Capital Gains Tax (Rates)

I am glad that the hon. Gentleman raises the issue of VAT. If he has a little patience, I shall address that fully in just a moment. I applaud the fairness factors in the Budget, many of which were suggested by Liberal Democrats. The £1,000 increase in the threshold at which people start to pay tax will bring 880,000 people out of tax altogether and benefit 23 million people on low and middle incomes. That increase is the first step towards a Liberal Democrat manifesto pledge. The tax on banks will not affect small banks, but it will allow tax cuts for other types of business to be introduced. The changes to capital gains tax will mean that top earners pay 10% more, although there will be thresholds so that others pay at a lower rate. The rate of 28% is not as high as Liberal Democrats might have gone, but the Government have been advised that 28% is the highest rate that can practically be set before revenue starts to be lost, so that is fair enough. Pensioners have already been discussed today. They will benefit from the earnings link and the triple lock, which will mean that they receive an increase reflecting earnings inflation or 2.5%. No Labour Member has managed to explain why the Labour Government did not restore the earnings link over 13 years, and never again will we have the disgraceful situation of pensioners receiving a 75p increase, as Labour proposed. Child poverty is addressed through an extra £2 billion for child tax credits, and the pupil premium will help the most disadvantaged children. This is a Budget for business. Business is the engine that will drive us out of the recession, so we have put our emphasis on ensuring that we have cuts rather than taxes, with a 77:23 split. The hon. Member for Hartlepool said that this was not a green Budget, but there are good incentives for low-carbon investment through the reform of the climate change levy, the proposals on which will come in the autumn. We also have the green investment bank and the green deal for households, which will enable households to make improvements that will pay for themselves over time. The reduction in corporation tax also shows that this is a Budget for business. In addition, we are pumping money into Royal Mail, which did not happen under the previous Government. The Budget contains nice little touches such as entrepreneurs relief. It does not involve any indexation or a taper, and the amount that retiring entrepreneurs can enjoy has increased from £2 million to £5 million. The national insurance threshold increase in 2011 will take 650,000 people out of national insurance altogether. What a contrast that is to Labour's proposals for a tax on jobs. The enterprise finance guarantee scheme is being extended to 2,000 businesses. Under the regional growth fund, I look forward to our pumping money into the regions, meaning that we are no longer a London-centric Government. We will ensure that the regions get the kind of support they need, especially for new businesses. Of course, there have been hard choices. The hon. Member for South Antrim (Dr McCrea) talked about VAT, and it is regressive. The hon. Member for Airdrie and Shotts said that we did not know the meaning of that word, but we really do. However, our VAT rate is still below the average for Europe.