The Tax Fairness Debate Transcript

Tax Fairness

Mr Speaker:

I inform the House that I have selected the amendment in the name of the Prime Minister.

12.44 pm

Chris Leslie (Nottingham East) (Lab/Co-op):

I beg to move,

That this House believes that a mansion tax on properties worth over £2 million, to fund a tax cut for millions of people on middle and low incomes, should be part of a fair tax system; and calls on the Government to bring forward proposals for such a tax at the earliest opportunity.

Let us consider the contrast that now exists as a result of Government decisions. Those who are on low and middle incomes—that is, the vast majority of the British public—have seen their tax credits cut, their child benefits squeezed, their cost of living rise as a result of higher VAT and their wages fall in real terms. However, the richest 1%, including the lucky few who earn £1 million a year, will see an average tax cut of £100,000 in four weeks’ time, and banking executives will not have to pay that annoying bonus tax, all thanks to the Chancellor’s generosity. This is a tale of two societies, with hard-working earners on low and middle incomes paying for the Government’s failure to get the economy growing while the richest elite are being rewarded by the Chancellor with a tax cut worth nearly four times the average annual salary.

Mark Reckless (Rochester and Strood) (Con):

Is it not also a tale of two sides of the House? Will the hon. Gentleman explain why his speech today has proved so popular with Labour Members?

Hon. Members:

Where are they?

Chris Leslie:

The hon. Gentleman really needs to focus on the issue at hand. If he is standing up for the millionaires’ tax cut, he should simply say so. It will take effect in about three weeks’ time, and a number of his constituents will be absolutely astonished that he has voted for an average £100,000 tax cut for millionaires while they have lost their tax credits, found themselves paying more and seen a decline in the quality of public services.

Harriett Baldwin (West Worcestershire) (Con):

I am sure that the massed ranks of the shadow Minister’s colleagues behind him today would like to know whether he will pledge to increase the top rate of tax to 50p in his manifesto.

Chris Leslie:

We certainly voted against the tax cut, and if we were in government now, we would not be cutting that 50p rate to 45p in April. Heaven only knows what other horrors the Government have in store over the next two years. We do not know what kind of situation we are going to inherit in regard to the deficit and to borrowing, so it is impossible to predict the tax situation that we will be faced with, if and when we inherit that position at the next general election.

Mark Reckless

rose—

Neil Carmichael (Stroud) (Con)

rose—

Chris Leslie:

I want to make some progress. I will give way in a moment.

The divide between the richest and the least well off is getting broader, not narrower, and the situation is getting worse. The Government are cutting taxes for one group this year—the very richest in society—with 13,000 people earning £1 million a year getting a tax cut. That is astonishing. Could any other policy better typify the twisted logic of trickle-down economics than that one?

Caroline Lucas (Brighton, Pavilion) (Green):

I welcome the mansion tax as a step towards equality, but why will not the Opposition go further and tackle the absurdity of our council tax rates still being based on 1991 rates? A house valued at £1 million in 1991 pays only 0.3% of its worth, while a house valued at £40,000 pays 2.4%, which is eight times more. Does the hon. Gentleman agree that that is unfair and should be tackled?

Chris Leslie:

It is important to listen to the Liberal Democrats’ proposal for a mansion tax. They believe that £2 billion could be raised in that way from properties worth £2 million or more to help those on low and middle incomes. In our view, any such revenue should fund the reintroduction of a 10p starting rate of income tax.

I would say to hon. Members, and particularly to Conservative Members who are struggling with the state of the current economic policy, that there are independent authorities and budget watchdogs to correct them when they wrongly assert that growth will not be affected by the cuts and the tax rises and that they are paying down the national debt, but they cannot pull the wool over the eyes of the public, who know what fairness is and who know that the choices made so far have been deeply unfair.

Mr Jim Cunningham (Coventry South) (Lab):

Does my hon. Friend recall that it was the Labour Government who introduced the 10p tax? Does he also think that it would help those in poverty, as well as motorists and the building industry, if there were a cut in VAT?

Chris Leslie:

That is our view. We want to do more to help those on lower and middle incomes, and to ask those privileged and wealthy individuals in society—particularly if they have a property worth £2 million or more—to make a fair contribution. The debate today presents an opportunity and a challenge to Government Members to do the right thing and to back what some of them profess to believe in.

Let me remind Members what our motion says. It asks the House to resolve

“that a mansion tax on properties worth over £2 million, to fund a tax cut for millions of people on middle and low incomes, should be part of a fair tax system; and calls on the Government to bring forward proposals for such a tax at the earliest opportunity.”

That is the extent of the motion. It is very simple and straightforward. Liberal Democrats who are in the Chamber today—for some are actually present—have repeatedly claimed to back a mansion tax. After going along with the Chancellor’s tax cut for millionaires, a failing economic plan, a VAT rise and a trebling of tuition fees, they finally have a chance to vote for something that was in their manifesto.

Mr John Leech (Manchester, Withington) (LD)

rose—

Chris Leslie:

I will give way to one of them.

Mr Leech:

Does the hon. Gentleman not accept that when they were in government, Labour Members opposed our proposal for a mansion tax? It is all very well for them to come out in support of it in opposition, but they never did so in government.

Chris Leslie:

I shall put to one side the fact that the Liberal Democrats said one thing in opposition—about, for example, tuition fees—and have done completely the opposite in government. The hon. Gentleman should know that circumstances are now getting worse, especially given the millionaires’ tax cut which will take effect in April. We must do something to revive the fairness of the tax system, and that is why I think it important for the Liberal Democrats to stick to their 2010 manifesto pledge to introduce

“a Mansion Tax at a rate of 1 per cent on properties worth over £2 million, paid on the value of the property above that level.”

Jane Ellison (Battersea) (Con):

The hon. Gentleman speaks of fairness. The mansion tax that he proposes would be profoundly unfair on a great many of my constituents who have done nothing more than live in the same house for several decades in an area which, in terms of its property prices, has changed unrecognisably. That applies to many parts of London. I am amazed that London Labour Members do not make similar points. What the hon. Gentleman proposes is akin to a tax on living in London.

Chris Leslie:

If the hon. Lady thinks that everyone in London lives in a £2 million property, she must be almost as out of touch as her party’s Chancellor of the Exchequer. Of course there are ways of introducing a mansion tax that could take account of the specific circumstances in which people are asset-rich and cash-poor, but there would probably be very few such cases. The Liberal Democrats have thought very carefully about that particular proposition.

Gloria De Piero (Ashfield) (Lab):

The public constantly tell us that they hate the infantile, Punch and Judy nature of politics. However, I read in today’s briefing paper from the Liberal Democrats that they will not back us because we have copied them. Is that not exactly the kind of behaviour that turns the public off politics?

