Rachel Reeves
MP for Leeds West and Pudsey · Labour · United Kingdom
“I thank my hon. Friend for his question and his work on the Treasury Committee. On pensions reform, through the Mansion House accord and Sterling 20, we have got pension funds to commit to investing more in British businesses, both through British venture schemes and in British infrastructure.”
“I thank my hon. Friend for her question. As Members will know, this Government are working on plans with our NATO allies for a multilateral defence mechanism. We have already signed a treaty agreement with Finland and the Netherlands, and we are working closely with Scandinavian, Baltic and eastern European countries.”
“At a time of great global uncertainty, it is more important than ever that we deepen ties with our closest allies and biggest trading partners, whose values we share, and whose interests are bound to ours.”
“Today the Government have responded to the covid counter-fraud commissioner’s recommendations in a report that I commissioned, which confirms that the Conservative Government left the door open to more than £10 billion of pandemic fraud.”
“As I just said, the DIP will be published before the summit. It will involve more money spent more effectively, and it will meet the scale of the challenges we face. Frankly, I will take no lectures from the Conservatives, who left our armed forces, in the words of their former Defence Secretary, “hollowed out”.”
“I thank my hon. Friend for bringing the story of Darren and Nicole to this House. I hope that they and their children will benefit from the change I made to the two-child limit for universal credit, as well as from the rolling out of free breakfast clubs to all primary schools, and the introduction of free school meals for all children wh…”
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“I will make some progress. For the reasons that I have given, pensioners from the National Pensioners Convention have come to Parliament today to lobby MPs to vote against the change. Let us take each issue in turn and consider who will be hit, because there has been some myth making by defenders of the granny tax about how only well-off pensioners will be affected. The truth is, those who will be hit have very modest incomes.”
“The money involved will not alleviate the pressure on women in retirement. It will all be used to give a tax cut of £40,000 to 14,000 millionaires. The hon. Lady talks about women in retirement, and it was Government Members who voted to increase the state pension age for women with just five or six years’ notice, hitting them by up to £15,000 in lost retirement income. We will not take any lectures from them about the matter.”
“I know that my hon. Friend sticks up for pensioners in his constituency, unlike Government Members, who want to grab the incomes of pensioners in their constituencies. My hon. Friend points out the evidence that we have commissioned from the House of Commons Library, which shows that a small personal or occupational pension of just £67 a week, or little more than £3,000 a year, would be enough to put someone in the firing line of the additional tax. People with such pensions are not the privileged few, living a life of luxury in retirement. The measure will hit millions of people who have worked hard in ordinary jobs and managed to set aside just enough to give them a small pension that relieves them of reliance on means-tested benefits and allows them to have some security in retirement.”
“Pensioners with modest amounts of pension saving stand to be the biggest losers.” Let us be clear that the change will hit people with small pensions who have made sacrifices to save and are now being penalised for doing the right thing.”
“If they were being taxed at 20%, that would mean tax of about £13 a week on their pension. Such pensioners will be hit hard by the changes. We know how hard it already is for many people to save enough for a modest pension, so why have the Government picked on pensioners to pay more? As the chief executive of Saga has put it: “Amid all the talk of tax cuts…the main tax-raising measure” in the Budget “consisted of a stealth tax increase on older people who did actually work and save hard for their future.” Gransnet has warned that “this tax change offers no incentive to save”, and the National Association of Pension Funds has stated that it will “come as a blow to millions of pensioners who have paid in to the tax system throughout their working lives.”
“The people who will be hit by this tax are those who have an income in retirement of between £10,500 and £25,000 a year. They will pay tax at 20% on any income over £10,500 a year. That is why 4.4 million pensioners will lose out by an average of £83 next year. People retiring next year will lose out by up to £322. That is the reality of the change that we will vote on this afternoon.”
“As the OTS has stated: “Older people can struggle to meet living costs. They are often on a fixed income once they have retired, or perhaps on a declining income in real terms where flat annuities have been purchased”.”
