Sophie and Aidan were dressed in Roman togas having recently studied this period of history, and they and their classmates were in celebratory mood having just completed their SATs.

During her tour, Catherine saw pupils across all ages at work in the open-plan school, and was particularly impressed by the younger pupils’ work following a recent visit to Beamish.  Catherine also heard about the school’s special provision for children from across Newcastle with complex physical disabilities and medical conditions.

After her tour of the school, Catherine spoke with members of the School Council about her role in Parliament and how it mirrors that of the School Council in representing their fellow pupils.

Catherine said:

“Kingston Park Primary is a fantastic school, tucked away in its own little corner of Newcastle in beautiful natural surroundings. I even got to hear about the deer which lives in the school’s grounds, but sadly didn’t get to see it during my visit.

“Sophie and Aidan were so enthusiastic about their school and the work they do, and make really impressive Ambassadors.  The standard of work being undertaken during my visit was incredibly high, with each child totally immersed in and thoroughly enjoying their activities.

“It was also a real pleasure to meet with the School Council, and hear about their work – and we came up with a plan for their next campaign: better rainy day toys!”

“I was particularly keen to hear about the school’s provision for children with physical disabilities and medical conditions, and agree that they need greater support for this important work which is something I’ll be taking up following my visit.”

Headteacher Jayne De Ivey said:

‘We were pleased  that Catherine took time out of her hectic schedule to visit us today. It demonstrates not only her passion for the constituents, but  her detailed knowledge of the community.

‘We were  delighted  that Catherine recognised the outstanding practice and standards in our school which we achieve through a strong whole school ethos of ‘Together we’re better’.

The Bee Cause campaign is also helping individuals to make changes in their gardens and communities to help bees – and has seen over 2,757 different actions taken in the North East, such as planting bee-friendly seeds, signing petitions and building ‘bee hotel’s to replace lost natural habitat. A recent report by the University of Reading has identified parts of the North East as being of key importance to the Bilberry Bumblebee and highlighted the issue of habitat loss in the decline of bees across the region.

Catherine heard about this work, and pledged her support to The Bee Cause campaign, during a recent event organised in the House of Commons by Friends of the Earth. She has also previously written to the Environment Secretary urging him to back an EU-wide ban on neonicotinoid pesticides, which research by Newcastle University has recently found damage bees’ brains.

Catherine said:

“Protecting our biodiversity is absolutely critical, and bees play such a vital role in our food supply, green spaces and economy.  The decline in the bee population is therefore very disturbing, and I believe the Government should be doing everything within its power to arrest this.

“It’s really encouraging that so many people across the region are doing their bit to save bumblebees, but we really need the Government to act on this important issue.”

Catherine McKinnell (Newcastle upon Tyne North) (Lab): Without doubt, the rising cost of living, combined with stagnating—or worse, falling—income, has to be one of the biggest worries for many people up and down the country. There is little sign of light at the end of the tunnel. People rightly feel that they are working hard and putting in the hours, but they are at best standing still and some are going backwards. Others have found themselves out of work, and the little support that they get when that happens is dwindling every day.

I find my constituency surgeries ever more heart-wrenching, given the number of people coming to see me not only because they have become unemployed, which is clearly a tragedy for those affected, but because they need help with the situation that they find themselves in after that. Some might be looking for help to start up on their own but are unable to get past first base. Others might be hoping for a more reasonable approach by the jobcentre that insists they pay the £3.60 return fare to travel to town rather than go to the centre that they could walk to in an hour. They would rather do that than spend £3.60 of their dwindling weekly budget. Others may fear that they are being discriminated against because they are over 50 and, having worked all their life, now find themselves unemployed and having to compete with graduates for jobs. Others might fear bankruptcy because of the loss of their home; they have been out of work for a year and the support they have received is now drying up. Those people are the victims of this Government’s economic mismanagement.

That is why it is even more galling that the only people who seem to have been given a break by this Government are those fortunate enough to earn more than £150,000 a year. They will benefit from the 50p tax cut. They are the very last people who should be getting such a break right now.

Andrew Selous (South West Bedfordshire) (Con): Does the hon. Lady not recognise that the rich are going to pay more in tax in every single year of this Government than they did in any year under the last Labour Government?

Catherine McKinnell: That is a spurious statistic. We know that the deficit needs to be paid down, but this Government have made a choice to give a tax cut to those on the highest incomes while leaving other people to pay. It is not just me who thinks that. Conservative voters and, indeed, Conservative party members up and down the country are frustrated by the choices this Government have made.

