Finance Bill

I shall bear your advice in mind, Mr Deputy Speaker, because I know that many right hon. and hon. Members wish to take part in that debate, which is fundamentally important to the vast majority of Members of Parliament. I hope that I have demonstrated such self-restraint in my contributions to the debates on the Finance Bill and will do so again this evening. It is a pleasure, of course, to follow the hon. Member for Wakefield (Mary Creagh). Her concluding remarks, in which she used fictional characters to make her point, were a piece of fiction that was very entertaining, but that is probably as far as it will go. The Finance Bill—after all, we are debating the Finance Bill and, perhaps sadly, not the Budget as a whole—has, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) made clear, nine clauses. It is rather limited. There will be a further Finance Bill in the autumn and, of course, there were other measures in the Budget—the hon. Lady referred to some of them—including the public spending restrictions of which we will learn more from 20 October onwards. Those issues will no doubt be debated in the future in the House. The debate this evening is narrowly focused and has been defined by Treasury Ministers as they have brought forward a limited number of measures from the Budget. I wish simply to make a couple of points. Primarily, I want to focus on the issues that I have raised through probing amendments to the Bill—in particular, those to do with VAT, its impact and what alternatives there might have been to the 2.5% rise proposed in clause 3. Before I do so, it is worth while to make it clear for the benefit of the hon. Lady and other Opposition Members that I shall support the Finance Bill on Third Reading, primarily because the Budget as a whole contained a number of measures for which the Liberal Democrats have been campaigning for many years, including the increase in personal allowances, the triple lock on pensions and the introduction of a banking levy. That levy is not at the level at which I should have liked it to have been, as I have made clear in earlier debates, but none the less it is a move in the right direction. I shall be encouraging Ministers to lever it up still further. Other such measures include improvements in child tax credit, protections for lower paid public sector workers and closing tax loopholes such as that on capital gains tax, which was brought in by a Labour Government. Although I want to see that increase still further, with protections—particularly for certain groups that will still use capital gains tax as a means of avoiding paying their rightful tax—it is still a move in the right direction. In view of all those measures, and in spite of my misgivings about other aspects of the Bill, I shall support the Government on Third Reading. As I have made clear, I had a number of misgivings. The Government are well aware that I refused to support them on the increase in VAT, as the voting record clearly shows. In the conclusion to the Budget, the Chancellor made it clear that the intention was to ensure that"““the burden is fairly shared””" and that the aim was to have"““The richest paying the most and the vulnerable protected””.—[Official Report, 22 June 2010; Vol. 512, c. 180.]" I shall not rehearse all the arguments contained in the Red Book and the Institute for Fiscal Studies' analysis of the impact of the VAT rise, but, having considered the impact on public services, on charities, on rural dwellers dependent on an old banger to get around because of the inadequacy of public transport and on poor families, I believe that the increase in VAT is regressive. That is clearly not a view held by Ministers, but it is still relevant. Let me refer to three elements of the impact of the VAT increase on charities. First, a briefing has been supplied to me by Save the Children that states that"““we will pay more in VAT but will not be able to charge VAT on our income as other companies do. This is a real concern.””" Save the Children's analysis of the figures presented in the Red Book points out that the deciles that are identified in the graphs include the most wealthy decile, which commences at £49,700 per annum. A lot of the very wealthy receive an income of significantly more than that. Save the Children states that"““the graph measures the impact at 2012/13 which doesn't include the impact of the tax & benefits changes in the Emergency Budget over the whole parliament and probably fails to pick up the changes in the measurement of the uprating (RPI to CPI). The essential point is that although the highest earning households pay more, they still pay proportionately less of their household income on the tax increases than poorer households.””" In previous debates, I have said that the impact on those households with children is clearly regressive according to Save the Children. Mencap has also provided me with a briefing on the impact that the measure is likely to have on its services for the learning disabled. Mencap provides important services and accommodation for the learning disabled and it estimates that for the 15 months from January 2011 to April 2012—that is, until the end of the next financial year—the cost to it will be £450,000, nearly half a million pounds. That figure includes non-recoverable VAT incurred by its housing subsidiary, Golden Lane Housing, which plays a significant role in Cornwall, where it provides an important service. I received the advice from one of Mencap's trustees who lives in my constituency, Colin Rogers. His concern as a trustee is that"““as much of Mencap's income is earned and not donated and since these earnings come from service provision which is also likely to be cut, we are potentially facing a dire financial position which can only be managed by reducing the many services which we subsidise or provide free-of-charge to people with learning ""disability and their carers. As a rough guide, the 12 month figure of £370,000 would each year pay for around 20 full-time community support workers””." I hope that the Government will take the impact on charities on board.