Household Energy Bills: VAT — House of Commons, 2022-01-11
Topic: Macroeconomics
Alan Brown (Scottish National Party, Centre-left): I welcome that intervention. It is good that people recognise that Scottish independence through a referendum is going to happen, and we look forward to a continued debate about the nuances of what will happen in an independent Scotland that has control of its own policies and can choose to go back into Europe As I said, we need to understand that the warm home discount is actually paid for by other bill payers. I am uncomfortable with the fact—the Chief Secretary did this earlier—that the Tories brag about the warm home discount as if it is a Government-funded measure. The reality is that, as a stand-alone tax measure, the warm home discount is actually regressive, because the people who can least afford it pay the same levy as those that can afford to pay more. So while the warm home discount does help people that require help, it is actually a regressive tax measure. If Labour’s proposals were implemented in the way the scheme operates just now, that would add £200 per annum to the bills of those who are left paying for it. It is inferred that Labour’s proposals would be funded from £3.5 billion of additional Treasury receipts, but that needs to be made clear. We also need to make sure that the Tories are not allowed to do a fudge when they raise the warm home discount, but by making other bill payers pay for it, giving them a free pass to pretend they are doing something. Similarly, there has been a call for policy levies to be removed from our electricity bills. I have argued this for a while because state levies on bills are also regressive, so we need to come to a fairer taxation measure to pay for our transition to net zero I have another concern about current Labour rhetoric about tax rises. It is as if all tax rises are bad. That plays to the Tories’ narrative and encourages them to make tax cuts ahead of the next election. So yes, the national insurance rise is an unfair tax on workers, and it is correct to highlight that, but we need to debate fair taxation. The Chancellor shied away from setting capital gains tax at the same rate as income tax. Had he done that, it would negate the need for a national insurance rise In Scotland the Scottish Government have shown that this can be done differently with a low starting rate of income tax and incremental increases across the bandings so that those can afford to pay a bit more do so. This is a model that Labour should be espousing. It should be demanding that the UK Government match our £20 per week child payment and reinstate the £20 per week universal credit cut It has been highlighted that tax burdens are the highest in peacetime since world war two. If this were to create a fairer society as part of a genuine levelling-up agenda, it could be managed. But we have right now in the UK the worst levels of poverty and inequality in north-west Europe and the highest levels of in-work poverty this century. The UK has one of the worst pensions in the world, made worse by the Government’s cap on the triple lock, so the Chancellor is balancing the books on already hard-hit pensioners struggling to heat their homes. How is it credible to reduce pensioners’ income by over £500 a year on what it otherwise would have been this year? The UK has one of the lowest sick pay rates in the OECD with the current rate of £96 per week. That is wholly inadequate, especially if people still need support in self-isolating Small independent countries continue to demonstrate that they can create a fairer, more equitable society. It is time Scotland had these powers rather than having to continually tinker around the edges and have decisions imposed on us. The debate has started today. I look forward to continuing the debate in that form.