Debbie Abrahams (Oldham East and Saddleworth) (Lab): Does my hon. Friend agree that it is an absolute disgrace that while there are commitments to fairness in the Queen’s Speech, the 40% lowest-income households will be worse off, with an average of £891 lost by each household?

Catherine McKinnell: My hon. Friend makes a powerful point. Another point to remember is the disproportionate impact that this Government’s tax and benefit changes have had on the lowest earners—and on the middle earners, too.

Let me get back to members of the Conservative party. Linda Pailing, for example, the deputy chair of Harlow Conservative party—I see the hon. Member for Harlow (Robert Halfon) in his place—put it very starkly, targeting her criticism squarely at the Prime Minister. She said:

“The national swing took us down and that is purely to do with what Cameron and his cronies are doing with the national party. The voters are disillusioned with Cameron himself. They don’t like the fact that he didn’t keep the 50p tax. This has really grated and people feel here that he is not working for them, he is working for his friends.”

I could not have put it better myself.

There could have been some acceptance of the Government’s approach—at least among their own supporters—if the 50p tax cut policy had boosted confidence and stimulated economic growth, which is the only thing that could turn the situation round for those feeling the squeeze, yet it has done precisely the opposite. The approach has not only failed to address the lack of confidence in the economy but compounded the lack of confidence in this Government. What kind of right-minded Chancellor or Prime Minister would turn a blind eye to the suffering of the vulnerable and those struggling to make ends meet, slap on a VAT hike and impose a bedroom tax, cuts to tax credits and in-work support while dishing out tax cuts to those who need them least.

Robert Halfon (Harlow) (Con): Will the hon. Lady acknowledge that this Government have taken 3,000 low- income people in Harlow out of tax altogether and cut taxes for 40,000 low-income Harlow residents? Why did she and her party vote against those tax cuts for lower earners?

Catherine McKinnell: I anticipated Members raising the issue of personal allowances, but the fact is that the Institute for Fiscal Studies has clearly shown that the overall impact of the Government’s changes to tax, credits and benefits has left the very people for whom the change to personal allowances was supposed to help worse off. People will be worse off under this Government in 2015, too.

Then comes the ultimate betrayer of the Government’s true intentions. First, someone claims Britons have never had it so good, completely downplaying the impact of the recession on those hard hit. Then, after resigning on the back of it, this person is reinstated and can now be heard extolling the virtues of starting a business in a recession on the basis that

“labour can be cheaper and higher quality, meaning that return on investment can be greater”.

I was both alarmed and enlightened to read the report in The Daily Telegraph of a leaked discussion between pollsters and the Government’s key advisers. When asked what kept them awake at night, those advisers replied “Nothing” at first, and then admitted that it was their kids’ school fees that bothered them most. If that is the main issue affecting the lives of the Government’s key advisers, that is quite indicative. Lord Young’s comments, cited above, are quite startling, showing him to be revelling in the strain that the jobs and wages squeeze is putting on people’s finances. There are 2.5 million people out of work at the moment, and nearly 1 million young people out of work, with 500,000 out of work for two years or more. That is the highest number since the end of the last Tory Government in May 1997. Since 2010, the number of unemployed people has risen. Lord Young should reflect more on that.

DaveAnderson (Blaydon) (Lab): Will my hon. Friend give way?

Catherine McKinnell: I am afraid that I cannot. If I do, I will run out of time.

Living standards have come under increasing pressure. Average earnings are rising at the lowest rate since the end of 2009. More worryingly, according to recent analysis of figures from the Office for Budget Responsibility by the Resolution Foundation, that squeeze on average incomes is set to continue for many years. The foundation estimates that, given the OBR’s projections, the gap between what people earn and what they would have been earning had their wages risen in line with inflation will have risen to £3,200 by 2017.

The squeeze on living standards has had a disproportionate impact in my region in the north-east. Analysis carried out recently by the northern branch of the TUC drew attention to the pay gap in the north-east in particular. It showed that since 2010, real wages had fallen by £23 per week and £1,196 per year in 10 out of 12 north-east local authority areas, and that the north-east is the poorest region in United Kingdom. Some households have been squeezed by £4,000 more than was the case a year ago, given wage freezes, below-inflation pay rises and public sector job losses throughout the region.

What hope did the Queen’s Speech offer to the millions of people across the country who have been affected by the Government’s policies? We needed a Queen’s Speech that would create jobs and growth and give people enough confidence in the economy to invest, but the Government offered nothing. The British people deserve more.