“I thank the hon. Gentleman. His constituents have had a hard time in the past few days. Older people will be hit by the changes to pensioners’ tax allowances, and of course the pasty industry in Cornwall and the south-west will be hit hard, so there is a double hit for his region. We need to remember the situation that most pensioners face. They do not have ways of making up for a loss of income by going out and finding work. That is what it means to be retired. They are therefore particularly vulnerable to rises in the cost of living and to unanticipated changes in their financial circumstances. The Office of Tax Simplification report notes that the current age-related allowance was “introduced to reflect potentially higher costs of living of older people.” That was why Winston Churchill introduced it in 1925.”
“It has been pretty cold in my constituency in Leeds this winter, as well. My hon. Friend is right to make that point, because people face many extra costs as they get older, such as in heating their home.”
“The winter fuel allowance has been cut; pensions have been indexed to a lower measure of inflation; the raising of the state pension age for women has been brought forward, and last year’s VAT rise has added £275 to the costs that an average pensioner couple faces. Evidence from the Institute for Fiscal Studies to the Treasury Committee confirms that, as a result of the tax and benefit changes that the Government have implemented, the incomes of pensioner households have fallen by 1.4%, and most have little prospect or opportunity of making up that loss.”
“I thank my hon. Friend for his intervention. Indeed, Citizens Advice said that the change “has to be considered in terms of the cumulative impact. Fuel prices continue to rise, and that is a key worry; 43% of the people who come to us are worried that they will not be able to meet their fuel bills. We have examples of people coming into our bureaux who do not heat their homes because they are worried about not being able to afford it... This group of people very often have to rely on their savings in order to live in their retirement, and they are getting very low interest on them.” My hon. Friends have therefore made good points, which represent their constituents’ very real concerns. Moreover, pensioners have already been hit hard by the Government.”
“We do not know what the economy will look like in three weeks, let alone in three years. The Government’s choices are making our economic prospects worse and worse. In the past year, the Office for Budget Responsibility has had to revise down its forecast for UK growth three times. It is now expected to be a third less than it was a year ago. We will publish our manifesto before the next election, but it will be very different from Government Members’ manifestos because we prioritise hard-working families, not a tax cut of £40,000 for 14,000 millionaires. That is why we will vote against the provision this evening.”
“Not many Governments would want to take credit for the fact that inflation has reached 5.3%. Pensions have had to rise by just over £5 to compensate for the increase in the cost of living for pensioners. The Government increased VAT and took no action to tackle excessive gas and electricity bills, and that is why inflation is so high for ordinary working families and pensioners.”
“That is like suggesting that if inflation was 10% and the Government had to increase pensions by £10 a week to keep pace, pensioners should celebrate and thank them. Of course they will not thank them because the increase in pensions only keeps pace with the rising cost of living. If the Government want to take credit for record high inflation, be our guest.”
“That means that annuity rates and returns on pensioners’ savings are lower than they would otherwise be.”
“No. Cuts to vital services such as the NHS and to social care and local transport also hit pensioners hard on top of the increases in VAT and the cuts to their pensions. Many of the worst cuts are still to come. Analysis of the 2010 spending review showed that, on average, pensioner couples would be hit hard by cuts to services, amounting to £1,275 a year or 6% of their household income, while single pensioners stood to lose services worth £1,300 a year or 11% of their income. As we heard from the Treasury Committee yesterday, many pensioners are also paying a price for the Government’s failure to get the economy moving because the Government are relying on the Bank of England to undertake more quantitative easing to prevent the economy from sinking deeper into recession.”
“Under the Chancellor’s latest plans, the savings credit will be abolished completely, costing more than 100,000 new pensioners as much as £897 a year: another stealth tax that the Chancellor tried to slip past pensioners; another slice taken from the constrained budgets of ordinary families.”