Chris Leslie:

My hon. Friend is entirely right. We cannot win. When we oppose the policies advocated by the Liberal Democrats, we are attacked, and when we support those policies, they still attack us. It is difficult to know what to do—but I do know that honour and integrity matter to the Liberal Democrats, which is why I still think that they should join us in the Aye Lobby in a few hours’ time. After all, on 17 February, when asked whether the Liberal Democrats would support this proposition, the Business Secretary said:

“It depends entirely how they phrase it. If it is purely a statement of support for the principle of a mansion tax I’m sure my colleagues would want to support it.”

We look forward to seeing them in the Lobby.

Mr Nick Gibb (Bognor Regis and Littlehampton) (Con):

I am waiting to hear the shadow Minister mention that this Government have taken £2.2 million of the lowest earners out of tax altogether. Does Labour’s support for a mansion tax signal its return to high-tax policies, and a end to the new Labour project so admirably led by Tony Blair and Peter Mandelson, which transformed Labour into an electable party? Are we now seeing signs of a return to the hard left, high-taxing Labour party of the past?

Chris Leslie:

No. The hon. Gentleman is in a coalition with partners, whom he no doubt does not regard as hard lefties, who are advocating the very policy that we recommend in our motion. We took the advice of the Business Secretary, a Liberal Democrat, who said “Table a very simple motion, and we will support it.” According to any objective measure, even the hon. Gentleman can see that we have held back from party-political rhetoric. The motion is very plain and simple, as requested. We have tried to find some common ground. If those 57 Members of Parliament—and perhaps even some Conservatives; who knows?—were to join us in the Lobby tonight, that would make the mansion tax a reality.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC):

We are minded to support wealth taxes, and we therefore welcome the motion, but it is a bit thin on detail. Can the shadow Minister reassure me that farmers will not be dragged into the new tax because of the value of their land, and not necessarily because of the value of their property?

Chris Leslie:

That is an important point. I am glad that we have the hon. Gentleman’s support on this issue. Obviously there is a difference between residential and corporate arrangements, but our motion says that we want the Treasury to bring forward proposals at the earliest possible opportunity. We have seen the proposition set out by the Liberal Democrats and used it as the basis for our motion, but let us see what further options can be drawn together. We think that it would be a good idea, for example, for the Chancellor to commission the Office for Budget Responsibility to present detailed suggestions of ways in which the arrangements might work.

Neil Carmichael:

Will the shadow Minister remind the House exactly what the top rate of income tax was throughout most of the last Labour Government, and give us some insight into to why it was at that level?

Chris Leslie:

After the global financial crisis, we decided to introduce a 50p top rate of income tax so that those earning £150,000 and above would make a fairer contribution to society as a whole. Those people are the wealthiest 1% in society. How astonishing—how absolutely breathtaking—that in last year’s omnishambles of a Budget, the present Chancellor of the Exchequer decided to go for the right-wing trickle-down approach and cut the 50p rate to 45p. I hope that that decision will be reversed in the forthcoming Budget, in respect of which I take it that the hon. Gentleman’s intervention constituted a representation to the Chancellor.

Dame Angela Watkinson (Hornchurch and Upminster) (Con):

Will the shadow Minister remind the House how much was lost to the Treasury during the period of the 50p tax rate, and does he accept that 100% of 45% is more than 50% of 50%?

Chris Leslie:

I am not sure about the hon. Lady’s maths, but we are still within the period of the 50p rate. Of course we want to see the details of what has been happening. However, while the Conservatives have the notion that for those who are very wealthy, the higher tax rates are a deterrent and create avoidance, they do not say the same about the poorest and the middle-income families in the rest of the country. They can pay VAT at 20%; they can pay higher taxes. The hon. Lady takes a view that is taken by so many Conservatives. There is one law for those who are very wealthy, but everyone else must suffer because of the Conservatives’ failure on revenue and borrowing.

Mr Geoffrey Robinson (Coventry North West) (Lab):

Does my hon. Friend not find it strange that the Government do not seem to understand that taxes are an element of economic policy that can be adjusted in line with economic circumstances? During the first period of the Labour Government, the prevailing circumstances meant that there was no case or need for taxes to be increased, by means of a mansion tax or by any other means. When the need appeared after the economic collapse, compounded by the financial crisis, it became clear that we had to do something, and of course the Government did. The trouble with this Government is that they think policies need not to be adjusted in line with circumstances, but they do need adjusting. Does my hon. Friend not agree with that?

Chris Leslie:

I agree. It is instructive to observe the different choices that the different parties are making on this issue. The Conservatives choose to cut taxes for the richest—the millionaires in society—and to increase everyone else’s taxes. The Liberal Democrats have said that they believe in a mansion tax. Indeed, a fortnight ago the Liberal Democrat leader, the Deputy Prime Minister, said:

“Victor Hugo observed that it is near impossible to resist an idea once its time has come. Last week, he was again proved right as calls for a mansion tax, first proposed by the Liberal Democrats in 2009, gathered new momentum…I offer certainty: the mansion tax, or a version of it, will happen…The Conservatives and opponents of fairer taxes have a choice. They can dig their heels in and remain stuck in the past. Or they can join with the Liberal Democrats and the chorus of voices seeking to make our tax system fair.”

Well, here we are today. What more can we do?

The issue is on the table, ready for that momentum to make it happen, so how can the Liberal Democrats resist that idea whose time has come?

Ian Swales (Redcar) (LD):

Is the shadow Minister going to acknowledge measures such as the raising of the tax threshold, the huge cut in pension tax relief and the huge rise in capital gains tax which have taken place under this Government? In a debate entitled “Tax Fairness” is his proposal really the only measure that his party could come up with?

Chris Leslie:

The mansion tax is not our only measure, but is an important one and we think it is necessary. I had thought that the hon. Gentleman supported a mansion tax. It is there on the table and it cannot be put in simpler terms—it is a one-line motion.

Mr David Winnick (Walsall North) (Lab):

Is there not a contrast between the opposition of the Tories, in particular, to a mansion tax and their wholehearted enthusiasm for a bedroom tax? Does that not show the class divide on their side?

Chris Leslie:

Absolutely, and I think that the contrast between the political parties is becoming clear. Let us contrast the Government’s approach where they feel they can get away with levying higher and more punitive costs—the bedroom tax being a classic example—with the enormous windfall that those earning £1 million a year will be getting from the cut to the top rate of income tax in only a few weeks’ time. It is grotesque.

