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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 8:15 pm on 28th April 2008.

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury 8:15 pm, 28th April 2008

From what the hon. Lady says, it appears that she represents a constituency where earnings are below the national average. The figures, from the independent Institute for Fiscal Studies, are clear: 5.3 million households will, after taking into account all the other factors in the Budget package, be worse off. That is the group of people we are addressing today. Also, in addition to those 5.3 million people, there are millions more people—including some of her constituents —who have benefited from this package and who are equally disgusted that a Prime Minister, especially one who poses as the protector of the poor, could so cynically betray those who have placed their trust in him.

What is the Prime Minister's response? As recently as a week last Friday, he was insisting that there was no problem and that no one would be worse off, despite the independent evidence mounting all around him, the threats of resignation from some within his own Government, the comments of his own senior Ministers, the figures produced by the Institute for Fiscal Studies and the rising tide of public anger reflected in the views and mood of his Back Benchers.

Instead of listening and responding as the furore mounted, the Prime Minister and the Chancellor dug in with their few remaining loyalists in the bunker. The Prime Minister said that there was no problem and that no one would be worse off, the Chancellor said that he could not reopen the Budget and the Secretary of State for Children, Schools and Families told The Daily Telegraph that the tax rise on the poor was part of the process of

"taking forward the fairness agenda."

The Minister for the Cabinet Office dismissed the fate of the 5 million or so losers as a "matter of regret".

Senior Downing street sources were briefing like mad to The Guardian on Saturday 19 April, saying:

"The idea that someone is going to stand up...and pull a rabbit out a hat is just not possible".

On 20 April, The Sunday Telegraph reported having been told:

"We are not doing anything. We are not going to change our policy".

The Exchequer Secretary was slapped down when she dared to suggest—with some prescience, as it now seems—that there might be some movement, and the Chief Secretary's Parliamentary Private Secretary, Ms Smith, got a blast of transatlantic vitriol when she sought to express her constituents' concerns.

The position was clear: the Prime Minister out of touch—and, indeed, out of the country at the critical time—was on top of it. He said:

"I am satisfied that once people understand the scale of the good things that we've been able to do in reforming the tax system ...then whatever questions people have about these changes can be answered".

Everybody else—Members who were reading their e-mails, opening their postbags, doing their surgeries and talking to their constituents during the recess—were all, apparently, hopelessly out of touch. Alternatively, in the view of those in the bunker, the others were perhaps just too stupid to understand what the great genius in Downing street had achieved.

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