 Further details of RCN Northern’s analysis are available here: http://www.rcn.org.uk/__data/assets/pdf_file/0006/521592/RCN_Northern_Region_criticizes_Government.pdf

 Catherine said:

 “It is absolutely disgraceful that the Government’s new funding formula means that public health funding allocations are now skewed towards areas which have far fewer health issues.

 “The North East has a number of well-documented health inequalities, such as higher cancer and cardiac disease rates and higher levels of smoking, drinking and obesity.

 “Yet, time and again, the Coalition is taking away funding from the areas that need it the most and spending it elsewhere.  Areas such as Chelsea – with male life expectancy of 86 – are receiving £133 per head this year, whilst Newcastle is receiving just £74 per head, despite some of the poorest areas of the city having a life expectancy as low as 69.”

 “This comes on top of their complete failure to act on key public health issues, such as minimum alcohol pricing and plain cigarette packaging.”

After a tour of the school with headteacher, Mrs Jennifer Gill, Catherine attended the school’s special assembly to present pupils with awards for behaviour, achievements in their work and for walking to school.  

Catherine was then grilled by the children about her work – with questions on how she got elected to Parliament, what inspired her to become an MP, how she works with local charities, and how her life changed after being elected in 2010. The pupils also asked her about different policy issues, including what further measures could be introduced by the Government to reduce smoking.

Catherine said:

“It was such a pleasure to visit St George’s, which is such a warm and friendly school and a beautiful learning environment.   The children are a credit to the school and teachers, and it was a real privilege to be able to present their awards, in which they clearly took immense pride.

“I was so impressed by the pupils’ knowledge of politics and Parliament, and the interest they take in the world around them. I’m quite sure there are a number of budding politicians at the school who might be keeping me on my toes in a few years time!”

Headteacher Jennifer Gill said:

“After having a tour of the Houses of Parliament last year, the children enjoyed the opportunity to meet Catherine and find out firsthand what the job of an MP entails. Our children take a keen interest in local and global issues and how they can contribute to their own community. I am sure that Catherine’s visit will inspire them to continue working together to make a positive difference on the issues that matter to them.”

Action on Stroke Month helps to raise awareness of stroke and lets stroke survivors and families know that support is available, with over 150 awareness, information and fundraising events taking place across the UK during May. In Newcastle, a Health, Wellbeing and Fitness Event is taking place in the Grainger Market on 2^nd and 3^rd May from10am-4pm.

A stroke is a brain attack which happens when the blood supply to the brain is cut off, caused by a clot or bleeding in the brain.  Around 150,000 people have a stroke in the UK every year and it is the leading cause of severe adult disability.

Catherine, who recently met with stroke survivors during a visit to the North East Trust for Aphasia at Newcastle University, said:

“Thousands of people across Newcastle are affected by stroke, and it’s so important that people are aware of the signs and symptoms of a stroke and that this can affect people of all ages. But it’s equally important that people know there is life after stroke, and a range of support available for survivors, their families and carers.

“I would strongly urge my constituents to go along to the awareness events in Newcastle this week, or to get in touch with the Stroke Helpline on 0303 3033 100 to find out more.”

Organised by the Human Trafficking Foundation, the exhibition was built by students from the Central St Martin’s College of Art in London, and depicts the different kinds of slavery hidden away in our society. Curtains, doors, drawers and tea chests concealed the stories and photographs of victims.

Survivors who attended the exhibition included a Romanian girl sold by her mother into prostitution in Birmingham when she was 16 and who narrowly escaped being snatched from her local authority care home by her traffickers.  There was also a man, duped by a job advertised in Hungary, and on arrival here forced to work without pay, compelled to open a credit card account operated by his slave master, and forced to claim benefits for non-existent children.  Other examples of modern day slavery include victims forced into a life of domestic servitude or people trafficked into the country and then forced to commit criminal offences, such as cannabis farming.  

No one knows the exact number of people affected, but the Serious Organised Crime Agency states that at least 2,000 victims are found in this country each year.  However, this figure is thought to be the tip of the iceberg and that, for every victim found, another ten remain hidden. 

The Human Trafficking Foundation believes that there are up to 20,000 slaves in the cities, towns and villages of the UK. Of the victims that have come to light, around 3% are known to be in the North East.

Catherine, who has previously campaigned for increased prosecutions against human traffickers and better protection and support for child victims, said:

“I was appalled to learn that even my constituency is affected by modern day slavery and that there will undoubtedly be deeply traumatised people who have been trafficked to the UK and abused living in my area.

