Graham Stuart

I thank the hon. Gentleman, and it is good of him to show that tribal loyalty. He did not criticise the OBR, but it said that it could not validate the so-called analysis. The £22 billion black hole does not exist, and it is quite clear from the OBR that that is true. Let us, however, assume that the black hole is true: I think the Government are spending £1,270 billion this year, so let us assume that, in that £1,270 billion, this gargantuan black hole of £22 billion actually has veracity, while it does not. Having gone to the lengths of forcing even someone as up front and candid as the hon. Gentleman to feel obliged under tribal Labour rules to keep backing this measure, and having established the figure, one would think that the Government would want to come forward with a tax rise, if that is what they wanted to do all along. Alternatively, to give the Government credit, perhaps they came into office and found that things were much worse than was thought to be the case beforehand, in which case they would want to come up with a rational way of raising the funds with minimum possible damage. I suggest it could be said to be a fib, but let us say there is a £22 billion black hole and they need to fill it. The Government should come forward with sensible tax plans. The Government have reneged on their pre-election promises, so why not renege on this one, and come forward with a sensible tax that does not particularly disincentivise those who are furthest from the jobs market? That is what the reduction in the NIC allowance to £5,000 does, and we know that it is particularly going to hurt people are struggling to get back into work, perhaps after a mental health episode, or perhaps because they are young and are struggling to get into the jobs market. There may be worse taxes than the way this one will work out. I think £26 billion is the headline amount that will be raised and taken out the economy, but 76% of that in year 2 or 3—whichever it is—will come out of wages. By my rough arithmetic that means about £19 billion is going to come out of pay cheques, which is the very thing the Government were trying desperately to avoid doing. This measure will take £19 billion out of pay cheques, and because of the reduction in investment, the reduction in employment and the resulting reduction in profits, it will net only £16 billion. Then the Government, having got that £16 billion, have decided to compensate the public sector, and we know about this because of the changes the OBR put out at the time of the election. It had to make a correction, because it had clearly been asked and told to allow another £800 million or £900 million for social care, recognising the issues that have been raised so powerfully by colleagues today. However, that was changed and removed, and it had to make an amendment to its response. By the time we have taken off the compensation as currently restricted to the public sector, which I think rises to about £5 billion, that takes the net receipts to £10 billion or £11 billion. That is a £26 billion hit to the economy, a reduction in investment, higher interest rates, lower growth, and £19 billion removed from working people’s pay packets—the people who Government Members believe they are on the side of—yet the measure nets only £10 billion or £11 billion to spend on public services. It is truly a ruinous approach to raising the money.