By next year, the personal allowance threshold will have reached £10,500. This will mean an £805 cut in income tax for the typical basic-rate taxpayer, and 3 million people being taken out of income tax altogether. Under a Conservative Government in the next Parliament, we would go further.
My hon. Friend is a champion for the hard-working people in her constituency. Not only have our personal tax cuts helped many thousands of those people, but if we go ahead with our plans to raise the personal allowance to £12,500, more than 5,500 people in Thurrock would be lifted out of income tax altogether and 58,000 of the people she represents would benefit.
Raising tax thresholds disproportionately benefits men, because many women earn so little that they do not even reach the lowest threshold. On the other hand, consumption taxes have a disproportionate effect on women who are responsible for managing the family budget. Will the Chancellor rule out any increase in VAT, in order to ensure that our tax system can be fair to both genders?
We do not need to raise VAT, because our plans are paid for by the Government living within their means. Does the hon. Lady speak for the Labour party, because she seems to be opposing the increase in the personal income tax threshold? That is a policy that has lifted many low-paid women out of income tax altogether, and I find it surprising that once again the Labour party is against the interests of hard-working people.
By raising the personal allowance, the Chancellor has pulled 3.2 million people out of tax altogether. At the same time, however, he has dragged 1.6 million people into paying the higher rate of 40p. It is the marginal rates that matter, and that is a massive disincentive to wealth creation in this country. Does he acknowledge that, as soon as the fiscal room to do so is available, it will be essential to act to take as many people as possible out of higher-rate taxation altogether?
As my hon. Friend knows, people earning up to £100,000 who are paying the higher rate have seen the benefit of the increase in the personal allowance. They have seen their income tax bills fall. He is right to say that more people have been pulled into the 40p rate, however, and that is why we are proposing to increase the threshold to £50,000. That will be in our election manifesto, and it is something that we can deliver in the next Parliament so that people on middle incomes, as well as those on lower incomes, can benefit from a tax-cutting Conservative Government.
The Chancellor did not give us the small print relating to the promises that he has just repeated: terms and conditions apply. Will he acknowledge that there is a price tag attached to those promises, and will he tell us specifically what the cost of those commitments would be?
It is around £7 billion when we add it all up. That would be paid for by lower public expenditure. These are tax cuts that are paid for. I note that that is not the approach taken by the Labour party, which would increase tax, increase borrowing and increase spending, sending the economy back into the mess that it left it in.
So we have established that this would mean £7 billion of lower public expenditure. What elements of public expenditure would be involved? Would the Chancellor cut the police again? Would he take the money from schools and hospitals? Or are we to judge him on his usual track record, which would mean that after the election he would simply add it on to VAT?
What we have seen under this Government is a party that is able to bring our public finances under control; to reduce the welfare bill; and to make sure the egregious waste in Westminster and Whitehall that took place under the previous Government no longer takes place. We will fund that by lower public expenditure, because once we get the public finances under control we are going to keep them under control.