“I return to my earlier point: if inflation was 10% and pensioners got a £10 increase in their pension, would Government Members celebrate and say that that was huge largesse for pensioners? It is not; it just keeps pace with the cost of living. The increase in VAT, and the increases in gas and electricity prices, which the Government have done nothing to tackle, and the rise in petrol prices, mean that the cost of living for pensioners and other families has increased enormously because of the Government’s choices. There is a further hit to pensioners’ incomes, buried in the detail of the Budget documents. This year, an estimated 300,000 pensioners stand to lose their savings credit, while others stand to lose as much as £276 a year as a result of reduced rates of savings credit.”
“I thank my hon. Friend and congratulate him on hosting the National Pensioners Convention in Parliament today. It came to make the very point that my hon. Friend just made, and that pensioners made to us in the Committee Room earlier. Some Government Members would do well to listen to some of the pensioners in their constituencies. It adds insult to injury for the Prime Minister and other Government Members to tell pensioners that they should be grateful for a rise in the basic state pension that merely matches the rate of inflation. It is not a rise—it simply keeps things level. If Government Members do not know the difference, they should get out into the real world, where the costs of food and fuel are going up and it is getting harder and harder to make ends meet.”
“The idea that pensioners have been protected from the squeeze on living standards is simply not true. It is divisive and distorts reality when Government Members try to make that point, and conceals the fact that many older people are under genuine pressure. We should do what we can to help them, not see pensioners as a soft target for stealth taxes, as the Chancellor so clearly does.”
“I thank my hon. Friend for that intervention. All hon. Members know that the average rate of inflation for pensioners is often very high—higher than it is for ordinary families—because they spend more of their income on gas, electricity and food, the rates of inflation for which are going up at a higher rate.”
“My hon. Friend sticks up for pensioners in her constituency, where, as she says, there are many pressures on their costs and standard of living. In fact, the only people insulated from the Government’s unfair choices and economic failures are the wealthiest. The richest 10% of people over the age of 65 will be wholly untouched by the tax increases that we are debating. Indeed, those with incomes over £150,000, including, we might note, some members of the Cabinet, will benefit from the cut in the 50p rate of tax that we debated yesterday.”
“We know how it has shaken their confidence in the strategic genius of the Chancellor and that many of them have heard from constituents who are anxious about the impact that the measure will have and angry about how the Government have treated people who deserve better. Therefore, today, the Opposition are glad to be giving Government Members an opportunity to make amends and a chance to dissociate themselves with this disreputable raid on the incomes of older people. They have a choice. Do they stand with the millions of people who have worked hard and saved what they can? Or do they stand with the Chancellor and his friend, the Chief Secretary, who see pensioners as a soft touch ripe for a sneaky tax grab? The Opposition know whose side we are on. We are about to find out whose side Government Members are on.”
“The relevant report by the Office of Tax Simplification states clearly: “we would stress…that the Office of Tax Simplification has not reached any conclusions as to the best way forward with age-related allowances, nor have we formulated detailed recommendations”. It is all too clear why the Chancellor did not bother to wait for the final OTS report: he was not really interested in simplifying taxation for older people. Rather, his single-minded focus and overriding priority was getting his millionaires’ tax break through, and he was willing to fund it by cutting the incomes of pensioners. In conclusion, we all know what an embarrassment this Budget has become to Government Members.”
“The Institute for Fiscal Studies agrees. It says that the Chancellor “should have avoided dressing up what is clearly a tax increase as merely a simplification”. In the same letter from Age UK to the Chancellor that I have quoted, it also states: “We are concerned that you announced the change to age allowances as a way to simplify the tax system and indeed the Budget Report lists the change under…‘Simplification’... rather than under ‘Personal and Property taxes’”. The Chancellor also attempted to hide behind the Office of Tax Simplification, but its director has told the Treasury that attempts to use its recommendations as a cover for his tax grab are “not 100% accurate”.”