“As a result of what I’ve seen today, I want to ensure that everyone in Newcastle  is more alert to the signs of modern day slavery.  I hope students in schools, public service workers, the police, as well as those in private business will join me in this task.  I will also continue to call on Ministers to put tackling this issue at the top of the political agenda.”

Anthony Steen, Chairman of the Human Trafficking Foundation said:

“What is amazing is that trafficked children, unlike adults, are offered no special care in spite of what they have been through.  They have no safe haven since in local authority care hundreds of trafficked children go missing each year.

Part of her regular series of coffee mornings around the constituency, this event will take place at the Church of the Holy Spirit on Dunblane Crescent in West Denton from 10.30am to 12noon.

Catherine said:

“I am looking forward to meeting with any Newcastle North constituent at the coffee morning on Saturday, whether they have a particular issue they want to raise with me, or they just want to drop by for a cuppa and a chat.”

Alternatively, Catherine and her constituency-based team will be happy to help residents of Newcastle North at any time – they should email catherine.mckinnell.mp@parliament.uk or telephone 0191 229 0352.

Catherine McKinnell: It is a pleasure, Ms Primarolo, to serve under your chairmanship this morning. I shall speak to the Opposition amendment to clause 1 and about clause 16, which relate to income tax rates and reliefs.

The Opposition believe that politics is about priorities—about providing support to those who need it most, rather than to those with the broadest shoulders. This has never been more the case than in the country’s current economic climate—a parlous economic climate which, let us remind ourselves, has seen just 0.8% growth since autumn 2010, compared with the 5.3% that was forecast at the time. The economy continues to stagnate under this Government, leading to the independent Office for Budget Responsibility halving its predictions for 2013 and anticipating growth of only 0.6% this year, compared with the 1.2% forecast just four months ago.

We have surely now reached the stage where we must ask ourselves what further evidence the Chancellor needs before he accepts that his economic plan is catastrophically failing. Once again, I note the lack of Conservative Members on the Government Benches. Perhaps Back Benchers are demonstrating their lack of confidence in the Chancellor’s plan which, I am sure they would agree, is far from acceptable.

The latest criticism of this failure came on Tuesday, with the International Monetary Fund downgrading its forecast for UK economic growth to 0.7%, in contrast to its view a month ago, when the IMF said that growth of 1% could be expected. Having subjected the UK to the biggest downgrade of any developed country for 2013 and 2014, the IMF commented:

“In the United Kingdom, the recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation.”

It went on to say:

“Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand”.

In simple terms, it is time for plan B.

Alex Cunningham (Stockton North) (Lab): I am grateful to my hon. Friend and fellow north-east MP for giving way. Does she share my view that yesterday’s unemployment figures showing an increase of 70,000 were disgraceful? The north-east of England has suffered a disproportionate increase in unemployment, and 12,000 of those 70,000 are from the region that she and I both represent. Does she agree that this is further evidence of the need for change, particularly in regions such as the one we share?

Catherine McKinnell: I very much share the deep concern expressed by my hon. Friend about the figures published yesterday. I hope the Chancellor will start to pay attention to the effect that his economic plan is having on people throughout the country but, I agree, particularly in the north-east, where unemployment is above 10%, which is a shocking figure and spells deep trouble for the long-term entrenchment of unemployment. I will come to that shortly.

As we have heard so often from this out-of-touch Chancellor, he is not for turning, despite the fact that the consequence of his economic failure means that Government borrowing is rising, not falling, with the Tory-led coalition set to borrow £245 billon more than it forecast in autumn 2010. His promise to balance the books by 2015 will not be met and the national debt will not fall until 2017-18 at the earliest. Who knows how many times that will need to be pushed back before the Chancellor realises that his plan is not working?

Of course, that dire situation has led to the downgrading of Britain’s triple A rating by Moody’s and the more recent decision by Fitch to place the UK on rating watch negative, both of which had been prized by the Chancellor and used as cover for the austerity measures he introduced back in 2010.

At a time when living standards are being squeezed, average earnings are rising at their lowest rate since the end of 2009, Government borrowing is up, growth forecasts have been downgraded again, the public services on which people rely are being cut or threatened up and down the country, and ordinary people are being asked to pay the price for the Chancellor’s economic failure, what we needed was a Budget that was on the side of ordinary, hard-working people and families, increasing numbers of whom are clearly struggling to make ends meet.

