‘Do you think people are stupid?’ MPs challenge Sunak on income tax cut planned for election year – live | Politics

In the House of Commons Robert Courts, the transport minister, earlier answered Labour’s urgent question about P&O Ferries. In his opening statement, he echoed what Grant Shapps said about the government’s legislative plans in his letter to the company today (see 12:59 p.m.), but did not add further details. He said:

We will return to this house to announce a set of measures that will ensure that the results that P&O Ferries are seeking during this disastrous decision to pay less than minimum wage do not materialize. As a result, they will no longer have any reason not to reconsider this decision.

Louise Haighthe shadow transport secretary, questioned why the company was not already being sued and why its chief executive, Peter Hebblethwaite, had been stripped of his directorship. Courts answered:

[She’s) quite right that P&O must face the consequences for their actions. We are looking at every tool that is available to the government, we’re doing that as fast as is humanly possible.

Mel Stride (Con) is picking Sunak up on what he said about Brexit. (See 4.19pm.)

Stride refers to the chart in the OBR report. The UK has seen trade intensity fall, while other G7 countries have seen it rise again. Does that not tell you that Brexit must be the factor?

Sunak said, “Maybe that’s good.” But he says it’s too early to pass judgment. He says he looked into this a few weeks ago and thought various factors were at play.

Q: We are becoming a more closed economy because of Brexit?

Sunak says he doesn’t think it’s because of Brexit.

He says there may be other reasons why economies are becoming more closed. Due to the pandemic, countries have wanted to become less dependent on supply chains.

He says the government wants to make the economy open to trade.

And he says it would always take time for the benefits of new trading relationships to appear.

Q: So if Brexit has reduced trade, does that surprise you, as a Brexit supporter?

Sunak begs the question. He says he doesn’t have the numbers in mind. But he proposes to come back to the committee to discuss it again.

Q: Why has the intensity of our exchanges decreased so much? Is it Brexit or something else?

Sunak says it’s hard to ‘separate’ the impact of the pandemic from the impact of Brexit. He says the data is imperfect. He says it was obvious that changing trade relations with the EU was going to have an impact. But he says it will be difficult until we are “through it all” to disaggregate the various factors at play.

It should be emphasized that the Office of Budget Responsibility seems to find it possible to pass judgment on the impact of Brexit. It says:

Our forecast continues to assume that leaving the EU will cause the UK’s total imports and exports to fall by 15% from what the UK had remained a member state. This fall in the commercial intensity of British production is likely to reduce the level of potential productivity, although the magnitude of this effect is uncertain; we assume that productivity is finally 4% lower after a period of 15 years.

Kevin Hollinrake (Con) passes next.

Q: Why can’t we just keep borrowing? Interest rates are low. In this way, we could revive the economy?

Sunak said when he became chancellor, people made that argument. He disagreed and says he thinks he was exonerated. He says the government will now spend more than £80billion on interest payments. A 1% increase in interest rates can add £20bn to government costs.

Q: Why are you reducing income tax in 2024? Is it good to determine tax reductions according to the electoral cycle?

Sunak repeats his point of wanting to show the “direction of travel”. The tax cut will be granted at a time when the government is respecting its budgetary rules and when inflation should have come down. It is not uncommon for chancellors to announce things a year or more in advance.

McDonagh hit back.

Do you think people are stupid? Do you think people won’t see that?

Sunak says he thinks people will see that the government is committed to lowering taxes over time.

Siobhain McDonagh (Lab) asks Sunak if he is a “fiscal illusionist”, a term used by the Institute for Fiscal Studies to describe him.

Sunak asks McDonagh to explain himself. She argues that most people don’t win. Sunak says she didn’t acknowledge the factors that influenced her decision, such as the pandemic and the war in Ukraine.

Q: No other G7 country raises taxes. You are increasing the gap between earned and unearned income. Everyone with less than £34,000 will be worse off.

Sunak says that 70% of people will be better off now that the national insurance threshold has been increased, even taking into account that the national insurance rate has increased.

Q: People using fuel oil or LPG will not benefit from the energy cap.

Sunak accept that. But he says they will benefit from the council tax refund. And he says reducing energy bills [or loan] applies to electricity bills, not gas bills, so people in these groups benefit.

Alison Thewliss the SNP Treasury spokesman, passes next.

Q: How will reducing VAT on energy saving measures help people who cannot afford solar panels?

Sunak admits that some people cannot afford solar panels. But the government is already directly helping people make their homes more energy efficient.

Q: How will prepayment meter users qualify for the energy bill discount?

Sunak says there are mechanisms in place to ensure they get the money. He says the commercial department is leading on this.

Dan York Smithdirector of planning, strategy and budget at the Treasury, says details will be released this summer.

Q: You cannot opt ​​out of this £200 ‘discount’. So people are forced to take on more debt?

Sunak do not accept this. He says it’s not a debt. There is no interest and he will not accept someone’s credit score. He suggests that Thewliss’ language may alarm people. “To describe it as a loan is a mistake,” he says. It’s a way to spread the cost of this year’s increase.

Thewliss says the government forces people to take something it thinks is good for them.

Sunak says, instead of asking people to pay £200 this year, it allows people to pay it over five years.

He suggests that Thewliss prefers to increase borrowings. But he doesn’t think it’s responsible, he says.

Q: In what sense is the health and social contribution mortgaged?

Sunak says that the health budget takes into account this money that comes in. But it is not formally mortgaged, he confirms. He says it wouldn’t be fair for the health budget to drop if the tax brought in less money than expected.

Anthony Browne (Con) passes next.

Q: Why did you decide not to remove the tax on health care and social services?

Sunak said he thought it was right to have a dedicated funding stream for health and social services. And it’s a progressive measure, he says.

If he had given it up, most of the profits would have gone to the top 15% of taxpayers, he says.

Q: Why is it important that the national insurance threshold be at the same level as the income tax threshold?

Sunak said it was a clear commitment. He says it simplifies the system.

Q: Why has the National Crime Agency’s budget been cut by 4.5%?

Sunak says he doesn’t think he was cut. He says some agencies get more money for the application. They’re trying to figure out where it’s best spent, he says.