Ms Karen Buck (Westminster North) (Lab):

My hon. Friend may be aware of current estimates that 60% of high-value properties in central London go to overseas buyers, and Conservative MPs, when they are being thoughtful, recognise that that is a serious problem. So he is right to look at the issue of high-value property taxes and getting a balance. Does he agree that there is scope to ensure that the small minority of people who have lived for a long time in areas with escalating property values and who are asset-rich but income-poor can be completely protected within a scheme such as he outlines?

Chris Leslie:

It is entirely possible to design this scheme in a way that deals with those exceptional circumstances—the Liberal Democrats have said so. It is an important question that has to be addressed, and the Deputy Prime Minister answered it in his “Call Clegg” radio slot on London’s Biggest Conversation, which I know is becoming a popular, regular and welcome fixture in the media diary. He said that individuals in such circumstances might be able to defer payments until the house was sold or to “leverage” the value of the property by remortgaging. I am not sure that that strategy provides the complete solution to the conundrum, but I do think that those in the Treasury should turn their minds to how to tackle these rare circumstances. That is why our motion calls on the Government to bring forward proposals for us to consider in more detail.

Mr Rob Wilson (Reading East) (Con):

I have been listening carefully to what the hon. Gentleman has said so far. He seems to have two tax policies that are not yet full commitments, one of which comes from a failed previous Government who brought us to the edge of economic collapse and the other of which comes from the Liberal Democrats. Is that really a great recipe for success on economic policy?

Chris Leslie:

I do not think the hon. Gentleman should be so partisan; he should look at the issues on their merits, as we have tried to do in our motion. We have stripped out all that party political rhetoric and put clearly on the table the proposition, “This House supports the principle of a mansion tax.”

Mr Gibb

rose—

Chris Leslie:

We urge all Members, including the hon. Gentleman to whom I am about to give way, to support that proposition.

Mr Gibb:

Is the hon. Gentleman advocating that a widow with little income who is living in her matrimonial home and is confronted with a £16,000 tax bill take out an equity release scheme mortgage in order to pay it?

Chris Leslie:

That was one of the solutions that the Deputy Prime Minister suggested. I think it is entirely possible to find solutions to deal with those rare circumstances. However, I ask the hon. Gentleman: what is he saying to all of his constituents who, like mine, face having to move out of their properties because of the bedroom tax that his Government are introducing in a few weeks’ time? Many of those people are probably still not aware what charge is going to hit them when the change to housing benefit comes in. He is expecting great upheaval—people having to move house—at one end of the spectrum but when the Deputy Prime Minister comes up with a particular solution his response is, “Oh no, that is entirely unworkable.” We need to get the Treasury and the Office for Budget Responsibility to think about these things in a detailed way.

We had hoped that Government Members would support the motion, but what does the Government amendment say? I urge hon. Members to pick up their Order Paper, turn to the relevant page and just look at the Government amendment—this pantomime amendment, whose logic is contorted. It proposes to delete the whole proposition of a mansion tax and replace it with a pleading defence of the different views held by different parts of the coalition. It would remove the resolve to back a mansion tax and retreat into a messy fudge as a means—I mix my metaphors—of brushing the whole issue under the carpet. It is an amendment that seeks to face both ways yet go nowhere. It is a push-me, pull-you amendment, and the Government should be deeply embarrassed at the drafting, which of course descends, as we can see, into a general attack on the Opposition.

Liberal Democrats need to grow some courage and stand up for themselves, for once. This measure is not just a bygone pledge from their now notorious 2010 manifesto; the Deputy Prime Minister made it the centrepiece of his leadership in the past few weeks. Kicking off the Eastleigh by-election last month, he called for

“taxes on mansions, tax cuts for millions”.

That is what is in our motion. He said:

“The mansion tax is an idea whose time has come.”

He said that opponents of it should

“join with the Liberal Democrats…seeking to make our tax system fair.”

Indeed, others have joined in that chorus.

On this Sunday’s “The Andrew Marr Show” Lord Ashdown said it would be “weird” if the Liberal Democrats did not vote in favour of the tax. The “Sunday Politics” had an interview with the Lib Dem president, the hon. Member for Westmorland and Lonsdale (Tim Farron), in which an interesting exchange took place. Andrew Neil said:

“It’s a simple motion. Will you vote for it?”

The hon. Gentleman said:

“Well, let’s say, I mean, when all’s said and done, that is pretty much Liberal Democrat policy”.

Andrew Neil then asked:

“Well, what part of that motion do you disagree with?”

The hon. Gentleman said, “None of it.”

Nic Dakin (Scunthorpe) (Lab):

Does my hon. Friend agree that the Liberal Democrats are in danger of being highly consistent? Having been against tuition fees they voted for them; having been against a bombshell VAT increase they voted for it; and now they appear to be for a mansion tax but are going to vote against it.

Chris Leslie:

I hope that my hon. Friend is not accusing the Liberal Democrats of consistency in their inconsistency—that would be a step too far.

Caroline Lucas:

The hon. Gentleman is talking about courage, so I wonder how far the official Opposition’s courage will go. Some £4.5 trillion is kept by the top 10% of wealthiest households, so the £2 billion that would be raised by a mansion tax, although welcome, is a tiny amount and would hardly bridge the chasm between the super-rich and the poorest. Given that, would the official Opposition support a genuine wealth tax?

Chris Leslie:

I would be very interested to see the hon. Lady’s proposition, but I do not think it is necessary to go for that general approach that she takes. I say that because there are targeted ways in which we could try to build consensus on a property tax for high-value properties over £2 million and then use the revenue to help the vast majority of lower-income and middle-income families. That is the proposition before us today.

Mr Dennis Skinner (Bolsover) (Lab):

It was interesting to hear the remark by the Green Member of Parliament about the wealth tax and being brave. I looked at the list of candidates who stood at Eastleigh, where I thought it would be wide open for a Green to find a way through, and found that the party did not even put up a candidate—what courage!

Chris Leslie:

We digress slightly, but that is an interesting observation. I did not realise that the Green party had fled from that Eastleigh by-election.

Mr Robinson:

Before we leave the subject of the hapless Liberals and consistency, does my hon. Friend agree that they do show consistency in their inconsistency and in their insincerity—that is the only consistency we can identify?

Chris Leslie:

There is time for those sinners to repent, and I hope that in three hours’ time they will re-examine the motion, seriously consider the outrageous stretch in the amendment, stick with their principles and support the motion. I accept that there is a need to flesh out the details of how the mansion tax arrangement would be designed. We need to commission the Treasury and the OBR to work on those particular details.

Some have suggested building on existing property tax systems, although that is not wholly straightforward. In New York City, apparently, a £2 million property owner can pay about £22,000 of property tax, but Lord Oakeshott, who, as we know, is a leading light in the Liberal Democrat firmament, argues against council tax banding as one way of approaching the question. He says:

“If you just put on one or two council tax bands, you can't make the superrich pay their fair share”.

