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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 Jeremy Browne Jeremy Browne Shadow Minister (Treasury) 8:30 pm, 28th April 2008

I very much agree. It does not seem difficult to work out that for people who pay 10p in the pound as a marginal tax rate, a doubling to 20p would end up costing them more in tax than if the measure had been left in place, but it obviously took 13 months for that finally to become clear to Labour Back Benchers, which is highly regrettable.

The Prime Minister is a man of massively diminished authority. Last week, he was pacing around the White House pleading with the hon. Member for Sheffield, Hillsborough, who is appropriately dressed in black for this occasion, urging her not to resign from her post as PPS and further humiliate him. Last week, one can only imagine the atmosphere in his private meeting with Mr. Field, who has a long track record of making keen observations about his qualities or otherwise. Who can forget the observation:

"Allowing Gordon Brown into No 10 would be like letting Mrs. Rochester out of the attic"?

The right hon. Gentleman went on to say:

"He has no empathy with people."

[Hon. Members: "More."] There are many choice observations by the right hon. Gentleman on the subject. He told ePolitix website a year or so ago:

"One of the reasons I favour a leadership contest is that once you're in a contest a person's full qualities can be judged in a way that they never are in normal circumstances...A contest would enable us to judge people's competence not just as Chancellor of the Exchequer but as Prime Minister, which is a totally different position."

That has been shown to be very much the truth, so I can only imagine how the Prime Minister responded to that intimate and cosy chat when a gun was held to his head by the right hon. Gentleman, who threatened to humiliate him.

I imagine that the atmosphere was less than perfect, but that does not justify the euphoria in the Labour ranks. Perhaps something happened in that conversation, and the right hon. Gentleman may tell us what it was when he gets to his feet. I read the letter from the Chancellor of the Exchequer to the Chairman of the Treasury Committee, and I could not understand why Labour MPs were in such a buoyant and euphoric mood last Wednesday afternoon. There are many questions—and many of them have been touched on by Mr. Hammond—that remain unanswered, and I shall go through some of them.

First, what is going to be backdated in this package of proposals? As I understand it, the specific measures aimed at trying to assist pensioners between the ages of 60 and 64 will be backdated, but there is dispute—and it remains unresolved—as to whether other people will receive backdated compensation. Indeed, the right hon. Member for Birkenhead said that the Chief Secretary was "badly briefed" on the backdating of the compensation package. I wonder whether the right hon. Lady, even though she is not speaking for the Government in this debate, has had time to swot up. It is extraordinary that she should have to be briefed at all on these matters, as one would think that she was at the centre of trying to decide the Government's taxation policy.

Secondly, even if those measures are backdated for everybody, there is the issue of cash flow. There are many people on low and low-to-middle incomes, and if they receive money in November that is backdated six months, it will not pay today's supermarket, gas or council tax bill, and those are the problems that the Government have not identified or addressed.

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