Even some mild empathy from the Chancellor for those bearing the brunt of his catastrophically failing economic plan would be welcome to people up and down the country, who feel that he is extremely out of touch with the reality that they face.
To put the issue into context for Government Members, who have willingly voted through this year’s changes, I should say that a two-earner couple with children are losing on average £1,869. The average single parent in work will lose £1,226. A two-earner couple with no children will be £672 worse off, while a one-earner family with children will lose an average of £4,000 in 2013-14. Even worse, this is happening at the same time as 13,000 millionaires are getting a tax cut from this Government worth an average of £107,000. Worst of all, but not surprising given this Government’s shocking attitude towards women, is research showing that 94% of the cuts to household budgets will directly hit women, while 85% of those on incomes over £150,000—so 85% of those who are benefiting from the Government’s tax cut—are men.
11.45 am
That sums up the coalition’s warped sense of priorities in a nutshell—looking after those at the very top while making everybody else pay the price for its economic failure. It is made all the more galling by the Chancellor’s previous promise that we are “all in this together”—although, admittedly, it is a phrase that we hear uttered from his lips a lot less these days. The Government may believe that the way to motivate people on low incomes is to pay them less and the way to motivate those on high incomes is to pay them more, but we think that that approach is misguided, at best. In these challenging economic times, our focus should be placed firmly on those who need our support the most. Our amendment therefore calls on the Government to look again at their decision to cut the top rate of income tax. We believe that that decision by the Conservatives and Liberal Democrats is completely indefensible, and that it is the wrong priority at the worst possible time.
In order for the Chancellor to make a properly informed decision on this vital issue next year, we need a proper assessment of the impact of the cut, as well as an analysis of how much the Treasury would gain if the additional rate were returned to 50% in 2014-15. The Chancellor, who claims to find tax avoidance “morally repugnant”, announced his millionaires’ tax cut in Budget 2012 on the grounds that the behavioural response to the 50p rate introduced by Labour was larger than expected. In other words, because some wealthy people found neat ways to avoid paying the top rate, the Chancellor has, in effect, rewarded them with a tax cut. It would be interesting to see his assessment of the behavioural response to his announcement in view of the extensive media coverage of bankers deferring their bonuses until this financial year in order to gain from
the lower top rate, but given his apparent continued determination to fight European plans to cut bankers’ bonuses, I will not hold my breath.