Finance Bill

Thank you, Mrs. Heal, for calling me. May I also thank you for exercising such judgment, which allowed the Opposition enough leeway to tell us what they were really thinking about, which is, of course, what is happening on the streets now: the fight between the Liberal Democrats and the Conservatives. I want to address my comments to the Treasury Bench, where decisions will be made this year and no doubt next year as well. My speech is on the impact of the 10p rate of tax. Whatever views one has of the Chancellor, one has to be pretty deranged to say that he is not passionate about redistributing resources to the poorest. I willingly sign up to that message. Therefore, I am puzzled that he has allowed this aspect of his Budget to go through. My feeling is that, on this one occasion, he cannot have done his sums. Those on the Treasury Bench know that, a month ago, I tabled questions asking how many people will be net losers as a result of the abolition of the 10p rate and how many of those people will not be compensated by the tax credit system. I am sure that, when those in the Treasury get around to answering my question a month late, they will be so appalled by the answer that they themselves will look before Report to meet those Labour Members who are going to table amendments—if we possibly can—so that those who are going to lose out will not lose out, at least for a transitionary period. The issue is twofold: there is redistribution from poorer people to richer people, but there is also redistribution within families. I want to draw the Committee’s attention to both those aspects of redistribution, which are unsatisfactory to Labour Members. Members of Parliament, given the salaries that we are on, will benefit from the tax package, but if we let the measure go through next year, those of our constituents who earn a sixth of our salaries will pay about £3 a week more in tax. That cannot have been the aim of the move. As I said, the redistribution occurs not only in a traditional sense—from poorer people to richer people—but within families. With most families, although not all, it is the men who are higher earners and the women who are lower earners. Therefore, if the abolition goes through, in every family in the land who are in that position, the women generally will pay more tax and their husbands will pay less tax. If the measure is unaccompanied by other protection measures, it will redistribute from women to men within families and, between families, from poorer families to richer families. As I said earlier, no one who is in control of their marbles believes that the Chancellor is not passionate about redistributing to poorer people. Some of us may have a debate about the methods of that redistribution, but no one should doubt the intent. Therefore, it is a surprise that the measure is going through as it is. I believe that once those in the Treasury, a month late, get around to answering the question that I tabled, they will be so horrified by the findings that they themselves will look at what measures we can take, and those measures should be of a transitionary nature, not permanent. The move that the Chancellor is making to simplify our tax system as much as possible and to make it easier for people to understand is the right one. The aim is for the standard rate of tax to be the tax rate that determines whether people work harder, train more, get jobs with greater responsibilities and push up their family income as a result. Therefore, I support the desire that the Chancellor has. I cannot believe, however, that he did the sums on the matter, in possibly his last Budget. When he has done the sums, he will not be happy at supporting a change that redistributes income in a family from lower paid women to higher paid men in that household, or more generally from lower paid workers to higher paid workers such as MPs. I hope that when we come to Report it will not be necessary for Labour Members to table amendments and that the Government themselves will make those changes.