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Budget: Cost of Changes

Volume 737: debated on Tuesday 12 June 2012


Asked by

To ask Her Majesty’s Government what is their estimate of the cost of the recent changes to the plans outlined in the Budget.

My Lords, the recent changes are expected to cost less than £150 million. That is it. I know that the noble Lord, Lord Barnett, enjoys telling the House that I have not answered his questions. I trust that, on this one occasion at least, he will accept that I have answered the Question.

Yes, the noble Lord has. It makes me wonder why on earth the Government bothered with such controversial cuts if the cost was so small. I was not allowed to use the word “U-turn” in my Question because it was deemed too political. However, if the Government are listening, as they have said they are, are they still listening to and potentially acting on the words of people such as those in the IMF who normally support the Government but have suggested that they should now boost the economy and go for growth, as well as others such as those on the Treasury Select Committee? Why will they not do that? Is there any particular reason?

My Lords, a great range of commentators, including the Governor of the Bank of England, the IMF, the OECD and so on, all believe that the Government should stick to their fiscal course, and that is precisely what we intend to do.

Does my noble friend agree that there is a source of revenue for the Government in that they can both protect and even extend the winter fuel allowance for the most vulnerable in society by asking higher rate taxpayers to pay tax on what they receive?

My Lords, what this Government have done as far as the wealthiest are concerned is to raise five times as much tax from them as the Labour Party would have done under its plans, so that the top 1% of the population of earners pay 27.7% of tax. We are very concerned to make sure that tax falls where it should: on the broadest shoulders.

My Lords, I am intrigued by the noble Lord’s estimate. Let us say that there is a £150 million cost to these changes. Can he tell the House whether that is the limit of what can be afforded? Could £151 million be afforded, or perhaps two or three times that £150 million, or maybe 10 times that £150 million? What is the limit that can be afforded?

My Lords, the recent Budget introduced £9 billion of tax changes. There were a number of measures on which we said we would consult. We consulted and made the changes that were appropriate, which added up to a total in the range of £120 million to £150 million. I can give the House the breakdown if it wants it. Those were the numbers that resulted from the changes that we believed appropriate, having listened to what people had to say to us.

My Lords, the Minister keeps saying that the Government consulted on these changes. As I recall, even 24 hours before they happened, Treasury Ministers were denying that there was any possibility of a U-turn, so please do not rewrite history.

Will the Minister clarify his answer? Are we to assume that £125 million is a small number and that all the changes are therefore no big deal or that it is a large number and that the changes are therefore of overwhelming significance? What message is he trying to give us and, for that matter, the public at large?

The message I am trying to give the House is that there were changes that we felt appropriate—on VAT on hot food, VAT on static caravans and the proposed cap on giving to charities—and that the total cost of the changes in those three areas was in the range of £120 million to £150 million a year. That is the only message that I am trying to give to the House.

My Lords, the CBI has suggested that a fund of £1 billion should be devoted to providing employment for young people. Have the Government had further time to consider this suggestion from the CBI? I hope that I have it correct.

My Lords, the CBI and other groups are continually putting forward all sorts of interesting suggestions. We consider them and respond appropriately, Budget by Budget. We are listening to them.