“Finally, it is worth recognising that the measure is not the only reason why people are so angry. It is not just the blatant unfairness that has offended people, but the way in which the change was announced. Most people believe that our older generation deserve to be treated with respect and dignity, yet this Government and the Chancellor tried to get away with going back on a previous promise by dressing up a tax grab as a “simplification”. Just one year ago, on page 35 of the 2011 Budget Red Book, people were told: “For the duration of this Parliament…the age related allowance will be over-indexed” according to “CPI and will increase by the equivalent of the…RPI”. What the Chancellor said then was clear and unmistakeable, but that is another broken promise by the Conservatives and their Liberal Democrat friends.”
“The chief executive of Saga said: “Over the next five years, pensioners with an income of between £10,500 and £24,000 will be paying an extra £3 billion in tax while richer pensioners are left unaffected.” The National Pensioners Convention, which I met earlier today, stated: “We have been inundated by pensioners who are disgusted that those on around £11,000 a year will no longer get additional reductions in their tax…whilst those earning £150,000 or more will see their tax bills reduced. This is seen by many as the last straw…Pensioners feel they are being asked to bail out the super rich…and it’s simply not fair.” Age UK, Saga, and the National Pensioners Convention have hit the nail on the head. It is just a shame that the Chancellor and the Prime Minister are so blinded by the demands of the super-rich that they fail to see it.”
“It goes to the heart of the problems that the Government face and the problem with their conception of fairness, and the callous arrogance with which they have abandoned the pretence that we are all in it together. Age UK responded to the Government’s measures by stating: “we feel it is disappointing that the Budget offered a tax break of at least £10,000 to the very wealthy while penalising many pensioners on fairly modest incomes who are already being squeezed”.”
“Does it go towards paying down the deficit? No. Does it help young people to get back to work? No. Does it help poorer pensioners? No—they have been hit too by VAT rises and service cuts. Instead, the money, which is being taken from those with pensions of just a few thousand pounds a year, is being spent on a tax cut for people for whom this tax grab would have counted as mere small change. The Government were said to have been surprised by the anger that the measure has aroused, but that again goes to show how out of touch they are with the reality faced by most people, and how far they have strayed from the values and priorities of the British people.”
“In fact, cutting tax avoidance should be part of every Budget anyway, and the money raised by measures to tackle tax avoidance in this Budget is less than the average reductions in tax avoidance achieved by Labour’s Budgets. In addition, we have since discovered that the Government’s definition of tax avoidance includes donations to UNICEF, Macmillan, the Royal National Lifeboat Institution and other charities that do fantastic work in our communities. That the Government cannot see the difference between tax avoidance and giving money to worthwhile causes again shows how out of touch they are. Meanwhile, the single biggest revenue raiser in the Budget is the measure before us. More than £3 billion over the next five years will be raised from the pockets of pensioners with modest incomes. Where does it all go to?”
“That is my principle and those are my priorities. I am sorry that Government Members do not share them. That is the second reason why the Opposition are opposing the tax increase on millions of modest-income pensioners. As my hon. Friend the Member for Pontypridd (Owen Smith) so eloquently expressed on Monday, the measure is unfair and unnecessary when the Government are spending £3 billion on a tax give-away for the richest 1%. Hon. Members will remember that, originally, the Government said that the 50p tax cut would be paid for by a mansion tax and a crackdown on tax avoidance. However, the cut costs 10 times as much as is raised by the new measure on stamp duty—the Chief Secretary’s sorry substitute for a mansion tax—and more than three times as much as is raised in the Budget by reductions in tax avoidance.”
“Winston Churchill was right in 1925 when he introduced that measure. People who are retired have fixed incomes, as a result of which there are more pressures on them and they cannot make up the additional changes. That is why the Opposition will vote against the Government’s change. We do not think it is the right priority or the right thing to do at this time, especially because the money is not being used to help young people to get back to work, to help the poorest pensioners or to help families of children who are struggling with the rise in the cost of living. Instead, the money is being used to give a tax cut of £40,000 to 14,000 millionaires. I can tell the hon. Gentleman what my principle is: we should prioritise ordinary families, ordinary pensioners and young people who are out of work, not those on multi-million pound salaries.”
