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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 9:15 pm on 28th April 2008.

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Photo of Frank Field Frank Field Labour, Birkenhead 9:15 pm, 28th April 2008

That is a very good question, which the hon. Gentleman should ask the Prime Minister. Much as I would like to be answering from the Dispatch Box, I am not; I am speaking from the Back Benches.

I want to get on to what I understood the agreement to be about. The first and most important point was that the Government wished to devise a package of compensation that was as comprehensive as possible. There may be doubts about the numbers, but I did not doubt for a moment that once the Government adopted a new position, there would be compensation. My understanding was that they were not going to take a mean-minded approach that excluded people, and that there would be efforts to make the package as comprehensive as possible. They were going to consider two ways in which to achieve that: through tax credits or using the Revenue.

I agree with my hon. Friend David Taylor that there are real difficulties with using the tax credit structure as a means of achieving that objective. The Government were to look at the Revenue and national insurance systems to see how packages of compensation could be paid, and the compensation package was to be made up of several factors. There is clearly a definable group of people who will be affected—those aged over 60 but under 65. In the Budget, the Government have substantially increased personal allowances for those aged 65 and over, which covers that group for losses owing to the abolition of the 10p rate. Some of the funds in relation to the reduction of the rate from 22p to 20p will also be used.

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