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Capital Gains Tax (Rates)

Part of the debate – in the House of Commons at 5:23 pm on 23rd June 2010.

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Photo of Caroline Lucas Caroline Lucas Leader of the Green Party 5:23 pm, 23rd June 2010

We also have a country that is at its most unequal at any time since the second world war. If someone asked me whether I would like either progressive tax reform or a much more equal society, I know which I would choose, because so much evidence suggests that unequal societies are not just incredibly damaging for those at the bottom of the heap, which is fairly clear; they are corrosive for everybody in society. Books such as "The Spirit Level" have demonstrated just how corrosive inequality is for everybody in terms of health outcomes and general well-being. I am happy to say here and now that I would much rather see an equal society. Of course, that is something the coalition Government told us the Budget was all about. It was supposed to be a fair Budget.

What choices were made? Let us be clear again that they were political choices; they were not inevitabilities. It was a political choice to make effective cuts to child benefit, the child tax credit and child tax funds that, together, cost £2.5 billion. Those cuts could have been avoided if, for example, the Chancellor had chosen not to cut corporation tax. It was also a political choice to increase VAT-a tax that hits the poorest hardest and that both Government parties said they were not in favour of increasing.

Raising the income tax threshold as some kind of compensation does nothing for the poorest households that do not pay income tax anyway, since in any given year about one in four families contains no income taxpayer at all. Uprating future benefits and tax credits only in line with consumer price inflation, rather than retail price inflation, will have a dramatic effect in increasing inequality in society. If we add to that the severe cuts in housing benefit, which will have a devastating impact on areas where significant numbers of people depend on it, such as my constituency of Brighton Pavilion, we can see that the menu we are being served up is very damaging indeed.

Let us remember that the vast majority of people who claim housing benefit are pensioners, people with disabilities or who care for relatives, or hard-working people on low incomes. As the director of Shelter has said,

"If this support is ripped out suddenly from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness."

If we add to that-if that were not enough-the impact of swingeing public spending cuts, we see a hugely bleak picture. Unemployment will grow, and anyone who leaves school or college in the next five years faces a grim future.

Of course, meanwhile, the rich have been largely let off. That is why we have seen the coverage we have seen in the Financial Times and everywhere else, with people saying that they are breathing a sigh of relief because the Budget did not hit them as hard as they thought it might. The rich will hardly notice the VAT increase. The bank levy is puny-less than half the £5 billion to £8 billion originally predicted-and is a fraction of City bonuses. That is not unavoidable; it is a political choice. The Government could have introduced a Robin Hood tax to raise billions-they did not. That was another political choice.

Unprotected departmental budgets will be savaged. Local government will need to slash services if it is to freeze council tax. Public servants, who did nothing to cause the slump, are being asked to bear an unfair share of the burden. Again, one thing we can say for sure is that we are definitely not all in this together. People on middle and low incomes have done much worse than expected, and the rich have been let off much of what they feared, but we will all suffer from an economy that now has a very real risk of going into a double-dip recession.

Many Opposition Members have talked about the importance of listening to commentators, such as Noble prize winner Joseph Stiglitz or David Blanchflower, about the real dangers of that double dip. David Blanchflower is one of the very few people who saw the recession coming. We should listen to his warnings now. The economy is still fragile. Today's measures will certainly slow recovery and could well stop it in its tracks. Even Martin Wolf says in today's Financial Times that we should be printing more money, rather than taking it out of the economy.

I should like to suggest that the real way out of the crisis, as well as fairer taxation, is through a major Government investment in the green infrastructure that this country so urgently needs if we are to emerge stronger from the recession than we were when we went into it. My party has called for the introduction of a green new deal-a massive and sustained investment in energy efficiency and renewable energy generation, which would create hundreds of thousands of new jobs, as well as cutting carbon emissions and making our economy more sustainable.

Let me give an example. Greens on a council in the north of the country brought an idea to the table that was accepted by the council and is being rolled out. Essentially, they leveraged some money from the energy companies and matched it with some council funding, and they are now rolling out free insulation for 40,000 homes in that area. That is not only cutting emissions, but saving average families about £150 a year on their fuel bills and creating 200 jobs. That sort of programme needs to be rolled out country-wide.

What about green measures in the Budget-or, better, where are the green measures in the Budget? Let us remember what the coalition manifesto promised. It said that it was promising

"a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy".

Those ambitions cannot have been very high.

The coalition's first Budget offered little more than a passing reference to the green investment bank, just a few lines about future reforms to the price of carbon dioxide and a renewed promise on energy efficiency, so where exactly is this famous full programme of measures? I searched in vain, but instead I saw old style, big picture macro-economics, with a 4% cut in corporation tax over the Parliament and a regional growth fund for new businesses from next April that will provide

"a stable economic foundation for private sector growth".

I am not against that, but what kind of growth are we talking about? Where is any commitment to sustainability in the vision for growth? What about the commitment to the green investment bank, which is urgently needed to drive £2 billion into clean energy by 2020? Apparently, we are going to have to wait, as there was no particular urgency on the green agenda in the Budget.

We were told instead that the Government will put forward

"detailed proposals on the creation of a Green Investment Bank" after the spending review, but we have heard that before. We are told that the Government are considering a wide range of options, but there is no confirmation of legislation and no mention of capitalisation. With nothing in the Budget on the green deal for households, we must wait for this autumn's energy security and green economy Bill. The low-carbon industrial strategy already appears to have lost urgency and direction.

The Chancellor talked a great deal yesterday about the crisis of national debt, but he barely mentioned the much bigger and more dangerous crisis of climate change. When the coalition Government were formed, Ministers said they would be the greenest Government ever. As I pointed out at the time, that, sadly, would not be very difficult, given Labour's lamentable record, but it does not look as though serious steps are being taken to make this a green Government either.

The Budget is economically dangerous, socially divisive and completely lacking in any kind of vision for sustainability. Tragically, an opportunity has been missed to introduce something genuinely progressive, such as a Robin Hood tax on financial transactions, measures to increase employment and cut emissions through a green new deal, and measures to introduce fairer taxation-in other words, measures to take us closer to the fairer, greener Britain that the coalition says it wants to achieve, but from which, after the Budget, we are further than ever before.

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