“Does my hon. Friend agree that it is disappointing that hon. Members will vote on the matter today without having any idea what proportion of older people it will affect? She is correct to say that 40% of pensioners will be affected, and I am pleased that Opposition Members know their facts, unlike Government Members.”
“If the hon. Gentleman is such a strong advocate of saving, will he join me in expressing disappointment about the fact that this Government have abolished the savings gateway and the baby bond, and have watered down automatic enrolment so that it will be introduced at a later date, and for people earning higher incomes than envisaged under the last Labour Government?”
“All Members now have a chance to show where their priorities lie; are they with millionaires or with pensioners? Will Government Members listen to the leadership of their former leader, Winston Churchill, who introduced the age-related allowance in 1925, or to their current leadership, the Prime Minister and the Chancellor, who are making a tax grab on pensioners? It is up to Government Members to decide how they will vote, but pensioners up and down the country will be watching this afternoon to see where their priorities lie, because the reality is that the Government are introducing these reforms because they want to help millionaires and hurt pensioners. We will vote for amendment 65 and against clause stand part.”
“They stick up for their constituents, listen to them and understand their concerns that pensioners will lose £83 this year and those who will retire next year will lose £322, with very little notice, and that is after many other hits, including the increase in VAT, and despite the fact that pensioners face additional costs, such as heating, compared with other people, and that the Government have done so little to consult on these changes before they are introduced. The fact is that this tax raid on pensioners is being used to fund a tax cut for millionaires—a tax cut worth £40,000 for 14,000 millionaires. That shows where the priorities lie for Government Members. The priorities for Opposition Members lie with ordinary families, young people and pensioners, who are feeling the full impact of the Government’s policies.”
“If you believe what the Exchequer Secretary said, Mr Williams, you would think that pensioners would have come to Parliament today to thank the Government for everything they have done for them. The reality is that pensioners up and down the country feel seriously let down by the Government. In contrast to the out-of-touch speech we heard from the Exchequer Secretary, we have heard concerns from Opposition Members, including my hon. Friends the Members for Wirral South (Alison McGovern), for North Ayrshire and Arran (Katy Clark), for Livingston (Graeme Morrice) and for Edinburgh East (Sheila Gilmore), and we heard a contribution from the hon. Member for Banff and Buchan (Dr Whiteford).”
“Will the Chief Secretary confirm the Institute for Fiscal Studies’ numbers showing that with the changes to the personal allowance and other changes—for example, to tax credits—the average family with children will be £511 worse off from this month?”
“Figures released by the Treasury today show that of those people earning more than £10 million, 72% pay the full top rate of tax, so can the right hon. Gentleman confirm that they will be receiving on average sums amounting to tens of thousands and in some cases hundreds of thousands of pounds because of the cut in the top rate of tax?”
“Business and consumer confidence have drained away, and growth has sputtered and stalled with no net increase in our national output over the past 15 months, and with wages and incomes stagnant or falling even as the cost of food, fuel and fares rise and rise. The Office for National Statistics confirms that last year saw the sharpest annual fall in real disposable income for 35 years. The private sector has been unable to fill the gaping hole left by deep and painful public sector cuts, and as a result overall redundancies have been running at a rate of one a minute since this Government took office.”
“This Finance Bill is so flawed, so unfair and so inadequate a response to the problems now facing the country that I am surprised that the Chief Secretary does not show a little more embarrassment in presenting it to the House this afternoon. This Government are presiding over an economy beset by rising unemployment, a slump in private sector investment and billions of pounds of unplanned extra Government borrowing, yet he comes to this House with a Finance Bill that does nothing for growth, nothing to get more young people back to work and nothing to help small businesses struggling to stay afloat, and which instead asks millions of hard-pressed families and pensioners to pay more so that millionaires can pay less. It is less than two years since this Government took office, yet they have already sent our economy into reverse.”
“I believe that a temporary cut in VAT back down to 17.5% and a national insurance holiday for all small businesses taking on new workers are the way to put the economy back on track to recovery.”