As my hon. Friend the Member for Stockton North (Alex Cunningham) noted, unemployment is rising again. What we needed was a Budget that would back Labour’s jobs guarantee, using money raised from the tax on bank bonuses to fund a guaranteed job—a real job—for every young person who has been out of work for a year or more. I am not sure whether Government Members have had a chance to analyse the long-term unemployment figures published yesterday, but I can tell them that in March this year 167,345 adults over the age of 25 had been claiming jobseeker’s allowance for more than 24 months. Let me repeat that figure: 167,345 adults had been out of work for more than two years, compared with 84,765 in February 2012 and 52,895 in February 2011. That is a disturbing rise of 97% since February 2012 and 216% since February 2011.

Targeted and urgent action is required if the unemployment situation is not to become dangerously entrenched. We believe that it is a totally unacceptable state of affairs and that action is needed now to stop people being put on the scrap heap and left there, as they were under the previous Conservative Government—and, of course, so that we do not continue building up long-term costs for the taxpayer.

What we needed from the Budget was a reversal of the Government’s decision to stop tax relief on pension contributions for people earning over £150,000 being limited to 20% to fund Labour’s compulsory jobs guarantee for long-term unemployed adults.

Stephen Williams (Bristol West) (LD): Perhaps the hon. Lady will remind us of the maximum amount of pension relief an individual could get right up to April 2010, or perhaps a little later. In case she does not know, someone could put just over a quarter of a million pounds a year into their pension fund and get higher-rate tax relief, including at 50%. This Government have lowered that figure to £40,000.

Catherine McKinnell: I said that the Budget needed to be about priorities and that we need to look now at how to help people struggling on the lowest incomes and ensure that those with the broadest shoulders bear the greatest burden. In government, Labour took steps to ensure that its pension reliefs were fair to those at the bottom as well as those at the top. This Government have reversed that decision to limit the relief to 20%, and we have seen the result: the impact across the board is being unfairly borne by those at the bottom. When times are as tough as they are now, it cannot be right to subsidise the pension contributions of the top 2% of earners at more than double the rate for people on average incomes who pay the basic rate of tax. However, the Conservatives and Liberal Democrats clearly believe that the time is right to prioritise those earning more than £150,000.

What we got in this year’s Budget, and in the very first clause of the Finance Bill, is the coalition’s unjustifiable and grossly unfair decision to reduce the top rate of income tax from 50p to 45p, a cut that benefits just 267,000 people earning more than £150,000, 13,000 of whom are lucky enough to earn more than £1 million. Indeed, those lucky few are receiving an average tax cut of a whopping £107,000 according to HMRC figures. Who wants to bung a millionaire indeed?

I have no doubt that at this juncture Liberal Democrat Members will want to trumpet the increase in the personal allowance—to pipe up and explain that they are not prioritising the richest in society over those who genuinely need support, but unfortunately for them the facts state otherwise. Let us remind ourselves of the analysis of figures published by the independent Institute for Fiscal Studies. It shows that taking into account all the changes to tax credits and benefits introduced since 2010, households in the UK will, on average, be a staggering £891, or £17 a week, worse off this financial year.

Stephen Williams indicated dissent.

Catherine McKinnell: The hon. Gentleman is chuntering from a sedentary position. Does he wish to intervene?

Stephen Williams: If you are going to quote from independent reports, you should not quote—

The Second Deputy Chairman of Ways and Means (Dawn Primarolo): Order. I am not quoting anything.

Stephen Williams: The hon. Lady should not quote from reports selectively. Perhaps she should go on to say that the Institute for Fiscal Studies says that the top decile of income earners has been hit hardest by the combination of Government tax changes.

Catherine McKinnell: I suggest that the hon. Gentleman is quoting selectively in leaving out the fact that the greatest impact is on the bottom decile of earners. When you take the cuts and changes overall, those at the bottom bear the greatest proportional brunt.

Debbie Abrahams (Oldham East and Saddleworth) (Lab): I want to support what my hon. Friend has said. The Chancellor’s own distributional analysis shows that the cumulative impact of tax, tax credit and benefit measures mean net reductions in income for the poorest 4% of households. That is not selective analysis—your own Chancellor’s analysis shows that 40% of the poorest households will be affected.

Catherine McKinnell: It is the hon. Gentleman’s own Chancellor who is quoting selectively from the figures. I thank my hon. Friend for that intervention.

The facts are clear, and beyond the facts is the reality facing households up and down the country. We see people from those households coming into our constituency surgeries week in, week out. We hear stories every day from families who are clearly struggling to make ends meet.

