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Budget Resolutions and Economic Situation

I of course accept what the Leader of the House has just said about the absence of the Chancellor of the Exchequer. What is slightly more surprising is the absence of any Labour Members in large numbers to defend the Budget—[Interruption.] Well, I suppose that there are some here, but not really the quality. It does not take long for this Chancellor’s Budgets to unravel, but even by his standards, this one was a record. It was presented to this House 24 hours ago as a tax-cutting Budget, but it took less than 24 minutes to work out that everything that he was giving with one hand he was taking back with the other. It is here in the Red Book—£8 billion given away by cutting the standard rate, and then £7 billion clawed back by abolishing the 10p rate, which he introduced, and £1 billion clawed back by the national insurance hike. This was not a tax cut: it was a con trick. The public have seen straight through it. The Chancellor said in his speech that he wanted"““to ensure working families are better off””.—[Official Report, 21 March 2007; Vol. 458, c. 828.]" But when the Institute for Fiscal Studies looked last night at the small print, it was clear that 3.5 million working families will be worse off as a result of this Budget. Which families? It is mainly the lowest paid. Pretty much anyone earning below £18,000 a year will see their income tax bills rise because of the abolition of the 10p rate, which more than cancels out the cut in the basic rate. That is a tax rise on the lowest paid and that lot over there cheered it. The Chancellor says, of course, ““Don’t worry, they get the money back in tax credits.”” Leave aside the sense of taking money in taxes from the wages of low-income families and then asking them to fill a form so that they can get it back, and leave aside the fact that only 60 per cent. of those eligible take up the working tax credit, because it is so complicated and poorly administered—there are still millions of low-income families who lose out. For a start, there are the ones without any children. For example, take a young couple who have not had kids yet, but are wondering how they will ever get on the housing ladder on their salaries. If they are each earning £13,000 a year, their income tax bill just got £224 higher. Then take two-earner couples on lower incomes with kids. Say one earns £7,500 part-time and the other earns £18,000 and they have one child. Even after tax credits, they will be £234 worse off—[Interruption.] Well, Labour MPs will have to put that on their leaflets at the next general election.