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Finance Bill

I thank the hon. Gentleman for his intervention. The current and the previous Chancellor have obviously watched the increase very carefully in recent years. If the price of crude oil was seriously to increase, and crept up towards $200 a barrel, we would need to look at the issue in its entirety. It is for all of us seriously to consider where we are going as a nation, and whether we will be held to ransom by oil producers. The Organisation of Petroleum Exporting Countries is not at present considering increasing output; if it did, the price of oil would fall, so we are, to a certain extent, being held to ransom. On the reduction in the basic rate of income tax from 22p to 20p announced in last year's Budget, and the abolition of the 10p rate, we should not forget that more than 600,000 pensioners will be lifted altogether out of paying income tax. That is a major issue for some pensioner households. Earlier, I intervened on the hon. Member for Taunton (Mr. Browne); he has not stayed around to hear the end of the story that I told him, but I am sure that he will read Hansard enthusiastically tomorrow. I told him that within two or three weeks of the Budget last year, a number of colleagues and I met the then Chancellor of the Exchequer, now the Prime Minister, to discuss various aspects of the Budget. Obviously, there was a lot that was good in it, but I took the opportunity to raise certain issues. I represent an area that is renowned, north of the border at least, for having a low-wage economy and very low household incomes. I thought that the abolition of the 10p tax rate would bring severe hardship to a number of households. In recent weeks, we have read in newspapers, seen on TV and heard on the radio that many households and individuals will be adversely affected, including women pensioners under 65, those who have retired early on the grounds of ill health, and wage-earning households where there is an income of under £18,000 and no recourse to tax credits to offset some of the loss. The tax credit system has to be improved; that may be the best way of putting it. In an intervention on my right hon. Friend the Member for West Dunbartonshire (John McFall), I made the point that far too many families have fallen foul of the system and ended up having to repay some of the tax credit that was awarded to them. Let us imagine someone on a low income, earning barely more than the national minimum wage, working hard and taking the opportunity to do a little bit of extra overtime. Months down the line, that may put their figures out of kilter, and it may mean that they receive an overpayment. In some cases, such people have unfortunately fallen foul of the tax credit system. They are then very reluctant to go back to it. That is a tragedy, because tax credits have removed so many families and children from poverty. I raised that issue with the former Chancellor shortly after the Budget statement last year, and I have also raised it twice in the past three months or so with the current Chancellor. He understood, and made it abundantly clear that he had been lobbied on the issue, particularly as regards the issue of women pensioners under the age of 65. I am somewhat perturbed by some of the stories that the press have run. As well as dealing with constituents through correspondence, I have also taken the time to pick up the phone and call them in the evening, so that I can understand what their difficulties are. I have been astounded by the number of pensioners over 65 who have believed everything that has been in the press. They have not recognised the fact that there has been an increase in their personal allowance, which will more than likely take many of them out of the tax-paying bracket. That has not been helpful. I tell my right hon. Friend the Financial Secretary to the Treasury that I suspect that in many working households, people in the low-earning bracket, who have not yet received their April salary, do not yet realise the impact that the measures may have on them. How did we get where we are? The figure of 5.3 million has been quoted regularly today, but I am not desperately concerned about the exact figure, because I come from a background where if people on low incomes are being adversely affected, we have to do something about it. Whether we are talking about 5.3 million people or a few hundred, it matters. There are people who will find it much more difficult to make their household budget meet their needs. I tell my right hon. Friend that we have a problem, and we, as a Labour Government, need to put it right. It really does not matter how we try to dress things up, or what the facts are. If a pensioner pays an extra £1 a week, or £52 a year, we may try to offset that with a winter heating allowance increase, but the reality is that that does not matter to them. All that they are concerned about is the fact that they are paying additional income tax. I am greatly concerned by the fact that our problem—I do see it as a problem—is not easily resolved; there is no quick fix. Earlier, the hon. Member for Buckingham (John Bercow) suggested that an increase in the national minimum wage would help low-wage earners. Yes, it would, but that is no good for women pensioners under 65 years of age, or anyone who has retired early on the grounds of ill health. The matter is much more complex than that. Supporting an amendment next week is not the answer, either. The question of how the situation arose is of deep concern to me. I see that the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) has left his place; I do not agree with any of the conspiracy theories that he put forward.