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Clause 3 — Abolition of starting and savings rates and creation of starting rate for savings

Part of Orders of the Day – in the House of Commons at 8:30 pm on 28th April 2008.

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury 8:30 pm, 28th April 2008

As I have just been reminded, the Liberal Democrats' policy was to get rid of the 10p rate, so the hon. Gentleman might be a little off message.

In practice, because of the arithmetic in the current Parliament, the only way the Government could fail to secure such a resolution would be to fail to secure the support of the 46 Labour Members who signed the amendment tabled by the right hon. Member for Birkenhead and those other Labour Members of like mind who had not quite summoned up the courage of their convictions by last Wednesday. If the Government deliver those Members what they promised them, or at least a package that they accept as being a fair and reasonable solution in all the circumstances, they will get their motion, whatever the Opposition parties do. But the provisions of the amendment would be the House's insurance policy against the Government who, with the rebellion off and the elections behind them, could renege on the commitment they have made.

Such an insurance policy is necessary, because the Government's body language, within hours of the deal apparently being done, signalled evasiveness. There was no clarity as to whether everyone would be compensated. There was no confirmation that they would be fully compensated. There was no commitment on backdating— except for 60 to 64-year-olds who will receive a winter fuel payment, where backdating is irrelevant in any case, as the qualifying date is in September. There was a shabby attempt to shuffle part of the burden on to employers by a political interference with the rate of the minimum wage. Perhaps the Financial Secretary will provide some specific and concrete assurances in the course of this debate. If so, that will be yet another change of direction, albeit a welcome one. In the absence of such details and concrete assurances, the House must have its insurance policy.

This is a problem of the Prime Minister's own making, quite literally. It was his Budget; his betrayal of 5 million households on low earnings; his refusal to listen to the advice and counsel of his own party supporters; his arrogance and intransigence in rejecting the possibility that he could be wrong; and his weakness and indecision in first squaring up to the rebels, and then climbing down. He has a track record now. Over the last decade or so, we have seen many offerings from the Prime Minister that do not quite match the fine rhetoric with which they were presented. We have all learned—and it takes a conscious effort now to remember that this was not the case before 1997—not to take what we hear in the Budget speech at face value, but to wait until we have trawled through the mountains of small print and press releases before passing judgement. Now the Prime Minister has to live with the consequences of that track record and recognise that many in the House will have been alarmed by the gap between the right hon. Member for Birkenhead's version of the deal and the Chief Secretary's comments on "Newsnight" last Wednesday. They will have been alarmed that they might have sold the pass too quickly, without a clear Government commitment on the extent of the compensation, the amount and how it will be backdated. I hope that they will support amendments Nos. 18 and 19 in the spirit in which they have been tabled—as an insurance policy to guarantee that the Government act in good faith.

Without such a guarantee, my hon. Friends and I cannot support clause 3. The Labour Members who displayed such courage last week, and who have now retreated from that position, will carry a tremendous weight on their shoulders if the end result is a package that delivers less than the right hon. Member for Birkenhead has led us to believe that it will.

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