Budget Resolutions - Income Tax (Charge)

Part of the debate – in the House of Commons at 2:14 pm on 1st November 2018.

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Photo of Yvette Cooper Yvette Cooper Chair, Home Affairs Committee 2:14 pm, 1st November 2018

This is a deeply uncertain time for our politics and economics, and as my right hon. Friend the Leader of the Opposition said, the challenge for this Budget should be to rebuild Britain and, as the Prime Minister promised, to end austerity. We also need to heal some of the deep divides that face our country, which all of us should care about. Against those challenges this Budget fails, and I will highlight three areas in which that is the case. First, the Government—particularly the Treasury—should be more worried about what will happen to growth in our economy over the next few years. Economic growth of around 1.5% a year over the next few years is far from the 2.5% average long-term growth that we have had for 60 years, and that will have long-term consequences for the wealth that we need for public services, and for our families’ incomes. That growth is also unbalanced. The latest figures show growth of 3% in London, while the north-east economy shrank by 1%. Towns are growing at only two thirds the rate of cities, and many town economies are shrinking. This is not just about needing to invest in our high streets, it is about the jobs and investment we need in towns and communities across the country, in the north as well as in the south, at a time when the focus of major transport capital investment is stuck on Crossrail and High Speed 2 rather than being on the networks that we need around our country.

Secondly, the Budget does not end austerity, and I particularly wish to highlight cuts to policing. The Home Affairs Committee called for urgent increases in investment in policing, but instead, by failing to fund pensions increases and contributions, the Government are cutting funding for policing by about £420 million. That is at a time when recorded crime is up by a third and arrests are down by a quarter. That means that more criminals are getting off, and the consequences of failing to support our police are frankly becoming dangerous, with serious impacts on public safety, community cohesion, criminal justice and confidence in policing, which, once lost, is hard to regain.

The third area I want to highlight is the failure to tackle child poverty and growing divisions across our country, because the Budget gives half the money to the richest 10% of households in the country at a time when the poorest 10% face having their incomes cut. Ten years ago I put child poverty legislation before Parliament, and it enjoyed cross-party support as it aimed not just to halve child poverty but to end it. The Government have ripped up that cross-party consensus.

Tomorrow I will go to a café in Airedale library where councillors and community leaders are putting on free lunches for children. It is half-term, and they realised that some of the kids going to the library were ravenous when they were getting some of the café leftovers. Without free school meals, their parents were unable to put a hot meal on the table, and those children were going hungry. This is 2018, and it should shame us that that is happening in our country.

The Government are going ahead with more than £1 billion in real cuts to tax credits and benefits for the poorest families this coming year, at the same time as choosing to spend a similar amount of money on tax cuts for higher rate taxpayers, including those earning more than £100,000 a year. A lone parent with a four-year-old who works part time could be nearly £3,000 worse off after those changes, whereas high earners will end up more than £1,000 better off. As my hon. Friend Andrew Gwynne said, we should support extra help for basic rate taxpayers, whether through the tax system or child benefit, but at a time like this, cutting taxes for higher rate taxpayers is the wrong approach. It means that millions of the lowest-paid workers will not benefit at all because they do not pay enough tax, while millions of the highest-paid workers will benefit the most. Hundreds of pounds are being taken from the parents at Airedale library, while hundreds of pounds are being given to people on £100,000 a year, who have benefited the most. It is simply wrong. The Prime Minister promised to those are “just about managing”:

“When it comes to taxes, we’ll prioritise not the wealthy, but you.”

She has done the opposite. It is wrong. This Budget should be about making us all stronger and the whole country better off. Instead it does the opposite.