Income Tax (Charge) — House of Commons, 2021-10-28
Topic: Macroeconomics
Barry Strachan Gardiner (Labour, Centre-left): I am sure that the hon. Lady will explain exactly why she is so proud of the Budget. That is her right. However, it is clear that many of her colleagues feel that it is pulling them in different directions. I will come to explain why that is the case As I said, no Government since the war have implemented a higher tax take from the people of this country, yet wages are scarcely where they were 10 years ago, growth in the next three years will slow to a sluggish 1.3% and our country’s debt stands at the astonishing figure of £2.2 trillion. It was notable that yesterday the Chancellor referred to underlying debt rather than gross debt. Underlying debt is still a staggering 85.2% of GDP and, on his own admission, set to rise over the next three years. Gross debt is now 103% of GDP What of the deficit? After the global financial crisis had seen it skyrocket from £50 billion to £103 billion in 2010, George Osborne said he would eliminate it by 2015. The deficit at its peak in 2010 was £103 billion, or 6.9% of GDP. At year end in March, the last ONS release said that the UK’s deficit was £304 billion, or 14.5% of GDP. The hon. Lady may not feel uncomfortable about that, but I think that a number of her colleagues do, yet the Chancellor had the extraordinary brass neck to the tell the House that "it is the Conservatives, and only the Conservatives, who can be trusted with taxpayers’ money."—[Official Report, 27 October 2021; Vol. 702, c. 276.] The Chancellor talked about building a stronger economy. His party has had 11 years to do that and it has failed. What should be of real concern is the Budget’s lack of direction. There is an extraordinary tension between No. 10 and No. 11, which are operating like a Doctor Dolittle character, with the Chancellor pushing for fiscal conservatism and the Prime Minister pulling for a bout of sunny optimism and lax monetary control. The truth is, they are afraid of the electorate and it showed in their spending decisions The Government are rightly relaxing the public sector wages freeze—to the horror of their Back Benchers—but they have wrongly imposed a £4 billion clawback on the very poorest in our society who rely on universal credit. Their changes to the taper relief show only how fearful they really are, but those changes do not nullify the impact of the clawback The Government have no strategy to tax wealth on unearned income. It is shameful that a cleaner on universal credit doing three jobs to make ends meet pays a higher rate of marginal tax and national insurance than her landlord. It is extraordinary that, instead of working with international partners to develop a proper tax framework for companies such as Amazon, they have done all they can to block one. It is extraordinary that the Chancellor has given £1 billion of tax cuts to the banks. Working families get tax rises; banks get tax cuts Priorities are the stuff of politics and the Chancellor has made his party’s priorities clear. But, in addition to the wrong priorities, the Government have been incompetent and profligate. The total investment announced yesterday for the next three years was £150 billion. That same day, the Public Accounts Committee reported that, despite being allocated an eye-watering £37 billion, Test and Trace failed to achieve its objectives, failed in its key purpose and, at the most critical time, failed to disrupt onward transmission. The Prime Minister had a phrase for money wasted like that—it referred to something being done up a wall. Delicacy prevents me from saying what it was The past 11 years of Conservative Government have seen our economy grow at just 1.8% per annum. Even taking into account the impact of the global financial crisis, in the years from’ 97 to 2010, when Labour were in government, the economy grew by 2.3%. No wonder the only person on the Conservative Benches to look pleased at the Chancellor’s discomfiture yesterday was the Foreign Secretary. The truth is he has taxed more and more unwisely, while presiding over unacceptably slow growth Many of us will recall the Government’s response to Labour’s manifesto commitment to invest £200 billion in the infrastructure of the country. They called it a magic money tree, but since then they have discovered a forest, even if their £130 billion infrastructure strategy now looks scarcely adequate to turbocharge our economy in the way that is required Let me now turn to the way that is required. It is to be regretted that the Chancellor does not use public transport when in London. Were he to do so, he would have seen the poster campaign that says, "The world is looking to you, COP26." One of those posters says, "Secure our priceless planet. Or argue over cost." Yesterday, the Chancellor could truly have given us a Budget of optimism: a Budget that addressed the infrastructure needs of our country, the skills development required for a just transition to a net zero economy, and the basis for sustainable economic growth. He failed, and did so in a way that displayed such an astonishing lack of awareness of the problem and what one can only call contempt for the reality of the crisis that it appeared a deliberate provocation to all those about to meet this weekend in Glasgow for COP26 The Chancellor referred to the tax super-deduction of 130% allowances for capital investment. He failed to mention that these have no environmental or climate filter and that some of the biggest fossil fuel companies will be able to use them to receive from the taxpayer not only the entire cost of their polluting capital investments but a bonus 30% for doing so, in projects like the Cambo oil field,. This incentivises the very behaviour COP26 is trying to curtail The Chancellor announced a new lower rate of air passenger duty on domestic flights and support for regional domestic airports to incentivise air travel within the UK. Other countries have banned domestic flights where a fast rail link exists and have been investing in their low-carbon rail infrastructure. It is, frankly, obscene that it is often cheaper to fly within the UK than to take the train. My hon. Friend the Member for Bristol South (Karin Smyth) earlier remarked that a flight from her constituency in Bristol to Glasgow costs just £29.99, while the train costs £97.20. The Government’s investment priorities on this are wrong. They are wrong economically and they are wrong morally.