would turn a blind eye to the suffering of the vulnerable and those struggling to make ends meet, slap on a VAT hike and impose a bedroom tax, cuts to tax credits and in-work support while dishing out tax cuts to those who need them least.
Robert Halfon (Harlow) (Con)
Will the hon. Lady acknowledge that this Government have taken 3,000 low- income people in Harlow out of tax altogether and cut taxes for 40,000 low-income Harlow residents? Why did she and her party vote against those tax cuts for lower earners?
Catherine McKinnell
I anticipated Members raising the issue of personal allowances, but the fact is that the Institute for Fiscal Studies has clearly shown that the overall impact of the Government’s changes to tax, credits and benefits has left the very people for whom the change to personal allowances was supposed to help worse off. People will be worse off under this Government in 2015, too.
Then comes the ultimate betrayer of the Government’s true intentions. First, someone claims Britons have never had it so good, completely downplaying the impact of the recession on those hard hit. Then, after resigning on the back of it, this person is reinstated and can now be heard extolling the virtues of starting a business in a recession on the basis that
“labour can be cheaper and higher quality, meaning that return on investment can be greater”.
I was both alarmed and enlightened to read the report in The Daily Telegraph of a leaked discussion between pollsters and the Government’s key advisers. When asked what kept them awake at night, those advisers replied “Nothing” at first, and then admitted that it was their kids’ school fees that bothered them most. If that is the main issue affecting the lives of the Government’s key advisers, that is quite indicative. Lord Young’s comments, cited above, are quite startling, showing him to be revelling in the strain that the jobs and wages squeeze is putting on people’s finances. There are 2.5 million people out of work at the moment, and nearly 1 million young people out of work, with 500,000 out of work for two years or more. That is the highest number since the end of the last Tory Government in May 1997. Since 2010, the number of unemployed people has risen. Lord Young should reflect more on that.
Robert Halfon (Harlow) (Con)
I welcome this debate because I believe that the Government’s record should be welcomed for a number of reasons. First, despite a number of factors outside their control, they have taken measures to help families—for example, with the cost of fuel and utilities. Secondly, the Government have recognised that tax is the biggest brake on the cost of living and have cut tax for low earners. Thirdly, the Government have realised that, besides tax, the best way to reduce the cost of living is to encourage people to move from welfare to work by increasing their skills.
Before I look at these things, however, we should look at how Labour has undermined the cost of living. As some Members have commented, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) has said that the wages of our constituents have fallen by £1,700 a year since the election and that our constituents are getting poorer. But as the Resolution Foundation made clear, median real wages stopped rising in 2003, a full seven years before the coalition came to power. We should not forget that Labour left office with 2.5 million people unemployed.
I believe that the Government are listening and I welcome the action they have taken to ease the cost of living, particularly the cost of fuel: they have frozen fuel duty for three years and cut it by 1%. All these measures were opposed by Labour. Yet 800,000 families still lose a quarter of their income at the petrol pump, and the average cost of unleaded petrol has risen by 60% since January 2009. Fuel duty is not just a tax on fuel; it is a tax on everything. It pushes up the cost of public transport and of food. With 71% of us still driving to work, fuel is an essential.
It is also right that we should have transparency. I have argued that the Government should make it compulsory for receipts to display how much of what the customer pays for fuel is tax. That would show that, despite the fuel duty freezes and the decrease in the cost of oil internationally, oil companies continue to increase the cost of fuel. News is emerging today to suggest that major oil companies have rigged the oil market. This is being investigated by the European Commission, and if it is true, I believe—I argued this last year in a debate in this House—the Government should not only fine the oil companies but consider imposing a windfall tax on them and passing those tax receipts back to the consumer through lower fuel duty.
I am pleased that there is a water Bill in the Queen’s Speech. Water companies are making big profits. In 2011, they paid out £28 million in bonuses, yet for families feeling the squeeze, water bills have risen by 82% over the last 10 years. I asked the Government to take further action to break the monopolies and to increase competition between water companies, which would allow for reinvestment in the water system that would keep bills low in the long term. A windfall tax should also be considered so that money could be handed back to consumers.
I welcome the fact that the Government recognise that the biggest brake on the cost of living is taxation. I am pleased that they are making progress in reducing taxation, including taking 3,000 lower earners out of tax altogether in my constituency of Harlow. I have urged the Government to reintroduce the 10p tax band that Labour scrapped in 2008 for those earning up to £12,500, which is the level of the minimum wage. That would give a cash boost to minimum wage workers of £250 a year.
One of the biggest problems in meeting the cost of living is the bill for the taxpayer from the welfare state. The average taxpayer on lower earnings pays £1,220 a year on welfare from the tax they pay. The Government are right to build an economy in which those who work are rewarded. It is right that the welfare bill is reduced. The reality of Labour’s policy to increase the welfare bill is that it would increase the tax bills of millions of lower earners across the country.
The final way to address the cost of living is to deal with the skills problem. It is no accident that those with the lowest skills are those with the lowest pay. The Government are tackling that by investing in half a million apprentices—the number of apprentices in Harlow has increased by 78% in the past year alone—and the building of 24 university technical colleges. We have also talked about the technical baccalaureate and other measures that the Government are making to improve vocational training. These are all the kind of things that will help with the cost of living in the long term.
I end with a quotation from a former Labour Prime Minister, Jim Callaghan, who understood that to reduce the cost of living the deficit had to be brought under control. He said:
“We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that option no longer exists.”