Some Conservative Members, such as the hon. Member for Bognor Regis and Littlehampton (Mr Gibb), complain that a mansion tax is impractical, that it cannot be done and that it would be an administrative nightmare, but I simply refer them to their own Front Benchers. Unbeknown to most Government Members, Her Majesty’s Treasury is, with very little fanfare, actively talking about the viability of an annual charge on high-value residential properties and launched a consultation document last May entitled, “Ensuring the fair taxation of residential property transactions”. It contains a whole chapter about introducing an annual charge, as the Treasury calls it, as part of the regime to tackle the avoidance of tax on high-value residential properties, albeit for properties enveloped in non-natural person terms—in other words, those owned by a company or by partnerships or investment vehicles.

Let me draw the attention of the House to some sections of that Treasury publication, because it suggests that a mansion tax is entirely feasible. On page 8, it states:

“The aim of the new annual charge is both to deter avoidance and to ensure the owners of high value residential property pay their fair share of tax…The annual charge will be introduced in Finance Bill 2013.”

So, the measure is coming in the forthcoming Finance Bill at the other side of the Budget. The document states:

“The interest to which the charge will apply will be the freehold or leasehold interest”

and that the annual charge will be

“applied separately to the freehold (if valued over £2 million) and the leasehold (if valued over £2 million…)”.

It goes on to state that the value of the property interest is proposed to be the value determined on 1 April 2012 and, interestingly—let us remember that the document comes from the Treasury—states:

“Property valuations for the annual charge will be self-assessed by the persons liable to the charge and submitted to HMRC as part of their annual charge tax return. HMRC will have powers to enquire into returns and also to make assessments so that non-compliance can be effectively challenged… Properties will be re-valued every five years…The valuation required will be an assessment of the ‘market value’”.

It even goes on to give a helpful list of four bands of annual charge on properties worth more than £2 million. The Treasury knows in its heart of hearts—I do not know whether it has shared this with hon. Members—that the concept of a mansion tax has some feasibility.

Huw Irranca-Davies (Ogmore) (Lab):

That is tremendously welcome news, because clearly neither of the Government parties will vote for the amendment. I understand that the amendment suggests that the Liberal Democrats are in favour of the mansion tax but will vote against the motion whereas the Conservatives are definitely against it so will on no account be voting for it. If they are both in favour of the tax, they can just support our motion.

Chris Leslie:

I hope that the scales will fall from their eyes and they will see the light, but I do not know whether they will.

Mr Rob Wilson

rose—

Chris Leslie:

Perhaps the hon. Gentleman is changing his mind because of the weight of my argument.

Mr Wilson:

The hon. Gentleman is being very generous and I thank him for giving way a second time. He might not remember that the Liberal Democrat proposals for a council tax were at one stage for properties worth over £1 million, not £2 million. Is not the concern that a Labour Government, desperate to raise tax, would row back to £1.5 million or £1 million? Can he give a cast-iron guarantee that there would be no rowing backwards from a figure of £2 million?

Chris Leslie:

Absolutely. That is not our proposal, as we think that it is possible to develop a mansion tax proposition for properties worth £2 million and above. We could develop and build on the Treasury’s suggestions for how it might work and we hope also to build on the carefully thought through calculations made by the Liberal Democrats.

Andrew Miller (Ellesmere Port and Neston) (Lab):

Would my hon. Friend like to speculate on why the Government chose not to refer to the Treasury document in their amendment?

Chris Leslie:

Let us be realistic: the amendment was getting rather long-winded, as it is about four or five times the length of the motion. In fact, it looks like a bit of a trashing exercise and does not add to the substance of policy choices before the House. Our view is that the circumstances are very simple.

Mr Jim Cunningham:

My hon. Friend has been very generous in giving way. Does he think that now the Liberal Democrats have been exposed they are probably holding off from voting against our proposals tonight but that when the Government bring forward their proposals, the Liberal Democrats will be in the Lobby with them?

Chris Leslie:

Especially on issues such as the bedroom tax, tax credit cuts and increase in VAT. Of course, let us not forget the tuition fee decisions that the Liberal Democrats have made. That is a matter for them, however. They must account to the electorate and they must go back and explain how they have voted today.

Let me say a little about how we would use the money raised from the mansion tax. Our view is that a fair tax system should include a 10p starting rate of income tax. We support the increases in the personal allowance, but a 10p band would mean a different tax rate for those on middle and lower incomes from that for those on higher incomes, helping the move towards a fairer tax system. Some argue that the 20p rate is adequate, but I believe that a steadier incline moving from zero tax to 10p and from 10p to 20p could be the bedrock of a more progressive tax system, sending out an important signal that tax cuts for working people are a priority.

The 10p starting rate would provide a tax incentive to enter work, especially for those on lower wages. It was a mistake to remove the 10p rate in 2007, even though it enabled the then 22p basic rate to be reduced to 20p, where it stands today. Reintroducing a 10p rate would be the right thing to do and, if the Liberal Democrats are correct that the mansion tax could raise £2 billion, the Chancellor could make that change next week in the Budget.

Just as there is support for a mansion tax from Members on the Government Benches, there is ample support for the return of a 10p starting rate for income tax, although strangely some of those Members have chosen not to take their place in the Chamber today. The hon. Member for Harlow (Robert Halfon) spoke about the 10p rate idea in his recent Adjournment debate, arguing that

“restoring the 10p rate would help the coalition to counter the war cry of its political opponents that it is only interested in cutting taxes for millionaires. It would prove to the public that ‘lower taxes for lower earners’ is not just a soundbite but that it can be a reality…the policy would be popular…it would be a symbol of the Government’s economic mission and…it would help to tackle the desperate stagnation in incomes that Britain has suffered”.—[Official Report, 22 January 2013; Vol. 557, c. 34-38WH.]

That argument was made by a Conservative Member.

Duncan Hames (Chippenham) (LD):

The hon. Gentleman is right that the previous Government were mistaken to scrap the 10p rate, but under this Government the income that would previously have been charged at the 10p rate is now charged at a 0p rate. If he supports the increases in the personal allowance, why is support for those increases totally absent from his motion in a debate on tax fairness?

Chris Leslie:

We wanted to focus on the mansion tax proposition, because the hon. Gentleman’s Business Secretary suggested that we keep the motion simple and that if we did so, the Liberal Democrats would support it. That is what the Business Secretary said. We support the changes to the personal allowance, but in our view it is important to have that graduated step up. People go from the zero rate to the 20p rate and it is important to consider introducing a more graduated step as a work incentive, which is something we ought to have in the system.

Duncan Hames:

Why does the hon. Gentleman think that a 10p tax rate is a greater incentive to go into work than a 0p tax rate?