“This was particularly the case because a large chunk of the fiscal consolidation in 2010 and in 2011 took the form of a VAT increase, which has a high multiplier for households.” In other words, by hitting households as hard as they did, sapping confidence and sucking demand out of the economy, the Chancellor and his ready accomplice, the Chief Secretary, have got the UK stuck in the slow lane while other key players in the global economy are overtaking us.”
“Our economic performance did not have to be this way. We need only look across the Atlantic to see the benefits of a more balanced approach to deficit reduction, with the US now enjoying steady falls in unemployment and accelerating economic growth. Let me quote the opinion of Adam Posen of the Bank of England’s Monetary Policy Committee. His forensic comparison of the US and UK experiences concluded: “Fiscal policy…played an important role as well. Cumulatively, the UK government tightened fiscal policy by 3% more than the US government did…and this had a material impact on consumption.”
“Last year the OECD warned credit rating agencies which press for rapid fiscal consolidation but “react negatively later, when consolidation leads to lower growth—which it often does.” Sure enough, Standard & Poor’s decision earlier this year to downgrade nine of the eurozone’s 17 member states was accompanied by the warning that “fiscal austerity alone risks becoming self-defeating.” The International Monetary Fund’s sharp downward revisions of its global growth forecasts—including for the UK—for 2012 was accompanied by a call to “reconsider the pace” of fiscal consolidation. Indeed, the IMF’s chief economist has said: “Substantial fiscal consolidation is needed, and debt levels must decrease. But it should be…a marathon rather than a sprint” and cited the proverb “slow and steady wins the race”.”
“The truth is that—just as we on this side of the House, along with numerous independent economists, warned—the Government’s attempts to cut too far and too fast have choked off the economic recovery, squeezing households and businesses and sending unemployment soaring, with the result that, as I said to the hon. Member for Dover (Charlie Elphicke), the Government are now forced to borrow £150 billion more than they had planned. This lesson is being learned around the world, as over-ambitious austerity plans founder.”
“This Government are borrowing an extra £150 billion because of the costs of their economic failure. The reality is that, with more people out of work and therefore claiming benefits, and with fewer businesses succeeding and paying taxes, this Government are ending up borrowing more, because their risky gamble with their economic policies has failed. Instead of continuing on the downward path begun under the previous Government, total unemployment has mounted to new highs. It is now at the highest level since 1997. Some 2.67 million people are out of work. More than 1 million young people are out of work. We have the highest level of youth unemployment on record. That is a cruel fate to be inflicting on people leaving school, college and university. Instead of going on to get a job or training, they are being left to rot on the dole queue.”
“The household consumption growth is being funded by a fall in savings every year from now until 2016 and by a rise in total personal debt of almost 50% over the next few years; it will reach a staggering total of £2.12 trillion by the end of this Parliament.”
“Ernst and Young said this morning that business spending “has picked up nicely in the US” but that UK plcs remain “extremely reluctant” to invest. It continues: “Consequently, the economy is bleeding cash into company coffers at an alarming rate…This haemorrhage is sapping the strength of the economy, keeping it on the critical list.” They are not my words, but those of the Ernst and Young ITEM club. Meanwhile, figures from the OBR reveal that the Government have increasingly become reliant on household consumption for their growth forecasts. That consumption is not being financed by growth in real disposable incomes, which, as I said, have stagnated and which the OBR confirms are set to stagnate for at least another two years.”
“Meanwhile, on any prediction, including the Government’s, we will still have at least 2 million unemployed people by the end of this Parliament. Even those figures conceal deeper failures and more disturbing trends. Some may remember the Chancellor’s promise of a new economic model for Britain, based on lower levels of borrowing, and higher levels of saving and investment. In reality, the promised renaissance of business investment has been repeatedly postponed. An 8% increase in investment was promised for 2011, but investment actually fell by 2%. A further 10% increase was predicted for this year, but an increase of less than 1% is now forecast. The role of investment in driving growth for future years has been significantly revised down, too.”