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Capital Gains Tax (Rates)

Part of the debate – in the House of Commons at 6:37 pm on 23rd June 2010.

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Photo of Gareth Thomas Gareth Thomas Shadow Minister (International Development), Party Chair, Co-operative Party 6:37 pm, 23rd June 2010

Given the time, no. I apologise to the hon. Gentleman.

The Budget also breaks clear promises made to the British people by the coalition partners at the election. The now Prime Minister told Jeremy Paxman in an interview in late April that his party had "absolutely no plans" to raise VAT. He recognised then that VAT was regressive and that it hit the poorest hardest. He said:

"It does, I absolutely promise you."

The Deputy Prime Minister agreed that VAT was "very regressive". He went further, making fear of Tory VAT plans a memorable part of his election campaigning. Yet now, with the electorate having cast their votes, we have an immediate volte face from the parties opposite.

As my right hon. Friend the shadow Chancellor made clear, in a classic effort to pull the wool over the public's eyes, those on the Government Front Bench use Labour measures to try to pretend that this Budget is fair. The charts deployed in the Red Book to justify that fantasy claim fail to acknowledge the scale of benefit reductions that will not have worked their way through fully in the period covered. They certainly do not include the impact of looming cuts in public services that are likely to hit the poorest households the most, or of changes to housing benefit. I have a specific question for the Financial Secretary: will he publish charts showing the impact of the Budget not just in 2012-13 but in future in years, by income distribution?

It is not just Opposition Members who recognise the unfairness of the Budget. Robert Chote, the head of the IFS, has said:

"The Budget looks less progressive, indeed somewhat regressive, when you take out the effect of measures that were inherited from the previous government-when you look further into the future than 2012-13 and when you include some other measures which the Treasury has chosen not to model."

Some Liberal Democrats-perhaps those such as the Orange Book Liberals-will be entirely comfortable with the unfairness of this Budget. Others on the Liberal Democrat Benches need to find the courage of the convictions that they had before 6 May to challenge their Front Benchers.

This is a Budget that puts economic growth at risk. It fails the fairness test. The poorest will suffer the most. The IFS analysis blows away the pretence that we are all in this together. It is a Budget of broken promises. On VAT both coalition parties broke election promises. It is a Budget that is overwhelmingly Thatcherite in tone and we will not support it.

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