Chris Leslie:

The hon. Gentleman seems to think it is all or nothing, but we think that a progressive tax system argument needs to be developed. If people move from paying zero tax straight to 20p, there is a cliff edge. We think it is important to consider smoothing the transition to work and making work pay more effectively. That is not part of the motion; it is our preference for what we would do with the revenues from the mansion tax.

Duncan Hames

rose—

Chris Leslie:

I will give way to the hon. Gentleman once more, if he wants to say whether he agrees with the text of our motion—not the flim-flam about the amendment. Does he agree with the text of our motion?

Duncan Hames:

I will be voting for the amendment; it states Liberal Democrat policy, which I support. The hon. Gentleman has accepted that he wants to do something very different from us with his mansion tax, and on that basis I am not happy to support him.

Chris Leslie:

What more can I say? I thought the hon. Gentleman supported the proposition in our motion, but clearly he does not. However cynical and defensive he may feel, Liberal Democrats should at least acknowledge that a principle of fair taxation is at stake today, and that it ought to transcend party differences as we try to create a more just society.

Geraint Davies (Swansea West) (Lab/Co-op):

Does my hon. Friend share my fear that the Liberal Democrats may become an endangered political species? Before 2010, they were very popular in Swansea but following the tuition fees, VAT and deep cuts turnaround, they lost the council. If they do not support the mansion tax, which was part of their manifesto, does he not think there is a real danger that we will never see them again in the political sphere?

Chris Leslie:

It would be a great loss for the House to lose some of the skills and contributions of Liberal Democrat Members. Perhaps at our next Opposition day debate a Liberal Democrat protection order should be on the agenda. They may cling on in a number of ways in different places.

I am surprised that the Liberal Democrats do not support the mansion tax proposition. It is hardly surprising that Conservatives do not support the idea. After all, half of them are in politics to defend the wealth of the wealthiest, and the other half will probably need to declare an interest before they speak on the issue.

Let us consider the mansion tax in relation to the other tax benefits that the richest 1% receive. If the Lib Dem design for a mansion tax were to be enacted, it would just recoup a mere fraction of the money being given away to high net worth individuals in the millionaires’ tax cut from April—the first of too many examples of unfairness. In the last Budget, the Chancellor took the decision to hit pensioners with the so-called granny tax, which is more accurately described as a freeze on the old age personal allowance and has caused widespread disgust, especially because the Government chose to use the money to fund a cut in the higher rate of income tax. That is not fair and it is not right, and it certainly should not be part of the society we want to build. Even Liberal Democrats must know that it is deeply resented across the country, yet the Government continue to clobber lower and middle-income families, whether by freezing the maternity pay of new parents, taking child benefit away in a fiendishly complex tax assessment process or reducing the value of the tax credits on which so many working people rely. They cannot even ensure that the money men pay their fair share, with a bank levy that for two years running has undershot the supposed target of £2.5 billion that the Chancellor claimed it would collect.

On maternity pay, the bedroom tax and the cuts to tax credits, the Government have their priorities all wrong. They are handing a tax cut to millionaires when millions of hard-working families pay more. Voting for the motion is an opportunity, especially for the Liberal Democrats, to tell the Government that they need to rebalance their priorities.

Jim Shannon (Strangford) (DUP):

I thank the hon. Gentleman for introducing an admirable motion. Does he agree that it is not just about tax cuts for millions of people on middle and low incomes, but that it could also be an incentive for first-time buyers to get on to the first rung of the ladder? They do not want to buy a mansion, just a first house. Should the money be used for that too?

Chris Leslie:

The hon. Gentleman makes an important point about finding ways to help those who aspire to own their home. I am certainly interested in discussing options for how that might be achieved, because it is important. It is becoming very difficult for people in those circumstances. They are the home owners that we really need to focus on. It is amazing that so many Government Members want to defend the massive super-wealth of those with properties of £2 million and above. All we want is that they pay their fair share, as the motion states in plain and simple terms. We are giving a timely pre-Budget opportunity for the House to express support for or opposition to a mansion tax as

“part of a fair tax system.”

It could not be more straightforward. The country is crying out for a tax system that focuses on helping the majority of the public and ensures that the wealthiest 1% pay their fair share.

First and foremost, Government Members have a duty to their constituents, who will be astonished if their MP flunks this opportunity to make real change because they are suppressing their principles in a bid to cling on to power.

Mr Gibb

rose—

Mr Speaker:

I do not think the hon. Member for Nottingham East is giving way; he has completed his speech. I call Mr David Gauke.

1.25 pm

The Exchequer Secretary to the Treasury (Mr David Gauke):

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

‘notes that this Coalition Government has cut income tax for 25 million people, taking over 2.2 million low income individuals out of income tax altogether, while at the same time increasing taxes on the wealthy, including raising stamp duty on expensive properties and restricting tax reliefs; further notes that both parts of the Coalition continue to support tax cuts for people on low and middle incomes; notes that the part of the Coalition led by the Deputy Prime Minister also advocates a mansion tax on properties worth more than £2 million, as set out in his party’s manifesto, and the part of the Coalition led by the Prime Minister does not advocate a mansion tax; and further notes that the top rate of income tax will be higher under this Government than under any year of the previous administration and that the rich are now paying a higher percentage of income tax than at any time under the previous administration, demonstrating that it presided over an unfair tax system where the rich paid less and the poor paid more in tax than now, meaning nobody will trust the Opposition’s promises on tax fairness.’.

After listening to the speech of the hon. Member for Nottingham East (Chris Leslie), we might have thought that it was the last Labour Government who increased stamp duty land tax to 7% on residential properties costing £2 million or more. We might have thought it was Labour who introduced a 15% rate of stamp duty for properties owned through a corporate vehicle. We might have thought that it was the last Government who imposed a cap on reliefs, limiting the extent to which the wealthy can drive down their tax rate, and we might have thought it was the last Government who deployed more resources to Her Majesty’s Revenue and Customs to tackle evasion and avoidance, and closed down loopholes such as disguised remuneration that cost the Exchequer nearly £1 billion a year.

We might also have thought that the Labour Government had introduced the 50p rate of income tax in their first Budget, not their 13th. We might have thought it was the Labour Government who had taken more than 2 million low-paid earners out of income tax by raising the personal allowance.

Whatever the differences that may exist on the Government Benches, and there are differences on this matter, one thing is very clear. The Opposition are in no position to lecture the two parties on the Government Benches about how to put in place a fair tax system that provides support to working people and taxes the wealthy effectively.

Alex Cunningham (Stockton North) (Lab):

At Treasury questions, one of the Minister’s colleagues said that the Government are focused on the causes of poverty. Can the Minister tell me how many of his millionaire friends getting a huge tax cut this year are actually pleading poverty?