The reality of the Chancellor’s failing plan is bearing out, not just in the statistics but in the reality of people’s day-to-day lives. The cuts to tax credits and child benefit, the granny tax, the mummy tax, the appalling bedroom tax and the huge hike in VAT, which disproportionately impacts on the poorest, hugely outweigh any small benefit from the rise in the personal allowance.

Yasmin Qureshi (Bolton South East) (Lab): My hon. Friend is making an excellent case about all the various cuts and how they are hitting the most vulnerable in our society. Do you think that the Government should be shedding tears for all those people who will be suffering from all the cuts?

The Second Deputy Chairman: Order. May I remind hon. Members that they are not asking the Chair of this Committee to answer questions or accusing the Chair of anything? The use of the word “you” addresses the Chair directly. It would be good practice to refer to “hon. Members” or “my hon. Friend” rather than using the word “you”, which makes things difficult.

Catherine McKinnell: Even some mild empathy from the Chancellor for those bearing the brunt of his catastrophically failing economic plan would be welcome to people up and down the country, who feel that he is extremely out of touch with the reality that they face.

To put the issue into context for Government Members, who have willingly voted through this year’s changes, I should say that a two-earner couple with children are losing on average £1,869. The average single parent in work will lose £1,226. A two-earner couple with no children will be £672 worse off, while a one-earner family with children will lose an average of £4,000 in 2013-14. Even worse, this is happening at the same time as 13,000 millionaires are getting a tax cut from this Government worth an average of £107,000. Worst of all, but not surprising given this Government’s shocking attitude towards women, is research showing that 94% of the cuts to household budgets will directly hit women, while 85% of those on incomes over £150,000—so 85% of those who are benefiting from the Government’s tax cut—are men.

That sums up the coalition’s warped sense of priorities in a nutshell—looking after those at the very top while making everybody else pay the price for its economic failure. It is made all the more galling by the Chancellor’s previous promise that we are “all in this together”—although, admittedly, it is a phrase that we hear uttered from his lips a lot less these days. The Government may believe that the way to motivate people on low incomes is to pay them less and the way to motivate those on high incomes is to pay them more, but we think that that approach is misguided, at best. In these challenging economic times, our focus should be placed firmly on those who need our support the most. Our amendment therefore calls on the Government to look again at their decision to cut the top rate of income tax. We believe that that decision by the Conservatives and Liberal Democrats is completely indefensible, and that it is the wrong priority at the worst possible time.

In order for the Chancellor to make a properly informed decision on this vital issue next year, we need a proper assessment of the impact of the cut, as well as an analysis of how much the Treasury would gain if the additional rate were returned to 50% in 2014-15. The Chancellor, who claims to find tax avoidance “morally repugnant”, announced his millionaires’ tax cut in Budget 2012 on the grounds that the behavioural response to the 50p rate introduced by Labour was larger than expected. In other words, because some wealthy people found neat ways to avoid paying the top rate, the Chancellor has, in effect, rewarded them with a tax cut. It would be interesting to see his assessment of the behavioural response to his announcement in view of the extensive media coverage of bankers deferring their bonuses until this financial year in order to gain from the lower top rate, but given his apparent continued determination to fight European plans to cut bankers’ bonuses, I will not hold my breath.

Mr Robin Walker (Worcester) (Con): The hon. Lady is asking for an analysis of what the change in tax rate would do to the Government’s revenues. That is exactly what the previous Labour Government failed to deliver when they made their change. Does she not regret the fact that the Labour Government, in their 13 years in power, continued to levy a top rate of 40% and then made their change to the top rate so late in the day that it failed to raise any additional revenue either under their Government or, because they had not undertaken such a behavioural study of what might happen, under the Government who followed?

Catherine McKinnell: I do not follow the hon. Gentleman’s logic that that justifies a non-assessment at this stage. He knows very well that there has been a huge intake from the 50p tax rate which this Government fail to acknowledge. He also knows that we suffered a catastrophic international financial crisis in 2008 to which the Labour Government responded by ensuring that those who could bear it most would take the highest burden, therefore introducing the 50p tax rate. This Government took the first opportunity to abolish it, without even allowing enough time for proper analysis of its effect to take place.

The Exchequer Secretary to the Treasury (Mr David Gauke): The hon. Lady says that there was a huge intake from the 50p rate of income tax. What is her evidence for that?

