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Let’s tax bank bonuses to fund jobs for young people in Chesterfield

Toby Perkins MP has called for a tax on bank bonuses to fund jobs for young people in Chesterfield.

Under Labour’s Compulsory Jobs Guarantee, every young person out of work in our town for more than 12 months will be given a paid starter job which they will have to take up or lose their benefits.

If Labour’s Compulsory Jobs Guarantee were introduced today 150young people would benefit in Chesterfield.

Under David Cameron’s government, the number of young people aged 18-24 claiming Jobseeker’s Allowance for over a year has doubled – from 28,300 in May 2010 to 56,100 today. Since 2010 in Chesterfield the number of long-term unemployed has gone from 85to 150in 2014 a 76% rise.

Toby backs Labour's jobs guarentee with Rachel Reeves and Ed Balls

Toby backs Labour’s jobs guarentee with Rachel Reeves and Ed Balls

Toby said: “Under David Cameron’s government too many young people in Chesterfield are struggling to find work and not seeing any economic recovery at all.

“150 young people in Chesterfield would benefit from Labour’s Compulsory Jobs Guarantee if the policy were introduced today. Labour’s Compulsory Jobs Guarantee will get young people in our town off benefits and into work.”

Labour’s shadow Chancellor, Ed Balls said: “If Labour wins the next election we will get young people and the long-term unemployed in Chesterfield and Derbyshire off benefits and into work.

“After the global banking crisis and with bank bonuses soaring again this year, it’s fair to pay for our jobs plan by repeating Labour’s tax on bank bonuses. We need a recovery for the many, not just a few at the top.”

 

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Editor’s notes:

1. 

2. Compulsory Jobs Guarantee

Building on the success of the Future Jobs Fund, government will work with the private and voluntary sectors to ensure there is a paid job for 18-24 year olds claiming jobseekers allowance for 12 months or more and adults aged 25 or over on claiming jobseekers allowance for over 24 months.

The government will pay for the wage and employee’s national insurance contributions for 25 hours over six months at the national minimum wage. The government will also provide an extra £500 per employee to pay towards training and admin costs.
Participants will be required to undergo training provided by the employer as well as intensive job-search activity for a permanent opportunity at the end of the six months. Those jobseekers who refuse to take up the offer of a job would risk losing their benefits, in line with the existing sanctions regime.

Businesses bidding for funds would need to demonstrate that the jobs are additional and would not lead to someone else losing their job or having their hours reduced, in line with the process used for the Future Jobs Fund.

Based on current claimant count levels the House of Commons Library estimates the cost of the policy will be £1.9bn in the first year and £900m a year in the following years.

These costings do not include the savings to the benefits bill which we believe can be made as a result or the savings from existing government schemes which will be superseded by the Compulsory Jobs Guarantee.

3. Bank bonus tax

Labour’s tax on bank bonuses in 2010 raised £3.4bn, according to the Office for Budget Responsibility. On a cautious estimate, repeating the tax will raise £1.5bn-£2bn.

Bonuses at a number of the big banks are significantly higher this year than last year: up 10 per cent at Barclays to £2.4bn, up 8 per cent at Lloyds to £395m and up 6 per cent at HSBC to £2.3bn. RBS also announced a bonus pool of £588m this year.

Details of how the original tax on bank bonuses worked can be found here: http://webarchive.nationalarchives.gov.uk/20120207221855/http:/www.hmrc.gov.uk/pbr2009/bank-pay-tech-note.pdf The repeated tax will also include allowances paid by banks which attempt to get round the EU bonus cap.

Combined with revenues from our proposed changes to pension tax relief even the lower estimate of what the tax on bank bonuses would raise more than covers the cost of the policy in the first year.

4. Pensions tax relief

For people earning over £150,000 we will reduce the rate of pension tax relief to 20 per cent – the same rate as basic rate taxpayers. The House of Commons Library estimates this will raise £900m-£1.3bn.

Even on the lower estimate of revenues the changes to pensions tax relief will cover the costs of the Compulsory Jobs Guarantee after the first year.

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Welcome

I am Toby Perkins, Labour's Member of Parliament for Chesterfield. If you would like to get in touch with me, my office is open and can be reached by phone on 01246 386 286. I also hold regular surgeries so that constituents can meet me and I can take up their concerns. If you would like to make an appointment then please do contact my office. Thank you for visiting.

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Email: toby.perkins.mp@parliament.uk
Post: 113 Saltergate, Chesterfield, S40 1NF

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