Mr Gauke:

In the last Budget package we increased taxes on the wealthy—higher rates of stamp duty, closing loopholes and putting a cap on reliefs. That is getting far more money from the wealthiest than a 50p rate that failed to do what income tax is supposed to do, which is raise funds to pay for public services. It did not do that.

Stewart Hosie (Dundee East) (SNP):

One of the reliefs that has been reduced is on 40p tax, which went down from £37,000 to £34,000 and then to £32,000 this year. The Minister has squeezed the genuine middle class—the people earning just over £40,000—not the £400,000 a year middle class. That bit of cynicism will never be forgotten by those people.

Mr Gauke:

I am afraid the hon. Gentleman is wrong. People earning just over £40,000 have seen tax cuts and a reduction in the total amount of income tax they pay, because the personal allowance has increased to more than compensate them. The higher-rate threshold has not increased as it might have done, because higher-rate taxpayers would gain more from the personal allowance than basic rate tax payers. Someone on between £40,000 and £44,000 a year is paying less income tax as a consequence of the Government’s policies than they would have done otherwise.

Geraint Davies:

Will the Minister take this opportunity to confess that the reason why the Treasury predicts less will be generated by the 50p rate in the one year of its operation than the 45p rate is that he knows, as I do, that millionaires can move their money between tax years? As the rate only runs for one year, they will move their money to the lower tax year. He would raise more money if he kept the 50p going. It is a con for his mates.

Mr Gauke:

There are two points. It is correct that the wealthy are often able to move income from one year to another, but the conclusion that HMRC and the Office for Budget Responsibility reached is that even taking into account the forestalling effect, the behavioural consequences of the 50p rate were so significant that it barely raised any revenue. That is the reality. It even takes into account the hon. Gentleman’s point about forestalling. That approach has been confirmed by the OBR. The 50p rate failed.

Anas Sarwar (Glasgow Central) (Lab):

The message that the Government have repeated over and over again is that we are all in this together. Take the example of families in my constituency who live just one mile apart. One has been handed a tax cut as a result of the scrapping of the 50p tax rate. One mile in the other direction families will be handed a food parcel. Does the Minister think that is fair?

Mr Gauke:

Let us look at what was in the last Budget in respect of stamp duty and the cap on reliefs. We could also look at what we have done with regard to capital gains tax. The independent Institute for Fiscal Studies has made it clear that the top 20% are affected most by the fiscal consolidation policies that have been pursued in this Parliament. Those with broadest shoulders are bearing the greatest burden. However, we have an enormous deficit that we have to get down—a deficit that we inherited from the Opposition.

Mel Stride (Central Devon) (Con):

Will my hon. Friend confirm that the highest rate of income tax currently under this Government is higher than was the case in the previous Government’s 13 years, all bar the last couple of weeks?

Mr Gauke:

My hon. Friend is right. The Labour Government were in office for 4,758 days. For all but 36 of those days, the highest rate of income tax was at 40p. Then it moved to 50p. There is a good question to ask the Opposition about why they kept it at 40p for so long. Why did they leave it until the fag-end of their Government, when it was clear that they would not be in government any more? The reason is that the 50p rate, predictably enough, did not do what it was supposed to do. It did not raise revenue, and an income tax that does not raise revenue is not something that a sensible Government would persevere with.

I turn to the mansion tax.

Geraint Davies:

Will the Minister give way?

Mr Gauke:

No. I shall make a little progress, devastating though the hon. Gentleman’s interventions so often are.

We have always been quite clear that the proposed mansion tax is an issue on which the two parties in the coalition have differing views. Our Liberal Democrat colleagues have supported the principle for some time. I am sure that the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster) will make that clear when he winds up the debate. In contrast, Conservative Ministers have very real concerns over such a proposal. We have concerns that a third of the properties in London worth more than £2 million have been in the same ownership for over 10 years, and that a mansion tax could hit asset-rich but potentially income-poor households, a point made by my hon. Friend the Member for Battersea (Jane Ellison).

Dame Angela Watkinson:

My hon. Friend will know that £2 million does not buy a mansion in London, and certainly not in outer London, where I have a number of constituents who moved out from inner London decades ago. Their homes have increased in value beyond their wildest dreams over a very long period, but they are in fact cash-poor, quite often living on a modest pension. The thought of paying very large amounts of tax every year for the privilege of owning a home that they have had for many years would be extremely frightening. Can the Minister think of any practical way that an elderly person in that position could possibly pay that tax?

Mr Gauke:

I noticed that that very point was one that the hon. Member for Nottingham East seemed to struggling with. He seemed to suggest that there were ways in which the Opposition would address that. I am not sure whether that was included in the costings they have produced. There is an issue for the asset-rich, cash-poor which would need to be addressed in the design and would obviously have an impact on the costing.

Sheila Gilmore (Edinburgh East) (Lab):

Would the Minister suggest to people in those circumstances that they might want to take a lodger, just as it has been suggested to my 60-year-old constituent that the answer to the bedroom tax is to take a lodger?

Mr Gauke:

I am not going to debate at length the spare room subsidy, which is an area of public spending constraint that we need to engage in. There is a genuine issue in respect of the asset-rich, cash-poor that the hon. Member for Nottingham East appeared to recognise and which would have to be addressed.

The mansion tax would be administratively burdensome for HMRC to operate, not to mention intrusive for the person having their home inspected. We would have concerns that in Labour’s hands, the starting level for such a tax would not stay at £2 million for very long. What began as a mansion tax would soon become a homes tax. To coin a phrase, it would become a tax for the many, not for the few.

Chris Leslie:

I am surprised the Minister thinks that “the many” own properties worth £2 million and above. I wanted to ask him about the Treasury’s own proposition that residential properties of £2 million and above, albeit owned by a company, should have an annual charge based on a self-assessed valuation, with a banding process. Is he saying that his own policy is administratively burdensome?

Mr Gauke:

Let us be clear. One of the weaknesses in the tax system that we inherited was the fact that people were able to walk around the paying of stamp duty. On very valuable properties, it was all too easy for people to arrange their affairs thorough corporate vehicles and not pay stamp duty. In the last Budget this Government introduced measures that will deal with that enveloping and deal with one of the unfairnesses in our tax system. One of the ways in which we are going to do that, as well as a high stamp duty charge for properties held in corporate vehicles, is to bring in an annual residential property tax. That is focused only on properties worth more than £2 million held by a corporate vehicle. It would apply to only 6,000 properties, we estimate. It is a very narrowly focused policy that will enable us to deal with an area of avoidance that was allowed to carry on for far too long under Labour.

