HM Treasury: Supplementary Estimate, 2008-09

As Parliament debates a motion to raise £42 billion, Charles Walker voices his concerns that sooner or later the taxpayer will have to pay for it and that the burden will fall unfairly on those least able to pay.

Mr. Charles Walker (Broxbourne) (Con): Thank you, Madam Deputy Speaker, for calling me to speak in this supplementary estimate debate. I had a good crack at this subject in yesterday afternoon’s debate on the Banking Bill, so I shall keep my remarks short and concise, which I am sure will come as a great relief to you.

Mr. Graham Stuart (Beverley and Holderness) (Con)
: And as a surprise. [Laughter.]

Mr. Walker: That is very rude of my hon. Friend.

The first principle is that the Government have absolutely no money whatever. All money that the Government spend ultimately belongs to the taxpayer; after all, money is raised from the taxpayer. Today, we are looking at a further £42 billion being placed on the public sector borrowing requirement. In recent days, we have moved effortlessly from tens of billions of pounds to trillions, so £42 billion may not sound like a lot of money any more. It sounded like a lot of money three months ago, but now we are in the world of trillions of pounds. It is, however, a huge sum of money, and eventually—sooner or later—it will have to be paid back by the taxpayer.

The sum is, of course, not just the £42 billion of today; a huge amount of borrowing is currently going on outside this £42 billion. Indeed, it is highly likely that by the end of this financial year the Government will have borrowed more than £100 billion, and next year that figure may be exceeded by many tens of billions of pounds. That could mean that next year one in every five pounds spent by Government is borrowed. Clearly, that is not a sustainable position in the long term, and even in the short term it will put our public finances under huge stress for many years to come.

I have had the benefit of the good times. I am 41; I have prospered, my house prices have gone up and my assets have risen in value—admittedly, they have come down a bit in the past few months, but I will have to live with that. However, what worries me most is that this debt we are signing off today—and I am sure we will be called back on numerous occasions over the next few months to sign off even more debt—will be paid back by my children, and there is every possibility that it will be paid back by my grandchildren. Therefore, we are saddling future generations with a huge burden at a time when they themselves will probably have to start paying for things such as their own university education, long-term care and certain drugs not provided by the NHS. Let us be in no doubt, therefore, that what we are doing today will have long-term ramifications for many years and decades to come.

I want briefly to focus on the preferential shares the Government have taken in banks. The Government are charging a hefty return of 12 per cent. interest per year. We could say, “Isn’t that brilliant? The banks are getting it taken to them. They are going to get screwed down. They will have to come up with that 12 per cent. My word, they deserve it.” However, we all know that, ultimately, it is the customers of these banks who will pay the 12 per cent. People on very limited earnings will face increased bank charges, and will get letters that are even more threatening when they go into an unauthorised overdraft, and will receive phone calls saying, “Your mortgage is about to change rate, and, by the way, you were on 5.5 per cent., but you are now going to 8 per cent.” Good, profitable businesses will get phone calls saying, “By the way, we are doubling”—or even trebling—“your interest rate.” These measures will hurt immensely. All these routes lead back to the poor bloody infantry—the taxpayer. There is no free ride here; the taxpayer is funding this.

As I mentioned yesterday, my main concern is that over the next year or two taxes on the very poorest will have to increase to fund this. Our tax burden will go up across the piece, but those in the worst position to pay the increase will carry an unfair burden. There are many people who earn at or just above the minimum wage, and who do not have bank accounts, savings or mortgages. It is true that we are safeguarding the savings of those lucky enough to have them and the situation of those with mortgages, but there will be a huge transfer of wealth, in the form of taxes, from people who have none of those things. They, too, will be caught up in this terrible web of debt and payment, and that is a great shame.

Mr. Stuart
: Will my hon. Friend comment on the fact that it is the very people he is talking about—those who have not enjoyed the fruits of the Brown boom—who will pay the price? How much greater might their taxes be in future, while those of great wealth have been most protected?

Mr. Walker
: My hon. Friend makes a very good point. People on every income scale will pay more tax, but those at the very bottom are least capable of doing so. They are already living week by week, and sometimes day by day, waiting for the next pay cheque. This will be a huge burden on them, and it is a burden that all parties in this House have a duty to ease sooner rather than later.

The taxpayer will be paying more income tax, but there is also a great danger, owing to the fact that the Icelandic banks went bust, that the taxpayer will also pay more council tax. We really must wonder what the rating agencies were doing to earn their money. In Hertfordshire, £28 million of taxpayers’ money has potentially been lost as a result of the failings of the Icelandic banks, and I know that Hertfordshire took advice from rating agencies and that the agencies said, “Well, we did downgrade the Icelandic banks,” but they downgraded them from AAA ratings to AA ratings. As local authorities seek to rebuild their reserves, that will, of course, result in either work not being done in the affected counties or the tax base of council tax payers having to rise in the short to medium term. This is another way in which taxpayers will be forced to pay for regulatory failings and the failings of this Government.

Members should not be in any doubt as we sign off this £42.2 billion that a huge amount of pain is in store over the next few years for a fair number of people. I wish that was not going to be the case, but it is. Good businesses will go to the wall; families will lose their homes; men and women are going to lose their jobs. There will be a huge, and somewhat unnecessary, amount of pain.

It is hugely refreshing that we are having this debate about the Government’s record and the failings of the regulatory system and the rating agencies, because that is the very essence of democracy. I was amazed that a number of colleagues and commentators in the newspapers sneered at what went on in the House of Representatives a few weeks ago, because that was the essence of democracy, too—the Executive were being held to account. At a time when Members of Parliament are held in such low esteem, we must not let these opportunities to hold the Executive to account pass. I am therefore disappointed that so few colleagues are present to take advantage of this opportunity—and I was also disappointed that so few were present to take advantage of the opportunity afforded by yesterday’s debate on the Banking Bill.

We have heard a lot of talk about consensus politics, but I do not like consensus politics because we live in a multi-party democracy. If we want consensus politics, we should go and live in China. What we want is constructive politics, which centres on robust debate and forensic examination of what is before the House. I therefore ask for less consensus politics and more robust and constructive politics because, after all, that is why we are sent here by our constituents. We must rise to the challenge at this important moment in our history.

2.39 pm



Mr. Walker: I am grateful. I hope that the hon. Gentleman accepts that I said it was incumbent on all of us in this place to ensure that that happened.

Mr. Heath: Of course I accept that. How to structure taxes to ensure that we protect those who can least afford the stresses of the current situation will be a very important debate for us to have in the near future.

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