Oral Answers to Questions

Alex Chalk Excerpts

Tuesday 29th January 2019 Commons Chamber

[Elizabeth Truss]

We do fund the core courses that are going to help people get work and get on in life, but we also provide adult learner loans so that people can help shape their own future. In 2017-18, we spent £220 million on those loans.

[Alex Chalk (Cheltenham) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

My principal responsibility is to ensure economic stability and the continued prosperity of the British people. At this juncture, the best way to achieve that objective is to support a negotiated Brexit, ensuring a smooth and orderly departure from the EU.

[Alex Chalk]

Cheltenham’s Government-backed future cyber-park will deliver jobs and opportunities for local people. What role will the Government’s university enterprise zones play in ensuring that this project is backed to its full potential?

[Mr Hammond]

I welcome the work that is going on in Cheltenham to build on the magnetic effect of GCHQ and to attract innovative cyber-based firms to the area. In autumn Budget 2018, I announced £5 million to support proposals for university enterprise zones, which will encourage collaboration between universities and businesses, promote knowledge and skills exchange, and deliver a boost to local productivity. The funding will allow excellent institutions such as the University of Gloucestershire to develop locally led proposals to build on strengths like cyber-security, technology and engineering.

Balanced Budget Rule

Alex Chalk Excerpts

Wednesday 23rd January 2019 Westminster Hall

[Lee Rowley]

Before we went to vote I was talking about the moral case for low debt and ensuring that the servicing of that debt was as minimal as possible, to retain and support our ability to ensure economic activity in the future. It was not for nothing that Herbert Hoover intoned sarcastically:

“Blessed are the young, for they shall inherit the national debt.”

In this context, perhaps we can bestow a few less blessings on them in the future.

Putting aside the morality of debt, the key issue, which should drive all politicians regarding the accretion of Government debt, is the year-on-year cost of servicing and holding it, as mentioned earlier. The proponents of unfunded spending may highlight how the markets are not that concerned with relatively high borrowing so long as it can be funded. That may be the case. Let us hope, for all of our sakes, that we do not enter a period of high interest rates in the coming decades when national debt is to be rolled over.

The opportunity cost of that funding, on an ongoing basis, is much less understood in this place than in public discourse. It comprises a tax, year on year, on today’s generation for yesterday’s spending. Unlike the total debt to GDP ratio, which has oscillated wildly in the last century due to wartime spending, the cost of servicing the UK’s debt has been on an upward trajectory for the last century. Adjusted for inflation, the cost of servicing that debt has risen from an average of £12 billion per annum between 1900 and 1960 to nearly £30 billion at the turn of the 21st century. Since 2009, that average has hit £43 billion every year. In total, since 1900 the UK has spent something like £2.5 trillion just on servicing its debt. About half of that has been spent since I was born—I still like to think of myself as being relatively young.

The bad news is not likely to stop there. With the continuing running of deficits until well into the 2020s, the annual cost of servicing that debt is projected by the Office for Budget Responsibility to hit more than £50 billion by the start of the next decade. In this Parliament alone, debt servicing costs are projected to be about a quarter of a trillion pounds over the five years. The sums are huge and growing. They represent a significant opportunity cost to the UK as a whole.

[Alex Chalk (Cheltenham) (Con)]

My hon. Friend is making a powerful point. To put it into sharp focus, does he share my concern that the annual cost of servicing the United Kingdom’s national debt is more than we spend on schools? As a matter of morality, we need to keep debt under control so that we can truly allocate resources where they are most valued.

[Lee Rowley]

I could not concur more with my hon. Friend, as I will address in my next paragraph. Putting this into context, about 8% of all current Government spending is diverted towards debt servicing. In 2015, that made interest payments the joint fourth largest proportion of spending by the UK after health and welfare, and on a par with defence. Spending on education, the police and transport pales in comparison with the budget allocated to debt interest. That budget could be used, as my hon. Friend has just outlined, for myriad other more socially useful activities, such as paying for a hospital to be built every four days, or for approximately 2,500 nurses, police or teachers to be hired every day throughout the year. For those of us with a more centre-right political outlook, the £45 billion spent on interest costs in 2015 could even have been used to reduce the size of the state through tax cuts, perhaps as large as 8% or 9% in the standard rate of income tax. If the populace actually knew that such a significant chunk of the taxes they paid every year was being used to pay for spending chalked up 20, 30 or 50 years ago, would they be content doing the same or worse for their children, given the sacrifices and opportunity costs involved?

We know what the problem is, so why do we not just do something about it? Why do we need a legislative solution for this issue? The problem is that we as a country are not that good at stopping adding to our debt. Our Labour friends—who have temporarily deserted the Chamber—have a tendency to spend money without a huge amount of regard for the implications. My party usually ends up having to clean up the mess. Even on my side, there are not insignificant number of people who cannot resist the temptation to spend when it comes down to it.