Catherine McKinnell: HMRC’s report, “The Exchequer effect of the 50 per cent additional rate of income tax”, but I will go into that in more detail in due course.

The Prime Minister went on record and said in this Chamber that the 50p tax rate was cut because it did not raise any money—the Minister seems to have just made the same assertion—but page 39 of HMRC’s report makes it clear that it resulted in a yield of about £1.1 billion, which is hardly a sum to ignore in these straitened financial times. However, what stands out most from HMRC’s assessment—this point was also raised when we debated last year’s Finance Bill—is the number of times that the words “uncertain” and “uncertainty” appear; I nearly lost count, but it is a staggering 30 times. The Chancellor decided to give a tax cut to his millionaire pals before we had a clear picture of the impact of the 50p rate.

That is not just the view of the Opposition. Robert Chote, chairman of the Office for Budget Responsibility, stated:

“This is a judgement based on not even a full year’s data, based in terms of how people have responded to the 50p rate, in particular in terms of those self assessment tax-payers.”

The Institute for Fiscal Studies said:

“By giving out £3 billion to well-off people who pay 50p tax…the Government is banking on a very, very uncertain amount of people changing their behaviour and paying more tax as a result of the fact that you’re taxing them…There is a lot of uncertainty, a lot of risk on this estimate.”

In its report on the 2012 Budget, the Treasury Committee concluded:

“The costs and benefits of reducing the additional tax rate to 45p are both highly uncertain, and could be significantly more or less than the cost included in the Budget. We recommend that HMRC publish in due course a comprehensive assessment of the effect on the Exchequer of the new 45p rate.”

We agree. We need a full and proper assessment of what effect the top rate tax cut has had on tax receipts and we need to be sure that the Government continue to estimate what the gain would be if the additional rate were returned to 50%. We need, as the IFS has previously suggested, to get a clear understanding of whether the short-run response to this tax cut has been symmetric to the introduction of the 50p rate. Will people continue to use the avoidance techniques that the Government clearly believe they employed to avoid the 50p rate, or will some or all of that activity come to an end as a result of the new 45p rate? The Government should commit to our amendment’s request for such a review, if they genuinely seek to maximise revenue to the Exchequer and not to give a tax break to their millionaire friends.

Stewart Hosie (Dundee East) (SNP): The hon. Lady is making a good case, particularly on the uncertainty about the reduced revenue yield, but even if the Government and the Red Book are correct and the loss of yield will be only £540 million over the next five years, I am sure she will agree that if £540 million is going spare it would be better to invest it in productive capacity for the future, rather than simply give it away in a tax cut that proves that we are not all in this together.

Catherine McKinnell: The hon. Gentleman makes an extremely strong point, and one that I have made repeatedly. This might seem like small change to the Chancellor, but it could make a very big difference to some of the people affected by his failing economic plan.

I am sure, given the concerns recently expressed by apparently senior Liberal Democrats, that Lib Dem Members will join us in calling for a commitment from their Conservative colleagues in the Government. Indeed, only last month a member of the Liberal Democrat tax working group stated:

“While the Treasury’s own figures about the 50p are highly questionable, the politics of cutting tax for the very rich make no sense; there is no reason why a 50p rate shouldn’t be part of a solution for tough times.”

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): I agree with many of the hon. Lady’s points. Plaid Cymru will fight the next Westminster election on a pledge to reintroduce the 50p rate. Will the Labour party do the same?

Catherine McKinnell: We have made it perfectly clear from day one that we do not support the cut to the 50p rate now, and we call on the Government to analyse the impact of the introduction and premature removal of the 50p rate. When we come to publish our next manifesto, we will review the state of the economy and whether a 50p rate would be the right response. I hope that Members of other Opposition parties, as well as Liberal Democrats, will support our amendment, because it would help to establish whether the 50p rate would bring in the additional Exchequer revenue that was anticipated—but if the Government refuse to back it today, we will never know.

The President of the Liberal Democrats, the hon. Member for Westmorland and Lonsdale (Tim Farron), said:

“Cutting the top rate was a stupid thing to do. It probably raised up to £3bn a year. We should pledge to restore the 50p rate at the next election. It’s not enough to be fair, you have to be seen to be fair.”

Their current, or former, Treasury spokesman—I can never work out which he is—Lord Oakeshott—

Stephen Williams: He’s never been Treasury spokesman.

Catherine McKinnell: Okay. I am pleased that that has been clarified for the record. Other hon. Members will feel the same.

