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Reducing Taxes

Volume 742: debated on Tuesday 19 December 2023

Thanks to the difficult decisions the Government have taken on inflation and debt, the autumn statement this year was able to deliver the biggest package of tax cuts to be scored since 1988.

I very much welcome the tax cuts recently announced by the Chancellor and hope to see more announced soon, especially a rise in the higher rate threshold. As the Conservatives look to reduce the tax burden on working people, does the Chancellor share my concern that £28 billion-a-year unfunded spending commitments would likely see taxes rise and lead to higher interest rates if Labour were ever in government?

It is not just me but Paul Johnson of the Institute for Fiscal Studies who, when talking about Labour’s plan, has said that

“additional borrowing…drives up interest rates”,

which is, of course, a back-door tax rise on families with mortgages. But as it is Christmas, perhaps I could explain it this way: if Santa borrowed £28 billion, he might have more toys to give out this year, but he would also have debt interest to pay and fewer toys to give out next year.

Record funding is going in to support the cost of childcare, to allow more parents to stay in the workforce. This is very welcome, but the tax burden on single-earner households puts the choice to be a stay-at-home parent beyond the reach of too many. Raising the youngest generation must count as a top investment, so may I ask my right hon. Friend the Chancellor what recent analysis has been undertaken on the transferable allowance? At up to £252 per annum, it is currently not designed to facilitate that choice.

I thank my hon. Friend for her question. As she knows, the marriage allowance is currently £1,260 per year, and it has been fixed at 10% of the personal allowance since it was introduced in 2015. On this side of the House, we believe it should be a woman’s choice, and we want to make that choice as real as possible for every family. For that reason, we think the best thing we can do is to bring down the taxes paid by working people to put more money into the family budget, and we were happy to make a start on that in the autumn statement.

Like many of us in this place, I am a big supporter of Small Business Saturday, and it is important to remember that small businesses are the backbone of local communities all year round. Many are unlikely to be able to take advantage of the Chancellor’s very generous and welcome expensing package, so what additional measures will he continue to consider to support all businesses great and small, including perhaps even corporation tax reductions?

I thank my right hon. Friend for her question. She will know that 70% of trading businesses only pay the lower corporation tax rate of 19%. That covers the vast majority of small businesses. I used to run my own business; I ran it for 14 years before I came into Parliament. I could not agree with her more: small businesses are the backbone of the British economy, which is why we are tackling the scourge of low payments and we rolled over the 75% discount on retail, hospitality and leisure business rates in the autumn statement.

Will the Chancellor confirm how much higher the tax burden is forecast to be at the end, compared with at the start, of this Parliament?

What I can confirm is that, as a result of the measures I took in the autumn statement, it will be lower at the end of the scorecard period than it would otherwise have been, and a lot lower than it would be under any Labour Government.

May I ask the Chancellor how many middle-income taxpayers have been paying the higher rate of tax since 2019?

I am happy to write to the hon. Gentleman with the exact numbers, but for people on low incomes—people being paid the lowest legally payable wage—their post-tax real income has gone up by 30% since 2010, because the Conservative party believes in making work pay.

Why is the fiscal situation strong enough to cut national insurance, but not strong enough to return the overseas aid budget to 0.7% of GNI?

Because the way we return the overseas aid budget to 0.7% is to grow the economy. By cutting national insurance, we put nearly 100,000 more people into the national workforce, filling nearly one in 10 vacancies in companies up and down the country.