PMQs: Clegg tells PM - VAT cut will not benefit low earners (Batley and Spen Liberal Democrats)

PMQs: Clegg tells PM - VAT cut will not benefit low earners

November 27, 2008 4:58 PM
Originally published by UK Liberal Democrats

Liberal Democrat leader, Nick Clegg MP, has criticised the Pre-Budget Report, saying the VAT cut will not benefit hard-pressed families.

Speaking at Prime Minister's Questions, he called for genuine fairness in the tax system, tax cuts for low earners and a removal of tax loopholes.

Read the full exchange below:

Mr. Nick Clegg (Sheffield, Hallam) (LD): May I add my own expressions of sympathy and condolence to the family and friends of Marine Alexander Lucas, who tragically lost his life in Afghanistan?

As a Sheffield Member, I am sure that I speak on behalf of the whole House and everyone in Sheffield when I say how horrified we all were to hear of the terrible abuse suffered by two daughters at the hands of their own father. We hope that the victims will now have the time, the space and the privacy to rebuild their lives.

In his pre-Budget report the Chancellor mentioned fairness eight times, but, as always with this Government, it pays to read the small print. The Chancellor's VAT cut will benefit big spenders much more than it will benefit hard-pressed families. His national insurance hike will hit millions of low earners. That is not fairness; it is a betrayal. The Chancellor had the chance to make our tax system fairer. Why did he blow it?

The Prime Minister: I join the right hon. Gentleman in saying that the whole House, and indeed the whole country, will be outraged by the unspeakable events that have been reported as having happened in Sheffield and other parts of the country, and utterly appalled by the news of the systematic abuse of two sisters by their father over such a long period. A serious case review is under way. It must involve all the authorities: social services, police and health. They have been in contact with the sisters, who are rightly protected from the media for the sake of their privacy and confidentiality. People will rightly want to know how such abuse could go on for so long without the authorities and the wider public services discovering it and taking action. If there is a change to be made in the system and if the system has failed, we will change the system as a result of the inquiries.

As for fairness, we have raised the pension by £4.55, and we have raised it from January. We have raised child benefit to £20, and we have raised it from January. We have raised child credit and pension credit, and we are continuing to raise them to take pensioners and children out of poverty. The best that we can do is continue the policies that have taken children and pensioners out of poverty, and not follow the right hon. Gentleman's policy of cutting £20 billion out of the public services.

Mr. Clegg: I am grateful to the Prime Minister for what he said about the importance of the independent review asking all the questions that must be asked.

On the issue of fairness, once again we have been given a list rather than an answer, and misleading bluster rather than a real response. The Prime Minister could give permanent big, fair tax cuts to millions of ordinary British taxpayers, if only he would close huge loopholes such as the £8 billion pension tax bonus for top earners, or the way in which millionaires can still receive their capital gains while paying much lower tax rates than their cleaners pay on their wages. He could have done that. Instead, he has toyed with the hopes of the British people. Why has he let them down?

The Prime Minister: The right hon. Gentleman seems to forget that we are giving real help to families, and that we are giving that real help now. He may think that the pension is only £30, but I can tell him that we are raising the pension by a higher rate than in many years, that we are bringing that forward to January through a £60 payment, and that we are also helping children and families through this difficult time. The cut in VAT will benefit low-income families, and the right hon. Gentleman should understand that that is the case.

As for the loopholes in allowances, every year we take action on loopholes, and every year we take action when it comes to looking at where there are abuses of the system. The right hon. Gentleman should look at the proposals that have been put forward by the Chancellor, which will be debated in a few minutes. We are the party of fairness. A party proposing £20 billion of cuts is not a party of fairness.

Click here to read Prime Minister's Questions in full

Batley and Spen Liberal Democrats