Our parliamentary system and representative democracy are excellent at pushing the cause of individual spending requirements, many of which, I do not contest, are no doubt noble. Yet there are few people who will exercise proper restraint or promote proper fiscal responsibility to ensure that all of these myriad pots of money are truly paid for. It is always tomorrow’s problem. Mañana, mañana, as they say. The numbers show just that: over the last century, the United Kingdom has consistently increased its national debt and its deficit spending. Both in absolute terms and as a proportion of GDP, the UK’s debt burden has grown significantly since the turn of the 20th century. The recent political consensus in the UK demonstrated a clear disregard—if we are honest—for the consequences of deficit spending.

Prior to the second world war, deficit spending tended to be closely correlated with war and national defence. In more than half the years between 1900 and 1939, the UK ran an absolute surplus, including during much of the late 1920s, during economic crisis. Since 1945, however, the achievement of a surplus in the UK’s national spending has been relatively rare. Only 13 out of 71 years saw the deficit being reduced, and on only two separate occasions—the late 1980s and the late 1990s—has the UK run surpluses for more than a couple of years at a time.

If all that sounds like one long criticism, it is not intended that way. It is just a statement of fact. Whether poverty or plenty, feast or famine, there is one almost universal constant: the Government spend more than they take in. That is not unique to the United Kingdom, but a feature of western democracy: red ink reigns supreme. The main variable in western liberal democracies is whether they overspend by a little or a lot. France has never run a Government surplus as a proportion of GDP since the 1970s, nor has Italy. The United States has managed to do so only once since 1960. Even Canada, one of the more enlightened in tackling public debt, has only managed to run surpluses in less than one third of financial years since the 1970s. The Maastricht protocol on excessive debt procedure says that countries should not exceed a 3% borrowing ceiling. Just think on that for a moment: there is a protocol that automatically sets an expectation of overspending—just that it is not excessive. And we wonder why debt has significantly increased in most western democracies over the past 30 years. There is an urgent requirement, over the long term, to address this inherent deficit bias in democracies.

The idea that we need to take more drastic legislative solutions is not that new; it is just that we have never properly applied it to national spending before. Sure, the Government have their charter of budget responsibility and an equivalent office creating the data and watching what is happening. Yet the charter requires people only to identify that they are changing policy. It does not really hold people to account or limit them.

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[Alex Chalk (Cheltenham) (Con)]

It is a pleasure to say a few words in this debate, Mr Stringer, and I begin by congratulating my hon. Friend the Member for North East Derbyshire (Lee Rowley) on securing it.

This is such an important issue, yet looking around this Chamber—in which there are only a few people—we could be forgiven for thinking that it is somehow a dry, bookish or niche issue. However, the reality is that what Governments of all stripes do in respect of the public finances resonates in people’s lives, including the lives of people who might be some of the most vulnerable in our community. If we lose control of the public finances, it is not the rich and the powerful who suffer, but the poor, the sick and the vulnerable. That is why it is so important that we engage with this issue, and I congratulate my hon. Friend on doing so.

However, part of the problem with discussing this issue is that we as a political generation fail to communicate about it properly. That is because if people are anything like me, once a figure gets above, say, £50 million or so, it just sounds like a very big number, and what we sometimes fail to do is to put these figures in context. How many Members of Parliament would be able to tell people the total budget that we spend every year as a nation? I suspect fewer than half. As a matter of fact, it is something in the region of £840 billion. That is an important figure to keep in mind, because it puts in context what has happened to our national debt over the last 10 years. Back in 2007, our total national debt—the total pile that we had to service as a nation—was about £500 billion or so. Now it is £1.8 trillion, and as my hon. Friend indicated that debt burden has to be serviced in some way.

Again, it is all very well to say, “Oh well, it costs roughly £50 billion a year to service that debt pile”, but that is a meaningless figure unless we place it in some sort of context. As has already been said, that sum is higher than the total schools budget. People like me, who represent places like Cheltenham, go and speak to headteachers about the pressures they face in their schools, where they might be looking to increase the high needs budget, which is about £6 billion. However, the reality is that we spend about eight times more on debt interest than we do on high needs funding, which supports special schools in our country, and more indeed than we spend on defence.

To put things further into context, the mighty United States is currently in shutdown because of the inability to agree on how to pay for the US President’s border wall. The sum required is about $6 billion. To put things another way, every year we spend, on debt interest alone, a sum equivalent to about 10 of Trump’s border walls. It is a huge sum of money.

