Yvette Cooper accuses Tories of “80s revivalism gone rampant”

May 7, 2009 at 2:50 pm Leave a comment

ashestoashes

by Tony Grew

The Budget continued to make its way through Parliament yesterday with the Second Reading of the Finance Bill.

The Chief Secretary to the Treasury, Yvette Cooper, accused the Conservatives of “watching too much Ashes to Ashes” and “80s revivalism gone rampant,” in reference to their plans for public spending.

There were even topical references to Spandau Ballet, Depeche Mode and Boy George.

Ms Cooper opened the debate with a stark assessment of the state of the British economy.

“This year’s Finance Bill comes as the world economy is shrinking for the first time in peacetime since 1932,” she told MPs.

“It is the first time ever that five of the biggest banks in the world have had to be rescued by their national Governments. That is the scale of the international challenge we are facing.

“This Finance Bill provides for vital measures to support the economy this year and to help British families and businesses through the more difficult times.

“It also provides for help to support the long-term prosperity of Britain and to ensure that public finances are sustainable for the future. Those two objectives are fundamentally linked, but the main Opposition party, astonishingly, seems to oppose both of them.

“If we do not take action now to get our economy moving and growing, it will cost us more in the long run.”

Tory MP Tobias Ellwood raised the issue of VAT, which is due to revert to 17.5 per cent. on New Year’s Eve.

“I do not know what she will do on that evening, but many retail outlets and establishments will be open, so it is not a great time suddenly to change VAT levels from 15 per cent. to 17.5 per cent,” he said.

“For the benefit of our tourism and services industry, I plead with the Chief Secretary to move the date from 31 December to, say, 3 January, which is a Sunday.”

Ms Cooper said Her Majesty’s Revenue and Customs is in discussions with business about  how to ensure that the change happens smoothly.

“It is right to ensure that this VAT reduction is only temporary, as it is part of our fiscal stimulus.

“The hon. Gentleman is wrong to oppose the temporary reduction in the VAT rate, which applies across the country, because the cut is equivalent to putting £12 billion into the pockets of consumers and businesses that would otherwise have been taken in tax.

“It is about putting money into people’s pockets and into the economy when it is most needed.”

She added: “The advantage of the VAT cut was that it was by far the fastest way of putting money into the economy to provide immediate support across the economy.

“Unfortunately, Conservative Members simply opposed the VAT cut, along with anything else involving additional investment or spending in the middle of a recession—an economic policy that is not just bonkers but dangerous.”

Ms Cooper outlined some of the stimulus measures in the bill.

“Clause 24 doubles tax breaks for business investment. It increases the rate of capital allowance relief to 40 per cent. for one year from April, allowing all firms investing over £50,000 in the current financial year to benefit from a higher rate of tax relief on investment. It is a boost for business but it is opposed by the Conservatives.

“For basic rate taxpayers, clause 3 means an increase in the income tax personal allowance, making them £145 better off than they were in April last year. It provides extra help for ordinary families now, which is opposed by the Conservatives.

“Clause 23 extends from one to three years tax breaks for business through the loss carry-back rules. It will help up to 75,000 businesses that made a loss last year, and it is part of the fiscal stimulus. It provides real help for businesses now, which is opposed by the Conservatives.

“Whether it is the £5 billion of extra help for the unemployed, the £600 million of extra help enabling teenagers to stay at school, or the £3 billion for public sector capital programmes, time and again the Conservatives oppose the vital investment and support that our economy urgently needs so that we can emerge from the recession sooner and stronger.

“Clause 6 implements a new additional rate of income tax from 2010-11 of 50 per cent. for those with incomes above £150,000 per year, and clause 4 legislates for a gradual reduction in the personal allowance for those with incomes above £100,000 until that is completely removed.

“We think that it is fairest for those on the highest incomes to contribute more because over the past 10 years their incomes have increased by an average of £5,000 a year, compared with £600 a year for the average taxpayer.”

Lib Dem Treasury spokesman Jeremy Browne pointed out that if national insurance is included in the calculations, higher earners will face a marginal income tax rate of 61 per cent.

Graham Stuart, Tory MP for Beverley and Holderness, asked if the government’s pledge to halve child poverty by 2010 would be met.

Ms Cooper called his question “ridiculous.”

“The hon. Gentleman does not believe in the target in the first place.

“How dare he come here to start making pompous remarks about whether the target is going to be met and whether we are making commitments towards it.

“We are determined to keep making progress towards it, because we think it is right to keep tackling child poverty, whereas his party doubled and trebled the rate of child poverty in this country.”

Phillip Hammond, the Shadow Chief Secretary, said Ms Cooper “has talked a great deal about tax increases for people on high incomes.

“One might get the impression from what she has said so far that there were no tax increases for people on ordinary incomes, whereas more than half the tax increases announced in this Budget for this year will fall on ordinary people, not on those on higher incomes.

“As she is so interested in the Opposition’s policies, let me tell her, for her information, that our priority will be cutting Labour’s taxes on jobs—the increase in national insurance contributions that will affect everybody who is earning more than £20,000 a year.”