Caroline Lucas:

As a tax that is much harder to evade or avoid, there is the land value tax. That is supported by one half of the coalition and by the OECD and the IMF. The IFS has said that the case for a land value tax is overwhelming because it is much fairer. Given that that is the case, can the Minister explain why his Government will not even do some basic research into it, as my private Member’s Bill requested?

Mr Gauke:

We are left with the same issues of complexity of valuation across the board, and the issues of the asset-rich, cash poor. That is why my part of the coalition is not keen to proceed with that matter, but it is worth pointing out that we are raising more money from property. There is a stamp duty land tax of 7% on residential properties costing £2 million or more, a policy that is easy to administer and will not impact on existing home owners.

On the mansion tax, we have made no secret of the fact that the two parties disagree. If we did not disagree on some things, we would be one party, not two. But in the circumstances that we are in, it has been perfectly possible for two parties to work together in a sensible and mature way and to reach agreement on a host of measures that have made our tax system fairer, easier to understand and competitive. We heard much from the hon. Member for Nottingham East to the effect that we should do more to help low income workers. May I just remind him and House of the progress that we have made in raising the personal allowance? In 2010, someone on £6,500 was paying income tax at 20%. From next month, someone has to earn £9,440 before paying any income tax at all. Our measures on the personal allowance have provided a huge tax cut for millions of people and will take more than 2.2 million of the lowest earners out of income tax altogether. In fact, over the course of this Parliament, someone working full time on the national minimum wage will have seen their income tax bill cut in half.

Let us contrast our record with that of our predecessors. Let us remember that when the right hon. and absent Member for Kirkcaldy and Cowdenbeath (Mr Brown) did his last Budget, rather than cut taxes for the working poor, he increased them. People talk about the scrapping of the 10p rate, but Labour did not scrap it, they doubled it. They turned it into a 20p rate. For example, someone earning £9,000 a year in 2007 would have heard a Labour Chancellor stand up and announce that a Labour Government were going to increase their income tax bill by more than £200. Last year, someone on £9,000 a year would have heard a Conservative Chancellor stand up and announce that a coalition Government were going to take them out of income tax altogether. Our constituents on £9,000 a year will soon be paying no income tax at all, saving more than £500 since the coalition came to power. Labour turned a 10p rate of income tax into a 20p rate. This coalition has turned a 20p rate into a 0p rate.

Mr Russell Brown (Dumfries and Galloway) (Lab):

Will the Minister remind the House what he did in terms of the personal allowance for pensioners? Am I not correct in saying that he froze that?

Mr Gauke:

There is no particularly sensible reason why there should be a different personal allowance for someone who is 64, compared with 65 or 75. It is clearly a simpler and, I believe, fairer system that one personal allowance should apply to everybody. That was never an option available to the Labour party because the main personal allowance for someone under the age of 65 was so low. We have been able to increase it substantially so that one personal allowance can apply to everybody. That is a simpler and fairer way to deal with that issue. At the same time, we have increased pensions, thanks to the triple lock guarantee, by much more than we would have done if we had stuck with the plans that we inherited. Last year, pensioners saw their biggest increase in the state pension.

Mr Gibb:

While my hon. Friend is on the subject of the last Labour Government, he will recall that in 2009-10, the last financial year of the last Labour Government, expenditure exceeded income by £159 billion, equal to 11% of the whole country’s income. Since he has been a Minister at the Treasury, have civil servants explained to him why that was allowed to happen, virtually bankrupting this country?

Mr Gauke:

My hon. Friend makes a very good point. There is no explanation that civil servants can give for that. An explanation and an apology are due from the Opposition, but we await either of those. I think that they persist in the view that there was no structural deficit even before the crash—

Chris Leslie

rose—

Mr Gauke:

If we are to have confirmation that there was a structural deficit before the financial crash, I will happily give way to the hon. Gentleman.

Chris Leslie:

There was certainly a global financial crisis. But can the Minister confirm that under the current Chancellor of the Exchequer, national debt has risen from £811 billion to £1 trillion 111 billion? Is it actually the case that debt has risen by that much? Yes or no?

Mr Gauke:

Debt is the accumulation of deficits. We inherited the largest deficit in our peacetime history, and every measure that we have taken to reduce that deficit the Opposition have opposed, and then they complain that debt is rising. That is the most absurd position. We are criticised for not borrowing enough, and then we are criticised for our debt going up. There is no consistency or credibility in the Opposition’s position, just as there was no credibility or consistency in their treatment of low-paid workers. In government, they raised the rate of income tax; in opposition, they make promises that they will cut it. When we remember the reality, why should those on low incomes ever trust Labour again?

Mr Alan Reid (Argyll and Bute) (LD):

In terms of fairness of taxation, another area where this Government have done a great job is on fuel duty. The fuel duty is now 10p a litre lower on the mainland and 15p a litre lower on islands than it would have been if the Labour party had still been in power. I hope that my hon. Friend will continue that good work and that in the Budget there will be an announcement that the September fuel duty increase inherited from Labour will not go ahead.

Mr Gauke:

I will take that as a Budget representation. It is perhaps worth pointing out that there was a measure that the previous Labour Government had to reduce the deficit, which was substantial increases in fuel duty over the course of this Parliament. That is a measure that we have been able to stop, and quite right too.

Debbie Abrahams (Oldham East and Saddleworth) (Lab):

Will the Minister explain why four out of five people feel that austerity is not working? Is it related to the downgrading of the economy yet again for 2013? Is it the shrinking of the economy in the last quarter of last year by 0.9%? Or is it that the OBR had to call the Prime Minister to task and give him an economics lesson?

Mr Gauke:

This is a difficult time for all major economies, and the UK is no exception. But matters would be much worse if we were to abandon our desire to bring some control to the public finances. We must ensure that there is the political will to deal with the public finances, and that is what this Government will continue to demonstrate. The approach of ignoring the deficit, believing that this is all an issue that can be addressed at some future time, is economically irresponsible and unfair on future generations who will face the bill that they will have to pick up because we failed to address those problems now.

Geraint Davies:

Is this not also about fairness? For instance, while the threshold changes that he has mentioned of £3,000, which deliver a saving of £11.50 a week to taxpayers, cost £9 billion, he will save half a billion pounds from inflicting that £11.50 on people for the empty bedroom tax. With a small amount of the money used to raise the tax threshold, he could have alleviated that for the very poorest. Is not this about values and not inflicting the most hardship on the most poor while giving a bung to the voters?

Mr Gauke:

I take it from what the hon. Gentleman says that rather than raise the personal allowance, he would prefer us to spend more on the welfare bill. If that is the hon. Gentleman’s position, fair enough, but I do not agree. Raising the personal allowance, taking people out of income tax, and making sure that work pays, are all things that a sensible Government should do, and I am delighted that this coalition Government are able to do that.

