18:51 - The House divided: - Ayes: 229 / Noes: 305 - Question accordingly negatived.
James Murray
Thank you, Mr Deputy Speaker, for the opportunity to set out the details of the kind of long-term workforce plan that we believe the NHS needs.
The NHS is one of the great challenges we face, but we know another challenge that parents and children across the country face: the desperate need for a modern childcare system. We need a system that supports families from the end of parental leave to the end of primary school, as the shadow Education Secretary, my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), has set out. As the first step in this landmark shift, we would use revenue from abolishing non-dom tax status to guarantee breakfast clubs for every primary age child in England. Too many families cannot afford the clubs before school that boost children’s learning and development and help parents to go to work. Labour’s plan would save families money as well as help parents to work the jobs and hours they choose.
Our plan to abolish non-dom status, replace it with a modern system and use the money raised to strengthen the NHS, childcare and the economy should be a no-brainer. Yet the Conservatives refuse to do it. We want to know why. This is not the first time I have asked Ministers to explain their position. In the last few months of last year, I asked Treasury Ministers five times to explain why the Government have been so reluctant to abolish this outdated tax loophole. I asked Ministers five times whether the Chancellor considered abolishing non-dom tax status, whether the Prime Minister was consulted about doing so and whether, when the current Prime Minister was Chancellor, he recused himself from discussions on the matter.
Five times I asked those questions; five times the Ministers refused to answer or even acknowledge them. Instead, Ministers have been determined to defend non-dom status. I suspect we will hear some of those same defences today. If previous debates are any guide, the Minister may well repeat her line that we should be grateful to non-doms for paying £7.9 billion in UK taxes last year.
The Financial Secretary to the Treasury (Victoria Atkins)
On a point of order, Mr Deputy Speaker. If I am going to be quoted, I expect to be quoted correctly. The hon. Gentleman seems to use words I am not sure he quite understands—I do not know. In my speech, I am going to help him to understand some of the words he has used. But I have only ever sought to set out the facts, which we have to take into account on the issue under discussion, which is that they do pay £7.9 billion in tax. That is the context in which I have cited that figure, not in the way that he has alleged.
Mr Deputy Speaker
Shadow Minister, do you want to respond to that? They were your words, not mine.
The Financial Secretary to the Treasury (Victoria Atkins)
If the House will allow me, I would like to take a moment to mark the 70th anniversary of the east coast tidal surge, which saw 307 lives lost in England, including 43 people in Lincolnshire. Sutton-on-Sea in my constituency was one of the worst affected areas, and this morning constituents and Lincolnshire residents came together on the coastline to mark this terrible day in our nation’s history. Sadly, I could not be with them, but I want to place on record that my thoughts are with them on this difficult anniversary.
The Government have five priorities, as set out by the Prime Minister. First, we will halve inflation to give respite to business and reprieve to families living under the pressure of rising prices. Secondly, we will grow the economy to create better paid jobs and opportunities across the country. Thirdly, we will ensure that our national debt is falling, so that we can secure the future of public services. Fourthly, we will cut NHS waiting lists, so that people can get the care they need more quickly. Fifthly, we will pass new laws to stop small boats. To reflect the people’s priorities, three of our priorities are economic. They are a plan for a bright future where our economy is growing faster and where people across the country have opportunities for good jobs and for their pay to go further.
The autumn statement laid out our plan to achieve that future and, despite the difficult fiscal decisions we had to make, re-emphasised our support for the most vulnerable. Having helped households throughout the pandemic, we have set up new schemes to help people and businesses with rising energy bills, and we have taken targeted action on the cost of living. We have raised pensions, benefits and the national living wage to help those who might otherwise have been left behind. Those who ask where the burden falls in paying for that support should look at the measures in the autumn statement, which, as a whole, show that we have asked wealthier people to pay more. We have asked those with the broadest shoulders to carry the heaviest burden.
Today is not only the deadline for self-assessments, but, interestingly, the third anniversary of the Conservatives keeping our promise to the British people by honouring the result of the referendum and leaving the European Union. It is therefore ironic that Labour has chosen to table this type of motion today, because it was a parliamentary device that the Leader of the Opposition fell on when he was the shadow Brexit Minister and self-identified as a Corbynite. Labour used this sort of motion to try to block Brexit, but it did not work then and it will not work now to stop the Government’s responsible handling of the economy.
The flaws in the motion are fundamental, because long-standing and crucial conventions exist that Ministers should be able to receive free and frank advice from officials. In developing policy, Ministers must have a safe space to be advised by officials. That process should not play out in public, especially given that Treasury Ministers are often dealing with issues that are highly market sensitive. Those conventions apply to Governments of all political colours. If we were to make changes to any aspect of the tax system, the right and proper place to publish related costings and assessments is at the relevant fiscal event.
