Charles Walker calls for a fairer tax system with tax breaks spread evenly across the income groups.

4.21 pm

Mr. Charles Walker (Broxbourne) (Con): I am grateful for the opportunity to speak in this important debate. At the start of the debate, I was slightly glum, especially after the opening speech by the Secretary of State for Work and Pensions. He is actually a very nice and decent young man, and his über-partisan tone let him down somewhat. However, my mood has been immeasurably improved over the past four hours by the quality of contributions from Members on both sides of the House. I shall endeavour not to lower the tone.

My mood has been improved further by being able to welcome the Financial Secretary back to the Front Bench. I know that she has been back on the Front Bench for nine months, but this is the first chance that I have had to congratulate her on her return after a short period of retirement on the Back Benches. Clearly they did not suit her as much as the Front Bench.

I wish to put on the record the fact that I love capitalism. It is a wonderful thing. It pays for many of the things that we enjoy as a wealthy society and take for granted. My one regret is that I was not very good at being a capitalist. I wish that I had been better at it and entered this place with a deal more money that I currently have—indeed, my wife wishes that even more than I do—but my lot is not a bad one. So I am a capitalist, red in tooth and claw. But in October last year, I was pleased and proud when our shadow Chancellor, my hon. Friend the Member for Tatton (Mr. Osborne), said that as a party we would levy a small and not unreasonable tax on those people who take advantage of non-domiciled status while they live in this country.

I was genuinely delighted that the Chancellor picked up the ball and ran with it on that issue. Over the intervening six months, I have been amazed by the media reaction to those proposals. Anyone reading our media, especially the broadsheets, would think that they were read only by the 120,000 non-doms who live here, such has been the outrage of journalists at those modest proposals. Indeed, one would think that journalists in this country spent most of their time on swanky yachts and in the posh houses of Holland Park with non-doms, so vociferously have they fought the cause of that tiny minority of people. It has been fascinating how the Evening Standard—a very good newspaper—has reported breathlessly that 10 American non-doms will leave this country. Some
120,000 non-doms live in this country, of whom only 8 per cent. stay for more than seven years. I am sure that every week hundreds of non-doms leave this country and hundreds more come in again.

I do not want to attack the noble profession of estate agents, which stands somewhere above the equally noble profession of being a Member of Parliament. Again, the Standard reported that estate agents feared that the property market above £5 million might collapse because non-doms were going to leave the country. That might not be a bad thing. We need property prices to go down a bit so that people born and bred in this country have a chance to get on the property ladder. Indeed, it might mean that our home-grown millionaires would have a fighting chance to get that home in Holland Park. I do not want to attack the press; I am sure that no matter how much I attack them they will attack me far more effectively. I shall move on quickly.

As the Member of Parliament for Broxbourne, I am not overly interested in the fate of non-domiciled people living in this country. I am glad that they are here and I welcome the great contribution that they make to our economy, but I am paid to represent hard-working men and women who have the franchise to vote in this country. Indeed, I represent about 72,000 people. As a Member of Parliament in this great mother of Parliaments, I am more concerned about the 200,000 British citizens who leave this country every year than I am about the 1,000 or so non-doms who might leave when the tax changes come into force. I doubt that more than a handful will leave. The media scaremongering will prove to be just that.

I am worried about the low earners in this country and about the fact that as of 1 April or 5 April, 5 million people will start to pay quite a bit more in income tax. I am concerned that people on tax credits are still suffering huge marginal rates of taxation. Some 2.5 million people still suffer marginal rates of taxation of more than 60 per cent. I hope that I am not being partisan in mentioning that point, because it was raised eloquently by a number of Labour Members who have spoken.

I am also worried about my middle-class voters. Many feel disfranchised and many, not only in my constituency but in constituencies such as that of the hon. Member for Ealing, North (Stephen Pound), are choosing to pack their bags and leave this country. I want to know why they are leaving; I am sure that everybody in the Chamber does. Is it because they do not feel safe in their communities any more? Do they feel that they cannot access good and proper education for their children? Do they feel that they are paying too much tax? Are they afraid of increased crime levels? I am not trying to be partisan, but we need to understand what motivates the people who leave this country and to start to address their concerns.

A recent Ernst and Young report found that the middle classes’ disposable income has fallen significantly since 2003. In 2003, after taxes and bills, they had 28 per cent. of their income left to spend on the things that they like to spend it on. That figure is now 22 per cent. They are feeling squeezed. Wherever we come from, we represent the middle classes as well as those who are higher up or lower down the income scale.

I do not want to be accused of soaking the rich, but we need a tax system that is not just perceived to be fair but really is fair. We cannot have a Marie Antoinette society—a “let them eat cake” society where the rich few float above the rest of the population and the poor bloody infantry work day in, day out to make ends meet. I want taxes to be reduced—I really do—but I want to make sure that tax breaks are spread evenly across the income groups and not just focused on the very rich.

I believe in enlightened self-interest. As a moderately successful, middle-aged, middle-class man on a good income, I would like my tax burden reduced—Mrs. Walker would love my tax burden to be reduced. More important, however, I would like the tax burden reduced for the least well-off in my constituency; they really are the most deserving of a tax break.

Will non-doms flee the country in droves? I do not believe that for a minute. Research by Taxation magazine suggests that only 8 per cent. of the 120,000 non-doms in the UK remain for more than seven years, which is between 9,500 and 10,000; the rest come and go.

Large American merchant banks use things called work-force management and work-force rotation. Many bright and talented people around the world are capable of earning £3 million or £4 million a year. I wish I was one of them, but clearly I am not. After five or six years, the human resources department will say to those star foreign exchange dealers, “In a year’s time you’ll be eligible to pay a £30,000 charge, or to sign up to UK taxes or leave. Let us know what you want to do so that we can start succession planning.” That is work-force management. In essence, the £30,000 tax is voluntary; no one will have to pay it if they do not want to do so. They can choose to pay, they can choose to leave the UK and go to another part of the world or they can choose to pay UK taxes. After all, after seven years people might actually want to stay in the country and make a proper contribution to its upkeep.

It does not matter who a person is—a multibillionaire walking down Knightsbridge, Charles Walker walking down Knightsbridge or someone struggling on the minimum wage walking down Knightsbridge; if they fall to the ground with a heart attack on Knightsbridge their life will be saved in an NHS hospital staffed by NHS workers, doctors and nurses. It is incumbent on people living in the UK, benefiting from our laws and protections and all the wonderful things that go with being in our country, to make a contribution. Seven years is generous. The period could be five years, but the Government have picked seven years, which is a credit to them. I would rather people signed up to our way of life and our tax system much sooner, but seven years is not an unreasonable expectation. That is where I am coming from. If people want to live in the UK almost indefinitely, it is not unreasonable that we expect them to pay their way and £30,000 a year seems pretty generous.

As a capitalist, I am fed up with people in the media arguing that we need to be nice to risk takers because they are special masters of the universe who deserve special treatment. Over the last few months, we have discovered that those risk takers have been taking risks with our interest rates and our mortgages. When they are found out and removed from their positions, they leave with huge pay-offs, sometimes upwards of between £10 million and £20 million, or the equivalent in dollars. That is outrageous. It will bring capitalism into disrepute if failure on that scale continues to be rewarded so generously.

Thank you for your patience, Mr. Deputy Speaker.

4.34 pm

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