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Capital Gains Tax (Rates)

Part of the debate – in the House of Commons at 2:58 pm on 23rd June 2010.

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Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport) 2:58 pm, 23rd June 2010

I thank my hon. Friend. I wholeheartedly agree, and I can give examples. I represent a very rural constituency. A questionnaire was recently put out to the farming community asking people about the biggest problem they had. They said that it was red tape and bureaucracy. The same applies to those in the fishing industry and those who have small businesses. It seems to be coming at them left, right and centre. Europe has an influence as well. That issue must be addressed very soon.

Let me turn to the position of pensioners. As representatives, we have an opportunity to really feel for people and to see issues they face. My area, like many others, boasts an increasing population of elderly people, and will have its greatest ever number of pensioners in coming years. I am very conscious of how pensioners budget, and how they will cope with a VAT increase on the products that they buy just to keep living. That is extra money that they have to find. Has consideration been given to how the increase will affect pensioners specifically?

There has to be good news in everything, like the curate's egg that is good in parts. It is hard to find enough good parts in this curate's egg, but that is by the way. The fact that the income tax threshold has been raised by £1,000 is good news-I give credit where credit is due. It will benefit some households to the tune of £175, at least, and perhaps more elsewhere.

At the same time, however, there is a negative factor: child benefit will not rise for three years in line with inflation. People will say, "Well, that's how things are, and that's how it has to happen." As someone who keeps his ear close to the ground and understands how these things work-I was not born with a silver spoon in my mouth, and I know how difficult it is for people to make do-I understand that the child tax credit and the working tax credit are critical. Many people visit my office and advice centre, just as they visit many other Members, and I can see what is involved in balancing the books and working out the weekly family budget. These people do not live beyond their means by any standard, but they require tax credits just to survive.

My provincial press today-I bought the papers this morning-gave five or six examples of people who will be affected. They included families with four children, single parents with two children, and some who are self-employed. Those people recognise the need for something to be done, but they do not feel particularly in tune with its impact on them. That concerns me, and I have to put it on the record. None of those half a dozen examples in the provincial press or the Belfast Telegraph involved people who would not feel pain over the coming period.

The Government encouraged people to take up tax credits, and they enjoyed a certain quality of life as a result. All of a sudden, that could change. I should like to say something about those in the middle class bracket. When someone is on £35,000 to £40,000 a year, we sometimes think they are doing all right, but half that income might go on their mortgage, and people's hopes for their children and communities are in their houses. I am concerned about the impact on such families of reducing or freezing working tax credits or child tax credits over a three-year period.

The one great commodity over which international wars have been fought-there will probably be many more of them-is oil. The price of oil today is $77.55 a barrel, and prices for oil, diesel and petrol were at their highest three years ago, when a barrel cost $147. Who makes the extra money and extra profit, and how? Clearly, someone is making it. John Thurso referred to the concessionary fuel scheme in his area. I represent a rural area, so I would be keen to know how that works. Perhaps the Government should consider reducing fuel duty to enable people to get over the hard times much more easily than in the past. Elderly people struggle to fill their tanks with oil.

For the fishing industry at Portavogie, which is an important part of Strangford, fuel costs represent 60% of the boats' running costs. A great many of those fishermen are having difficulty getting through the times they face at this moment. There is some talk about European funding, but there have been delays. The hardships that the fishing industry faces are critical, and it may not survive.

I welcome the Government's commitment to reduce corporation tax from 28% to 24%, which is significant. Last week, I met bank officials in my town, and they outlined the measures they would like. By and large, the Government have reflected what the banks wanted. However, what the banks want is not always best, as we have seen over the past year or two. The reduction in corporation tax is good news. The Government have realised that businesses need that help. The Chancellor stated that that is the lowest rate in any major western economy and the best rate in the G20, but the Republic or Ireland's corporation tax is 12%. As Northern Ireland has a land border with the Republic, I suggest that corporation tax should be looked at more sympathetically for us than elsewhere.

Businesses are very conscious of corporation tax. I have met a number of business people in my area recently. Pritchitt Foods in Newtownards is one of the largest employers in the area, and corporation tax is the biggest factor for that company in trying to make its business work. It is a go-ahead, progressive firm that creates significant employment in my area. It feels that the 4% reduction will go part of the way to addressing its concerns. I have asked the Government about this matter, and I understand that they will be making a statement in October about corporation tax in Northern Ireland. I look forward to seeing whether we can have a further reduction, which would help us. We also have the largest energy costs in the whole United Kingdom. I suggest that that also needs to be offset and considered.

I could not let this occasion pass without commenting on child poverty. Wearing my other hat as an Assembly Member in Northern Ireland, I had the opportunity to contribute to an inquiry on the underlying issues. Some 20% of children in Northern Ireland are deprived through poverty. What will happen to those who find themselves in child poverty over the next couple of years? There is some £80 per household for children in Northern Ireland, as against £600 in other parts of the United Kingdom, so child poverty will be much more important to us.

The next days and months will tell us clearly what impact the Budget will have. I am concerned that the welfare savings of £11 billion will devastate the poor. Will the Chancellor look seriously at that?

I think that England and Slovenia have been playing for 15 minutes-I do not know what the score is-and am mindful that some Members will wish to see what is happening, but I want to make one last point, on disability living allowance. When I read of the DLA changes, I was exasperated and deeply concerned, because I felt that they were a direct attack on those who can least face up to such an attack. There are some delays in relation to how the system will be run. Many of the cases that I have fought as an elected represented have been on behalf of those who need DLA-those who have mobility problems, who are getting over cancer operations or who have immobilising diseases. Such cases have involved those with heart problems, and many involve people who have extensive care needs.

Why target a section of the community who basically need that money more than anything else? Do the Government see savings? They may see savings, but I see the people and their needs, as a great many other hon. Members do. I ask the Government to reconsider, and to look carefully at whether they should pursue savings from those who receive DLA. Doing so will impact on a group of people who can least respond and deal with the financial implications. People who are on DLA focus on their health and how to get through the day, as do the people who care for them. If the Government add to that a financial burden by making it hard for them to receive their benefits, their health will be affected. I am not in the business of doing that, and I hope the Government are not.

I rest my case on that point, and I hope that my comments will be taken on board. The Budget delivers some things for us. I am not being critical of all of it, but I am critical of some measures. I ask the Government to take those matters on board. I hope that they will have some better ideas on DLA. We all have to work with the Budget-we cannot do so individually-but the Government need to take on board the needs of those who are less able to face the financial burdens that will come upon them.

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