The reason this issue is important is because it has an impact on people’s lives. Here are two things that I think are axiomatic. First, there is no national security without economic security. In other words, unless we live within our means, we cannot be sure that our military and indeed our intelligence agencies, such as GCHQ, which is in my constituency, can rely on the knowledge that they will have the resources they need to keep our country safe into the future. Secondly, we cannot have economic security without fiscal security. In other words, unless we keep control of our finances, when economic shocks come, which they will, the nation will be ill-prepared to deal with them. Put bluntly, the cupboard will be bare.

That is precisely what happened in Greece. That nation had a debt to GDP ratio of about 90% to 100%, and when the storm came it was unable to deal with it. As a result, as I indicated before, it was the poor, the sick and the vulnerable who suffered, with Greece’s equivalent of NHS funding being slashed by half. The reason why that is so sobering is that the UK’s debt to GDP ratio is in the high 80s; it is not a million miles away from where Greece was 10 years or so ago. That is an important point to raise, and as a political group we need to do better in explaining its impact, but I say respectfully to the hon. Member for Bootle (Peter Dowd) that the Opposition need to be straight with people as well. It is easy enough to say, “We are going to spend £1 trillion”, but in the same sentence, Labour ought to explain the costs that will entail each and every year so that people can understand what that offer means.

The reality is that if Labour wants to spend another £1 trillion, that is absolutely fine for my generation—no doubt there will be more money for the NHS, and so on and so forth—but the next generation will suffer, because before they can pay for a single soldier, nurse, doctor or teacher, they will have to pay vastly more in debt interest. If that argument is made, people can make their choices, but everyone who does so has to be straight with the British people. I regret to say that that has not always been quite as transparent as it might be. There is a moral case for living within our means, and my hon. Friend the Member for North East Derbyshire has done an important service by making that case today. I am grateful to have had the opportunity to say these few words.

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[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mr McCabe. I thank the hon. Member for North East Derbyshire (Lee Rowley) for securing this debate, which gives us an opportunity to brush aside some of the myths that he referred to. I also thank the hon. Member for Southport (Damien Moore), the hon. Member for Dundee East (Stewart Hosie), who spoke eloquently and sensibly, and the hon. Member for Cheltenham (Alex Chalk), who referred to the Greeks. I remind him that Thucydides said that

“while the strong do what they will, the weak suffer what they must.”

That is precisely what the Tories have done. They talk about the poor all the time, but it is the strong that they stick up for, and they do it time after time.

The hon. Member for North East Derbyshire forgot to mention that the global financial crisis that the Tories use time and again started in the United States. [Interruption.] The hon. Member for Cheltenham can sit there and pretend to snore, but that is the reality: until the Tories accept that fact, we will not be able to move on. There is a danger that there could be accusations of dishonesty and disingenuousness—I am not making those accusations, Mr McCabe—until those on the Government Benches begin to acknowledge that.

The issue is not just about fixing the roof before the rain comes through; we were all in it together at the time, and we all know that we have not been in it together under Tory policies. The poor have been getting a stuffing year in, year out. The Tories have also missed every target they have set. Talk about a moving target! The situation was supposed to be sorted out years ago. The hon. Member for Cheltenham said there was a debt of £800 billion, but the Tories have doubled the debt since they came into power. They have borrowed more money than Labour ever has.

[Alex Chalk]

We have this extraordinary situation where on the one hand Labour complains that the national debt has gone up too much, and on the other it complains that the Conservatives are not spending enough. That kind of illogicality would embarrass a 10-year-old. Surely the hon. Gentleman can do better.

[Peter Dowd]

Of course I will do better. At the end of the day, it is about priorities. As the hon. Member for Motherwell and Wishaw (Marion Fellows) said, the Tories have spent the money in the wrong way. The hon. Member for Southport effectively accepts that. We have had £15 billion wasted on the introduction of universal credit by the Tory party, so let us get a little bit real.

I am sick to death of talking about how useless the Tory party is, so I will speak about Labour’s fiscal credibility, which I am sure will get a certain amount of unanimity in the Chamber, and the issue of balancing. [Interruption.] I am happy to deal with it. We could have discussed the issue in a mature and grown-up way with adults in the room. Yanis Varoufakis wrote a book called “Adults in the Room”, but there are not many in the Chamber today. I suggest Members have a read of that book; it will show them what happened to Greece.

Following discussions with our advisers, including Professor Joseph Stiglitz, on 11 March 2016, the shadow Chancellor announced a fiscal credibility rule, which has five key elements. I am happy to set that out in the symposium that hon. Members are here to attend. First, Labour committed to closing the deficit on day-to-day spending within five years. Secondly, we committed to excluding investment from that commitment so that we can borrow to invest, which is important. Thirdly, we undertook that Government debt as a proportion of trend GDP would be lower at the end of a five-year parliamentary term than at the start.