I come now to the taxation of those on highest incomes, on which we have already touched. The top 1% of taxpayers, those with incomes of over £150,000 a year, will pay more than a quarter of all income tax, while the top 5% of taxpayers, those with income of £68,000 or more, will pay nearly half of income tax. We agree that it is important that we create a tax system that ensures that those who earn the most contribute the most, but it is also important that we create a tax system that works. Among other things, that means a tax system that does not damage our economy by undermining our international competitiveness.

The Government inherited a top rate of tax at 50p, a rate that our predecessors, who this afternoon have painted themselves as the party of taxing the rich more, had put in place for just 36 of their 4,758 days in power. The rate that they left us with was the highest top rate amongst major economies. The last Labour Chancellor had made it clear that it was temporary. It was also very clear that it was having an immediate impact on our competitiveness.

Let me say something that I hope is not controversial: the principal purpose of income tax is to raise revenue. So we commissioned HMRC to analyse just how effective the 50p rate was in raising revenue.

That HMRC report, laid before the House, set out thorough and compelling evidence on the impact of the 50p rate. It showed that the rate was uncompetitive, distortive and inefficient. Not only did it not raise much revenue, but it could even have cost the Exchequer money when the indirect impacts on other taxes were taken into account. This Government were not prepared to maintain a rate of income tax that was both ineffective at raising money and that left us with the highest statutory rate of income tax in the G20, so we acted, in the interests of the country, and the top rate of tax will fall to 45p from April this year. This will see our top rate of tax drop below that of Australia, Germany, Japan and Canada, which will send a signal to businesses taking decisions on investment and location that the UK is a competitive environment.

Rehman Chishti (Gillingham and Rainham) (Con):

Has the Minister seen the KPMG report that states that Britain’s competitiveness is better than that of Switzerland and the United States and that that is a consequence of the measures taken by the Government?

Mr Gauke:

My hon. Friend is absolutely right to raise that point in the context of the changes we have made to our corporate tax system. In 2009 KPMG commissioned a survey of tax professionals, asking them to name the three most competitive countries. The UK was nominated by just 16% of respondents. In 2012 KPMG undertook the same survey and the UK was nominated by 72% of respondents. That is a dramatic change, which we are proud of, and it will help our economy grow. We have also had the courage to reduce the 50p rate, which will help our competitiveness, too.

Andrew George (St Ives) (LD):

One thing we do know is that mansions cannot emigrate if the tax rate goes up. Earlier my hon. Friend the Minister said that the problem with the mansion tax is that it becomes a home tax. Does he agree that the council tax is also a home tax, and may I understand from what he has been saying that the Conservatives are coming round to the Liberal Democrat view that we should consider introducing a local income tax as an alternative for financing local authorities?

Mr Gauke:

No, I think my hon. Friend would be wrong to reach that conclusion from what I have said. There is an interesting debate on the balance between property and income taxes, however, and I note his suggestion in that context.

May I now return to the topic of the 50p rate, as I know the hon. Member for Nottingham East likes to focus on it? The Opposition may think that in this day and age 50p is the least the wealthy should pay in income tax. I want to put to them the question raised earlier by my hon. Friend the Member for West Worcestershire (Harriett Baldwin). In less than four weeks the 50p rate will have gone. The additional rate will be 45p. Will Labour seek to reverse that? I am happy to take an intervention on this point. Will Labour seek to reverse that after the next election?

Chris Leslie:

The Minister is asking the Opposition what is going to happen in two years’ time, but can he tell us what will happen in next week’s Budget?

Mr Gauke:

That is very amusing, but of course I am not going to do so. I am fairly confident, however, that at the next general election the Conservative party will not be advocating a 50p rate of income tax. The hon. Gentleman is calling for a 50p rate of income tax, however. He will not tell us why. He is now saying, “Well, we don’t know what the economic circumstances will be.” That is fair enough, but does he think that his party will make a manifesto commitment at the next general election to introduce a mansions tax? Is that a commitment? I am happy to give way again.

Chris Leslie:

It is very simple: now, in 2013, we can see the deficit rising and getting worse and we can see borrowing increasing, growth flat-lining and living standards falling, and the Minister is asking us to predict what we are going to do in two years’ time. How on earth do we know what other horrors are in next week’s Budget box or, heaven forfend, in the spending review of 26 June? Can he tell us what is in that spending review?

Mr Gauke:

This is starting to get interesting, because we have now learned that the Labour party has moved a motion trying to persuade Liberal Democrats to vote in support of a mansion tax, yet Labour will not confirm whether it thinks a mansion tax is a sensible policy for the next Parliament. The position of the Liberal Democrats is clear and the position of the Conservatives is clear; what is not clear is whether the Labour party do, after all, support a mansion tax. Will it be in its manifesto? That is a perfectly clear question.

Debbie Abrahams

rose—

Mr Gauke:

I will give way to the hon. Lady, and she can tell us whether she thinks that ought to be in the manifesto.

Debbie Abrahams:

The Minister is being very generous in giving way, but I want to ask him what his Government are doing. I tabled a written parliamentary question to his Department asking about the average tax rates for different groups of people, and he may be astounded to know—as I am sure many of my constituents in Oldham will be—that 6% of people on incomes over £10 million pay under 10% income tax. What is he doing to address that inequity?

Mr Gauke:

That is exactly why in the last Budget this Government brought in a cap on reliefs preventing the wealthy from driving down their tax rate to such levels—something the Labour party never did in 13 years in government. I note, however, that I get no answers to my question.

Let us be clear: we hear lots of complaints about the 50p rate being reduced to 45p, but we get no indication as to whether the Labour party would or would not reverse that if they were to win the next election. I can only assume that that is because deep down they know that campaigning on 50p might look good on a leaflet but is lousy for the economy; after all, that seemed to be Labour’s approach when it was in government. We have also learned this afternoon that the Labour party is not committed to a mansion tax in the next Parliament, after all. So what do we have? We have opportunism on the 50p rate and opportunism on the mansion tax.

Several hon. Members

rose—

Mr Gauke:

I am going to press on.

This is what we have seen from the Labour party, therefore: we have a party that increases the tax rates on the low-paid and then lectures a Government who take the low-paid out of income tax; we have a party that is in uproar at our reducing the additional rate of income tax to 45p but that will not promise to reverse it; and we have a party that did little, or nothing, to tax expensive properties more now being converted to a mansion tax for the purposes of this afternoon’s vote for transparently political reasons, but refusing to confirm that it will be their policy at the next election. That is pathetic. It is insincere, it lacks any semblance of credibility, and it deserves to be defeated. I urge my hon. Friends to defeat the motion and support the amendment.

Tax does have to be taxing.

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