Having dealt with the motion’s flawed framework, I will say that we understand the legitimate concerns of people across the country. The country has a strong instinct for fairness, and we want all people to pay their fair share of tax. As the Minister responsible for the tax system, I feel that keenly, because I know that many people across the country are under pressure at the same time as we need to fund our public services properly.
Matt Western
At its heart, the motion is about laying before the House the evidence and analysis undertaken by the Treasury. On the point about fairness, I am sure the British public will want to hear the answer to my simple question about the 28,000 people who are non-domiciled in this country. What is the average length of time that they have been in this country? What is the longest and what is the shortest?
Victoria Atkins
I am genuinely grateful to the hon. Gentleman, because that helps me to set out the progress that has been made in that area in the last decade. Non-domicile tax contributions rightly play an important part in funding our public services. Non-doms pay UK tax on their UK income and gains, and they pay UK tax on foreign income and gains when those amounts are brought into the UK.
I know the hon. Member for Ealing North (James Murray) dismisses £7.9 billion out of hand, as though it is somehow not relevant, but I set out these facts precisely because that is a very large sum of money and it helps to fund public services. It is right, in having a reasoned debate about these measures, that we adhere to the facts.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I have a rather technical question about the remittance basis charge. Would His Majesty’s Government consider raising the lower rate from £30,000 to £60,000 and perhaps the upper rate from £60,000 to £90,000? It would make better the balance between taking in revenue and the non-doms paying their share. Furthermore, following on from that, would they index link the charges to inflation in following years?
Victoria Atkins
I am very grateful to the hon. Gentleman for that thoughtful contribution. I hope he will understand that I must neither confirm nor deny that given where we are in the Budget cycle, but he makes an interesting point about the level of the remittance and his views on its impact.
Victoria Atkins
The hon. Gentleman at the back has been very patient, so I will give way.
Imran Hussain
I am very grateful to the Minister. Thus far in this whole debate I have not heard one credible reason why we should not abolish non-dom tax status. The Minister seemed to indicate earlier that she is waiting for the right fiscal event, and then she will abolish it Is that right?
Victoria Atkins
Again, I have to be very careful, as any Treasury Minister at the Dispatch Box six weeks before a fiscal event—a Budget—would have to be. The hon. Member will understand that there may or may not be market sensitivities in relation to tax policies ahead of the Budget, so I am not able to give any indication at this moment. What I am trying to do is to set out the facts in relation to tax take, and of course there will be a debate across the House about the whys and wherefores of that.
It is important, for us to have a reasoned debate, that we understand that non-domiciled taxpayers pay UK income tax, capital gains tax and national insurance contributions on their UK income and gains. That is money, as all taxpayers’ money is, that we can use to improve our schools, benefit patients in our hospitals and pour into infrastructure projects that will help level up across the country.
On top of that—again, the shadow Minister seems ready to dismiss this—non-doms have invested more than £6 billion in the UK into UK businesses, helping to grow the UK’s economy. That is an extraordinary amount of money: it is just under half the policing budget for England and Wales. I know that, when writing a speech, these sums may not seem very significant, but the real-life impact these figures have is very significant.
As the shadow Minister also, sadly, does not seem to have understood, we have in fact gone further in making sure non-doms pay their fair share of tax. In 2017, the Government reformed the rules to end permanent non-dom status and ensure all non-doms have to pay inheritance tax on any residential property owned in the UK, even when they own that property through a complicated structure such as an offshore trust or an offshore company. When the challenge was put to the shadow Minister by my hon. Friend the Member for Aylesbury (Rob Butler) about why a Labour Minister had not managed to do that before, we did not have an answer. Those affected by these reforms are paying more than £3 billion per year in UK income tax, capital gains tax and national insurance contributions on top of the earlier figures.
I would like to correct another mistake made, I am sure inadvertently, by the shadow Minister. We did in fact deal with non-domiciled taxpayers in the autumn statement, because the Chancellor closed a loophole to ensure that non-doms who have grown companies in the UK pay capital gains tax to the UK, bringing in an additional £830 million in revenue to support frontline public services. This announcement makes the tax system fairer and ensures that tax cannot be avoided by an individual exchanging shares in a UK close company for shares in an equivalent non-UK company as a way to re-categorise UK income or gains as foreign income or gains. That means that UK resident non-doms pay tax on gains and distributions received where value has been built up in the UK. The remittance basis is intended to provide an alternative tax treatment for foreign income and gains. It does not extend to income and gains that result from UK assets, and the Government are not willing to accept contrived arrangements that allowed clever tax planning to sidestep the tax charge that would otherwise have been due. As I mentioned a few moments ago, any analysis will be considered as part of the usual Budget process. We keep all taxes under review, as usual, and we do not comment on speculation around changes to tax policy outside fiscal events. That long-standing tradition has historically been respected by parties of all colours.