Lord Oakeshott said:

“In such hard times, we should never have rolled over when the Tories wanted to cut the 50p rate unless we got a mansion tax in return. At the next election, both the mansion tax and a 50p rate should be at the forefront of Lib Dem tax policy.”

I have news for him. Liberal Democrats have had the opportunity to vote for the mansion tax, and today they have the chance to vote for their 50p rate. They do not need to wait for the next manifesto. They can make it happen today. Lord Oakeshott’s is an interesting view, however, given the Liberal Democrats’ decision to vote against their own mansion tax policy twice in as many months. I would join him, however, in urging his party colleagues not to roll over for the Tories on this issue, but to support our amendment.

We are obviously disappointed that our amendment to clause 16 was not selected for debate. The clause introduces schedule 3, which provides for the cap on 11 named income tax reliefs for amounts greater than £50,000 or 25% of an individual’s income. This policy was first announced in 2012. Like many others, the Opposition are pleased that this provision no longer includes the original proposal to limit tax relief on charitable giving. In one of the several U-turns on last year’s omnishambles, the Chancellor was forced to back down on this ill-thought-through policy, which threatened the charitable sector with a cut of up to £500 million in income per year. A powerful campaign backed by more than 1,000 charities was given the very simple title, “Give it Back, George.”

Several concerns about clause 16 remain, however, particularly about its potential impact on entrepreneurialism and small businesses. The Association of Accounting Technicians believes that the restriction of small reliefs on losses runs counter to the Government’s apparent commitment to encourage new business start-ups. It stated:

“In the current economic climate, start-up businesses are likely to operate at a loss in their early years, therefore our view is that an imposition of an arbitrary cap will be a further obstacle to entrepreneurship… Furthermore, existing legislation already prohibits relief for ‘artificial losses’”.

That means that any genuine losses sustained in starting or developing a business should be relievable, in accordance with existing legislation, in a way that enables the entrepreneur to recover tax previously suffered as quickly as possible in order to help to fund their new venture.

The Chartered Institute of Taxation shares similar concerns, describing the cap as a “blunt instrument” that could have an

“adverse effect on genuine businesses and the UK economy”

and saying that

“it gives the wrong message to entrepreneurs thinking of setting up a business. The net effect could be to reduce the tax take rather than increase it.”

It has drawn particular attention to concerns that the cap will catch owners of genuine commercial businesses who happen to incur a loss, instead of a profit—for example, where a new business is being established; where a business is weathering economic conditions and concentrating on simply surviving until the climate has improved; and where there has been an exceptional level of business expenditure, such as on the purchase of a major item of machinery or the recruitment of additional staff in anticipation of expansion.

The Institute of Chartered Accountants in England and Wales has said that the measure

“will hit small businesses by restricting loss relief for commercial losses. The measure will reduce cashflow, hamper business growth and could lead to small businesses that are experiencing difficulty in the current economic climate going bust”.

Surely even this Government would not want that outcome as a result of a Budget measure. I would therefore greatly welcome hearing from the Minister that the Chancellor might just be for turning on this issue.

At a joint meeting this week of the All Party Parliamentary Groups on Smoking and Health and on Heart Disease, also attended by North East campaign group Fresh, Catherine heard about the successful introduction of plain tobacco packaging in Australia.

Exactly one year ago, the Government launched a public consultation on introducing plain packaging in this country. Despite the consultation closing on 10^th August 2012, Ministers are still to issue a response.  And since the consultation was launched, figures calculated by Cancer Research UK suggest that more than 200,000 children have taken up smoking across the country – or around 1,076 in Newcastle, which is equivalent to almost 21 every week.

As well as attending the meeting in Parliament, Catherine also used Health Questions in the Commons this week to express her concerns on the issue – telling Ministers:

“This decision is taking too long, and those who care about the impact of smoking on children are at a loss to understand why. Given the U-turn on minimum alcohol pricing, the delaying of the sexual health strategy and, now, the stalling on standardised packaging. I must ask whether the Government have simply given up on public health.”  

Speaking later, Catherine said:

“It is absolutely appalling that so many children in Newcastle and across the country are being tempted in to taking up smoking every day.  Cigarette packs are deliberately designed to make smoking look attractive, but the reality is a lifetime of addition, illness and premature death.

“The last Government made great strides on this issue, with the ending of most forms of tobacco advertising back in 2003, a ban on sports sponsorship In 2005 and of course the ban on smoking in public places in 2007.

“There is no reason for the Government to continue prevaricating on plain packaging, and they should finally commit to implementing this life-saving measure without delay.”