Clause 131 — Indexed Rate Bands for 2003–04: PAYE Deductions Etc

Finance Bill – in the House of Commons at 1:30 pm on 14th May 2003.

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Question proposed, That the clause stand part of the Bill.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

The clause extends by one month the date on which statutory inflation-linked changes to income tax bands must be made to PAYE deductions. It changes from May to the first pay day after 14 June. Essentially, it short-changes taxpayers by £10 as a result of the Chancellor introducing the Budget later than usual. People have received no apology. They will get the money back: in a sense, it is a £20 million interest-free loan from taxpayers to the Government.

Such disregard of ordinary people is objectionable. Why cannot the Government get their act together? They were able to charge increased national insurance contributions with effect from May, but here they are messing about with ordinary people, who were expecting to see income tax band adjustments in their May salary. It may be a small matter, but it represents the arrogance of the Government, who could not care less about short-changing people a pound or two here or there.

Photo of John Redwood John Redwood Conservative, Wokingham

I support my hon. Friend, who has summed up the main point extremely well. The Government's action is arrogant, thoughtless and unhelpful to employers, who are under pressure to explain it to their employees. There is no need for an interest-free loan from taxpayers to the Government, given that they are proposing to raise vast amounts of taxation through the Bill and from existing legislation. I hope that the Paymaster General will apologise to the British people for the incompetence of her boss, the Chancellor of the Exchequer. He may well have been preoccupied with his rows with the Prime Minister about the euro, but he has not even offered a statement to the House on that matter. As a result, we have had a delayed and bodged Budget, and we now have a forced loan from the British people to the Treasury. We deserve an apology.

Photo of Norman Lamb Norman Lamb Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury)

I endorse the views of the Conservative spokesman on the matter. Is it not possible, as the Treasury Select Committee recommended in its report on the pre-Budget report last autumn, for much more notice to be given of the date of the Budget? It should take place in time to ensure that proper arrangements can be made for the new tax year. The problem that we are seeing here should never be allowed to happen.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The first day after 17 May has been the day on which employers and pension providers are asked to implement any codes and tax changes resulting from changes in the Budget. As last year, this clause changes the date, for this year only, from the first pay day after 17 May to the first pay day after 14 June. That allows time for the Inland Revenue to send out the necessary employer packs, and for employers to implement them, given that the Budget was in April this year.

As PAYE works on a cumulative basis, no one will lose out as a result of the delay. The system automatically gives people the benefit of any tax reduction that they are due on the first pay day after 14 June. The clause makes no difference to the way in which the Inland Revenue and employers administer PAYE. It is essentially a technical amendment, to bring matters into line. As the hon. Member for Arundel and South Downs well knows, the same clause was brought forward last year in a straightforward and reasonable way and he saw no problems with it.

Question put and agreed to.

Clause 131 ordered to stand part of the Bill.

Clauses 132 to 134 ordered to stand part of the Bill.