The Government will be voting against the Opposition motion, because it breaches established precedents and would prejudice the development of tax policies. I note that we have a Budget in just six weeks. I also note that we need to maintain an internationally competitive tax system that brings in talent and investment, which contributes to the growth of the economy. It is vital that we deal not just with the current economic problems we face, but also with the long-standing difficult ones that have beset us for decades. As the Chancellor outlined in his growth speech last week, we need to support enterprise so that more businesses want to locate here. Among other things, that means taking steps to reduce the tax burden overall. We are a party that believes in low taxation, and as soon as the fiscal situation allows, we want to reduce it. The Conservative vision for our economy is to unlock our national potential, and to be Europe’s most exciting, innovative and prosperous economy. We are making taxes fairer, simpler, and supportive of growth, to achieve the bright future for our country that I am sure we all want.
Several hon. Members rose—
The Economic Secretary to the Treasury (Andrew Griffith)
Although we may not agree, it is always a pleasure to hear the passion that the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) brings to her role.
The public expect us to have a plan for the economy, for growth and for the country, and we do. As the Prime Minister has said, we have five priorities that deliver on the people’s priorities: to cut inflation by half, to grow the economy, to get the national debt down, to cut NHS waiting lists and to stop small boats crossing the channel. As we deliver against these pledges, we will move towards a better future, with our economy growing faster and the benefits shared across the whole of our country.
Just as we did in the pandemic, we will continue to support the most vulnerable. That is why we uprated benefits by inflation—an £11 billion commitment. It is why we honoured the triple lock on pensions—that is billions more on supporting pensioners on low incomes. It is why, when Putin’s war on Ukraine hiked the global cost of energy, we delivered a generous subsidy to cushion households’ energy bills: £900 for each household last year and £500 this year, on top of a £900 payment for everyone on means-tested benefits.
The Opposition do not want to dwell on this because they recognise no limits when it comes to spending other people’s money. Opposition Members who say we are prioritising the wealthiest simply need to look again. At the same time, we need to make sure that our economy is fertile for growth, and it would be wrong to make decisions based on what is politically expedient at the cost of public services. As the Chancellor has said, it is important to look at any proposals on non-doms in the light of the true impact on the public finances.
I will respond to some of the points Members made shortly, but let me first remind the House that it is well established, in particular in developing policy, that Ministers of the Crown must be able to receive free and frank advice from officials, especially when that advice is market sensitive. It is entirely right that Parliament hears Government decisions first, but that should be through the established process of a fiscal event, when the Government can set out their decisions on market-sensitive issues such as tax in an orderly fashion.
We started this debate with a demolition of the arguments put forward by the hon. Member for Ealing North (James Murray) by my right hon. Friend the Financial Secretary to the Treasury. My hon. Friend the Member for Aylesbury (Rob Butler) raised a valid point, to which we have yet to receive an answer, about why successive Labour Governments did not take action during their years in power. I am very happy to take an intervention if shadow Ministers would like to answer that right now.
My right hon. and learned Friend the Member for Northampton North (Michael Ellis), a master of the constitution, rightly observed that the motion is unconstitutional, irregular and injurious to the public interest. My hon. Friend the Member for South Cambridgeshire (Anthony Browne), with his deep knowledge of these matters, reminded us that 35 countries have similar schemes. He also reminded us a number of times during the debate about the Labour party using this debate, once again, to restate its credentials as the party of envy. Labour Members have not learned and they have not changed.
My hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) reminded us of how we on this side of the House have taken millions of people out of tax entirely, with an increase in the rate of the personal allowance from £6,500 when we took office to £12,500 today. My hon. Friend the Member for Amber Valley (Nigel Mills) gave us his own view that he sees a case for reform in this area.
People across the country are looking to us in this House to get inflation down, cut debt and unleash growth, and we have a plan to do so. It is an inflating-cutting plan that will see the economy growing, debt falling, NHS waiting lists cut and small boats stopped—that is what we will deliver. Our plan is rooted in economic stability and the prudent management of our finances. Not for us the shadow Chancellor’s spend now, pay later economics. In the three weeks since Labour Members promised no “big Government chequebook” they have made £45 billion of unfunded spending commitments. That is why her predecessor, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), left us a note saying, “I’m afraid there is no money.”
The right hon. Member for Leeds West (Rachel Reeves) has been busy. One minute she is hanging out with masters of the universe in Davos, the next making promises to masters of the unions in Deptford. From glühwein to white wine, the only common denominator is spending more of other people’s money. But we will not be distracted from our important task, and we will not indulge in this sort of procedural politics from the Opposition, which I regret is the sort of thing that lowers the esteem of this House. Disregarding established precedents while prejudicing the process of consideration would not be in the public interest, especially when we have just weeks to wait until the fiscal event. Instead, our focus is delivering on the people’s priorities, and delivering a Budget to help achieve them. That is what we are focused on, and that is why Conservative Members oppose this desperate and distracting motion.
Question put.