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Capital Gains Tax (Rates)

Part of the debate – in the House of Commons at 1:14 pm on 23rd June 2010.

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Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills 1:14 pm, 23rd June 2010

The hon. Gentleman says that a gamble is being made. Certainly there is a risk. There are risks in tightening fiscal policy too quickly, but there are also risks in doing nothing, or in doing less. We have had to balance those risks, and we have concluded that we must act.

Since the questions are coming from Labour Members, let me now give the other reason why I feel strongly about the need to act decisively in the way in which the Chancellor acted yesterday. Thirty years ago, as an adviser, I occupied the office that I now occupy as a Minister. It was the end of a Labour Government who had chosen to ignore the build-up to a major financial crisis. As some people will remember, the painful measures-the taxes, welfare cuts and spending cuts-were not taken by choice. They were imposed from outside by the International Monetary Fund. Because I was there at the tail-end of that Government, I saw the consequences, not the least of which were the massive divisions that opened up. People in the Government such as Denis Healey, Roy Jenkins and my boss, John Smith, believed that the Government had to be responsible, but there were a lot of others-I sense a growing echo of this feeling on the Opposition Back Benches today-who said, "We don't need to do anything, we can fight the gnomes of Zurich and drive them underground, we can ignore the rest of the world and we do not need to act." It was a disastrous alternative strategy, and the Labour party is in great danger of returning to that territory.

That is why I have come to the same position as the Chancellor of the Exchequer. We come from different political traditions; I do not try to hide that. As it happens, my role models as Chancellor of the Exchequer include Sir Stafford Cripps and Roy Jenkins, because they understood the need for sound public finance and they combined tough action on budgets with fairness. That is the tradition that we have continued.

Let me list some of the measures in this Budget with which I am proud to be associated. There is the lifting of the tax threshold by £1,000, towards the £10,000 mark. There is the action on capital gains tax, which is not just a tax-avoidance measure, but is about fairness. We have acted on public sector pay not just by freezing some salaries but by giving special help to people on low pay in the public sector. We have introduced the bank levy. We have done what the Labour Government failed to do in 12 years and introduced a triple-lock to protect pensioners-the shadow Deputy Leader of the House, Barbara Keeley, could not quite get her head around what the triple-lock is-and in addition supported pensioners through improved pension credit, which is a major cost on the budget going forward. We took action to head off any increase in child benefit, too.

Let me read a comment on child poverty made not by a politician, but by Barnardo's, one of the leading charities. Yesterday it said:

"There's some pain in this Budget for the poorest families, but we recognise the government has done what it can to protect the most vulnerable.

Our calls for child tax credits to be redirected away from more wealthy families to the poorest have been heard-an action we highly commend."

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