Ms Cooper responded by questioning how the Conservative party’s only “manifesto commitment is to cut tax on inheritance for millionaires’ estates, so that the 3,000 richest estates in the country will each get £200,000?

“How can that be a defence of ordinary people? It is defending the richest estates and shows the wrong and distorted priorities of the Conservative party in the middle of a recession—so much for fiscal conservatism.”

She added: “This week, the Conservative leader has admitted Margaret Thatcher is his great inspiration in rolling back the state.

“The Conservatives have been watching too much Ashes to Ashes.

“This is ‘80s revivalism gone rampant. Spandau Ballet are back together, Depeche Mode are back in the charts and they are pinning their hopes on Boy George.

“All we need now is for the hon. Member for Runnymede and Weybridge (Mr Hammond) to don the stripy legwarmers.

“If they honestly think that a return to Thatcherism is best for Britain’s future, they are living in cuckoo land.

“We remember Thatcherism.

“We remember the devastation it caused to our communities, the generations of young people abandoned to long-term unemployment, the soaring child poverty, the public services neglected and the families scarred. We will not return to the politics and policies of the ‘80s.”

Mr Hammond responded:

“Well, that was quite a rant.

“The Chief Secretary has obviously decided that if she cannot defend her own policies and record, the best thing to do is to come out of the bunker spraying fire in all directions and hoping to get away with it.

“The overwhelming sense that I got from that speech, and indeed from the interventions from Labour Members, was that they simply do not get the scale of the crisis that they have created and the challenges that it may fall to others to pick up in an attempt to put this country back on its feet.

“Hon. Members might be forgiven for experiencing a sense of déja vu today. It is only last week that we were debating—and unravelling—the Budget. Now we must debate a Finance Bill that was published only last Thursday.

“Outside experts have scarcely had a chance to digest it, but it will be forced through the House at a pace dictated by the political decision to delay the Budget until after the G20 meeting, rather than by the needs of good government and proper scrutiny.”

He added: “Britain’s credit card is maxed out and the Prime Minister cannot borrow his way out of trouble.”

“I do not think that I heard the Chief Secretary describing the £175 billion that the Government will borrow this year and the £173 billion that they will borrow next year as sensible and sustainable.

“Last year it was the denial Budget—no one would be worse off as a result of the abolition of the 10p tax rate—and this year it is the distraction Budget, with a subliminal message that taxing the rich can resolve the gaping hole in the public finances as the Government desperately try to divert attention from the reality of the Chancellor’s package.

“It is a reality of tax rises for the many not the few and of spending increases before an election to mask a programme of massive cuts afterwards.”

Ms Cooper challenged the Conservative party to back the Crossrail project underway in London at a cost of more than £15bn. There had been press speculation a Tory government might scrap it.

“We believe that Crossrail is a good project,” Mr Hammond replied.

“It fits very well with our agenda of improving rail infrastructure — [ Interruption. ] She sits there, chuntering about guaranteeing to support this or that project. Do the Government have no conception of the scale of the hole that they have dug?

“Every single programme and project will have to be reassessed and re-evaluated.

“Each project will have to demonstrate its value for money and its effectiveness in an extraordinarily tight fiscal climate created by the disaster that the Government have visited on this country.”

Mr Hammond laid out “three key themes linking our main criticism of the Bill.

“First, its failure to rise to the challenge of building the competitiveness of the UK as a place to do business in the recovery; secondly, its failure to support savers at a time when rebuilding the savings culture will be critical to Britain’s future; and thirdly, its abject failure to balance the rights and responsibilities of taxpayers and the Revenue as it extends and expands Revenue powers.”

For the Liberal Democrats, Jeremy Browne drew attention to the level of debt.

“The Budget that gave rise to this Finance Bill was a total humiliation for the Prime Minister himself and for the Labour party generally.

“The reputation of the former has been destroyed for ever, and the reputation of the latter for at least a generation, and possibly irredeemably.

“Their self-imposed destruction does not concern me, as they are the architects of their own misfortune and eventual downfall, but what does concern me is the catastrophic impact that this Budget and this Bill will have on our country both financially and socially for many decades to come.

“The Government of this country are now borrowing £480 million every day.

“We are borrowing £20 million an hour. Our national debt increased by £12 million during the time that the Chief Secretary took to make her speech opening this debate.

“I am afraid that it went up by another £21 million while the Conservative spokesman was talking, which makes the rate charged by the Conservative shadow Foreign Secretary seem positively mean-spirited.

“I shall try to boil those numbers down to understandable levels, because people trade tens of billions as though it were small change. Our debt is clocking up another £1 million every three minutes, and it is a serious and frightening problem.

“It will rise by £175 billion this year, £173 billion next year and £140 billion the year after that.

“When the Prime Minister delivered his first Budget as Chancellor in 1997, almost exactly 12 years ago, total Government spending was £322 billion. Now the debt increase alone for the next two years will be £348 billion.”

The rest of the debate was dominated by Conservative backbenchers critical of the Budget. Tory MP Douglas Hogg raised a point of order pointing out that in the debate there were 14 Back-Bench speakers, of whom only three came from the Labour Benches.

Click here to read the full transcript.

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