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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 9:45 pm on 28th April 2008.

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Photo of Steve Webb Steve Webb Shadow Secretary of State for Environment, Food and Rural Affairs 9:45 pm, 28th April 2008

I agree with the right hon. Gentleman on his second point; it is a question whether we believe in the good faith of the Government. Given that the root of this problem was an attempt to deceive people and to portray something in one way that came across in another, the worry is that the presentation of this compensation package is already being spun. I simply do not have confidence that the Government will act in good faith in this regard. On his first point, I suspect that we will divide later on whether the clause should stand part of the Bill. The Liberal Democrats will clearly and unambiguously vote against the Government's measure.

Mr. Clarke made a point that I wish to reiterate. Let us suppose that the package costs around £1 billion—because we cannot identify the losers and just give them back their losses—and we end up paying, for example, men in the 60 to 64 bracket who may not have lost out in the first place. Where would that £1 billion come from? Would it come from another tax, thus creating a whole new set of losers? Can we be confident that the compensation package really will compensate people, or will it just create a new set of unjustified losers? The right hon. Member for Birkenhead would be the first to acknowledge that that money will have to come from somewhere. Someone will have to pay the bill for this incompetence and we may find that it is other vulnerable people, unless it is achieved through a progressive mechanism. This Government are not known for using progressive mechanisms.

Those who heard the news last week may have hoped that they would be compensated. It would be a cruel deception if, having found out only this month that they have lost out, the compensation was not paid until next year and did not even then compensate them for their losses. That is why the compensation package, as so far outlined, is wholly inadequate.

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