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Capital Gains Tax (Rates)

Part of the debate – in the House of Commons at 6:08 pm on 23rd June 2010.

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Photo of Chris Williamson Chris Williamson Labour, Derby North 6:08 pm, 23rd June 2010

I congratulate the hon. Members for Harrogate and Knaresborough (Andrew Jones) and for Carlisle (John Stevenson) on making their maiden speeches today.

A week before the general election, the Prime Minister said:

"The test of a government is how it looks after the most vulnerable, not just in good times but also in bad".

On April fools' day, he told BBC News that the Conservatives' plans did not involve an increase in VAT, and when speaking on "The Andrew Marr Show", the Prime Minister also said that

"any cabinet minister...who comes to me and says, "Here are my plans" and they involve frontline reductions, they'll be sent straight back to their department to go away and think again."

That prompts the question: why did he not ask the Chancellor to think again about his dreadful Budget-a Budget that will result in the quality of life of Britain's most vulnerable people being sacrificed on the altar of Tory dogma, a Budget that will result in massive reductions in front-line services, and a Budget that will lead to a colossal increase in unemployment? It is less than seven weeks since the Prime Minister made those solemn pledges, but the Chancellor's proposal to increase VAT is making a fool out of him.

We must not forget the Deputy Prime Minister either, who said that he wanted to "hardwire fairness" into society. However, increasing VAT does not hardwire fairness into society; on the contrary, it short-circuits fairness, because it hits the poorest families twice as hard as the richest. Britain's richest families spend just 7% of their disposable income on VAT, while the poorest spend almost 14%. How fair is that? The truth is that it is not fair at all. Cutting tax credits, freezing child benefit, slashing housing allowances, cancelling the help in pregnancy grant and chopping free school meals are not fair either.

No doubt the Liberal Democrat members of the coalition Government will point to the increase in tax thresholds that they wrung out of the Chancellor as evidence of their influence. However, the sad fact is that the meagre increase that they secured will make little difference to low-paid workers and will be more than offset by the regressive measures that the Chancellor announced yesterday. Worse still, many of the workers who might benefit from the modest uplift in tax allowances will end up losing their jobs if the Liberal Democrats vote through the Budget.

Of course, the Prime Minister and the Chancellor insist on repeating their quasi-egalitarian mantra, "We're all in this together." Needless to say, it is nonsense, and it has overtones of the infamous scene in George Orwell's "Animal Farm" when the animals realise that the pigs have changed the seven commandments to read:

"All animals are equal but some animals are more equal than others"- or, to put it another way, "We're all in this together, but if you're poor, you're in it a lot deeper than others," such as the numerous millionaires who sit on the Government Benches.

Increased unemployment will force more people on to state benefits, which will put pressure on the size of the national deficit, which the Chancellor claims to be so concerned about. However, unless he has a damascene conversion, I suspect that he will respond to the failure of his economic prospectus by making even deeper cuts in welfare provision, as happened in the 1930s and 1980s. No doubt he will try to justify his failure by repeating his Orwellian mantra, but the reality is that it will not be his former Bullingdon club colleagues paying the price of that failure. No, it will be Britain's poorest people, who will be in it up to their necks.

Of course, the Tories have form on that. I saw what they did in the 1980s to proud working-class communities in constituencies such as mine all over the country. They caused mass unemployment, slashed welfare provision, decimated front-line public services and did not stop cutting until they were thrown out of office in 1997. They even used another Orwellian ploy: to blame the unemployed for being out of work, labelling them as "scroungers". Indeed, I see that the Prime Minister was at it again over the weekend when he talked about "welfare scroungers". The Chancellor joined in the Orwellian chorus with his "Ministry of Truth" description of his Budget as a "progressive Budget".

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