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Clause 2 - Personal allowance for 2013-14 for those born after 5 April 1948

Part of Finance (No. 2) Bill – in a Public Bill Committee at 4:30 pm on 23rd April 2013.

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Photo of David Gauke David Gauke The Exchequer Secretary 4:30 pm, 23rd April 2013

If the hon. Gentleman believes everything that he reads, there are a few things that I might throw back at him—for example, The Independent’s claim that the Labour party is going to spend more than this Government. There was something in the Daily Mail today about the Labour party getting a fight from the furthest left-wing perspective since Neil Kinnock. There are all sorts of things that one reads in the newspaper; some I am inclined to believe and some I am not.

I have to say that I am not entirely clear, given that the Labour party has asked for a review of age-related allowances, quite what its position is. I asked a number of times whether, as a matter of principle, the Labour party thinks that the personal allowance should be lower for people under the age of 65. The hon. Member for Newcastle upon Tyne North (Catherine McKinnell), it would be fair to say, did not entirely answer that question.

I had assumed the hon. Lady would take the position that the abolition of age-related allowances was terrible and that she would reverse it. I am indebted, however, to my hon. Friend the Member for Amber Valley for highlighting the Fabian Society report that is directly relevant to the review requested in amendment 7. He intervened to ask her whether she was sympathetic to that report, and she replied—I do not have her verbatim answer—that it could be looked at as part of the review process.

It is worth quoting what Andrew Harrop of the Fabian Society said in The Times today:

“The older generation has been protected from the worst of the austerity measures. That special treatment must end—instead there should be a presumption of parity between age groups, and that must mean sharing out the pain of tax rises or spending cuts… So the tax system could be redesigned to treat earnings and pensionable income the same by merging national insurance and income tax. The prize is big—closing the ‘tax gap’ between young and old with the same incomes would raise about £7 billion for the Treasury.”

I was therefore interested to learn this morning that that will be part of the review, and the Opposition want one so that the Fabian Society proposal will be considered. I must say that that does not persuade me to accept amendment 7. We do not intend to pursue such proposals, but I was interested to hear that they are considering going down that route.

We have had a lengthy and thorough debate, but it is worth pointing out that clause 2 represents a significant step in our assured progress towards making the first £10,000 of income free of tax. It will ensure that both fairness and reward for aspiration remain at the heart of this Government’s approach to taxation. It will put more money in the pockets of hard-working people and help them to live in these difficult times. Amendments 7 and 8 are unnecessary and should not be pressed.