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Economy

My Lords, I know that the noble Lord has an opportunity to make his own speech and of course, he is perfectly right—this is against the background of the global financial crisis. I am simply pointing out how this Government have turned a global financial crisis into a British financial catastrophe. We will not create growth and employment by taxing jobs with higher national insurance charges, which this Government are doing. Instead of spending the £12 billion on cutting VAT by 2.5 per cent, the Government should be cutting the cost of employment to keep people in jobs and help businesses to compete. They should not be raising the marginal rate of tax to 50 or 60 per cent for some people. We know that that will result in a reduction of revenues and a reduction in growth. It is significant that even the all-party Treasury Select Committee, dominated by the Labour Party, yesterday said: ""We believe there are considerable uncertainties over the yield to be raised by the new 50 per cent top rate of income tax"." It went on to say that, ""we were concerned that the Chancellor lacked a robust basis for selecting the threshold from which the new top rate of tax would apply and for choosing what that rate should be"." I notice that the Minister, the noble Lord, Lord Myners, was on the radio this morning discussing a report on how we could make our country more competitive, a report produced by the Chancellor’s Financial Services Competitiveness Group. There was a report in the press earlier that it was a bit miffed because it was not allowed to refer to the impact on competitiveness of the Chancellor’s increase in the top rate of marginal tax. I tried to check what was said in the report, but we discover that his department is not going to release it until after I have sat down. I am sure that that is entirely coincidental. However, how can the Minister go on radio and talk about a report, which the rest of us have had no opportunity to see? As to the 50p rate, I cannot put it better than the former Cabinet Minister Stephen Byers, speaking in the other place in last week’s Budget debate. He said: ""I believe that it should be opposed, because in the long run it will be damaging for both the Labour Party and the economy"." He went on to say that we need a tax system, ""that is not only fair, but internationally competitive and attractive"." He continued by saying that, ""the 50p-rate … has more to do with political positioning and tactical manoeuvring than a principled, strategic approach to taxation and the raising of revenue".—[Official Report, Commons, 27/4/09; col. 615.]" That is from a former Cabinet Minister. It says it all. What are we to make of a Government who make our wealth creators pay higher taxes, knowing that it will damage our economy, in order to play some political game? They are a Government who put their own interests before those of the country. They are a Government who are morally bankrupt. It is no wonder that another former Cabinet Minister, Charles Clarke, says that he is ashamed to be a Labour MP. I give way to the noble Lord.