Fourthly, we committed to giving the Monetary Policy Committee of the Bank of England the power to suspend the rule if it determines that interest rates are not having their usual effect due to the lower bound. That would allow stimulus action to step in when monetary policy is ineffective. Fifthly, we would shift the reporting requirements of the Office for Budget Responsibility so that it reports to Parliament, rather than the Treasury, and ensures ongoing Government compliance, to which the hon. Member for Dundee East referred. All the facts are there, so let Parliament have them. The elements of the rule mean that a Labour Government would not need to borrow to fund our day-to-day expenditure.

[Alex Chalk]

The United Kingdom last lived within its means in 2001. Under a Labour Government, when would it next do so?

[Peter Dowd]

If the hon. Gentleman listens to what I have to say, he will find out in due course. [Laughter.] The hon. Gentlemen laugh and snigger. Meanwhile, millions of people suffer under their policies. They should stop their sniggering and listen. I know that the Tories think they have some divine right to rule and some divine economic ability, but they have not. They need to show a little humility occasionally and listen to other people.

Unlike the Conservatives’ different, haphazard and unsuccessful attempts to achieve fiscal credibility, our fiscal credibility rule has three criteria for good economic policy. I know that economic good in economic policy is an alien concept to the Tories, but they might learn one or two things if they listen to what I have to say. The three criteria are: responsibility in economic management; recognition of the value of long-term public investment; and flexibility for changing economic circumstances. A Government trying to bind themselves into a model that has palpably failed all over the world are not particularly helpful. There has to be some flexibility.

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[Alex Chalk]

Will the hon. Gentleman give way before he sits down?

[Peter Dowd]

I have finished—I am sorry.

[Alex Chalk]

He did not answer my question.

[Steve McCabe (in the Chair)]

Order. Have you finished, Mr Dowd?

Oral Answers to Questions

Alex Chalk Excerpts

Tuesday 11th December 2018 Commons Chamber

[The Chief Secretary to the Treasury (Elizabeth Truss)]

The changes to public sector pensions have resulted from increases in contributions that will ultimately benefit lecturers retiring from university and retiring teachers. We are looking, through the Augar review, at the question of higher education funding overall, but ultimately it is for universities to find that extra money.

[Alex Chalk (Cheltenham) (Con)]

T4. On Saturday in my constituency I met Tom, a student at the University of Gloucestershire, who shares my concerns that online digital marketplaces, social media companies and search engines should pay their fair share of tax. What steps are being taken to ensure that they do precisely that?

[The Financial Secretary to the Treasury (Mel Stride)]

I thank my hon. Friend for that very important question. The Government recognise that the current international tax regime is not fit for purpose when it comes to taxing certain types of digital platform-based businesses—the types to which my hon. Friend has referred—and we are therefore working with the OECD and the European Union to arrive at a multilateral solution to ensure that the right tax is paid. However, we have made it clear, and the Chancellor made it clear in the Budget, that in the event that we do not secure a multilateral agreement, we will move ahead unilaterally by 2020 to ensure that those businesses pay a fair share of tax.

European Union (Withdrawal) Act

Alex Chalk Excerpts

Thursday 6th December 2018 Commons Chamber

[John McDonnell]

The backstop could remain permanent. We have had confusion this morning on the advice from the House of Commons Library and the Chancellor about how it could be ended or a transition deal extended in some form. There is absolute confusion at the moment, and we are now undermining the relationship with one of our biggest trading partners as a result.

One organisation, the National Institute of Economic and Social Research, has estimated that by 2030 we could see a £70 billion reduction in national GDP, in 2016 prices, as a result. Once the Prime Minister accepted our argument for a transition period, she argued that it was right because it would mean only one change for British businesses. Now we face shifting from a transition period to a backstop arrangement, and then to a free trade deal. This is not what was promised. We do know, however, what the Chancellor thinks of the backstop arrangement because he has said so:

“I’ve been clear from the outset that I do not like the backstop. I don’t think the backstop is a good arrangement for our economy, I don’t think it’s a good arrangement for our union.”

I fully agree.

[Alex Chalk (Cheltenham) (Con)]

In fairness, the right hon. Gentleman is absolutely right, and it is perfectly legitimate to shine a light on the issue of the backstop, which causes a lot of us concern, but can he help me to understand something? Under his proposal, if the United Kingdom were to remain in a customs union, would there not still need to be a backstop in any event, because we would be outside the single market? Is there not a concern that it does not really solve the issue? I ask that respectfully and in a spirit of inquiry.

[John McDonnell]

I believe that under a comprehensive customs union agreement, it is so much more unlikely that there would be any need for that fall-back position, and we would be able to offer permanency in an agreement rather than something that is a defective insurance policy.

Others may agree with the Chancellor on his initial assessment, and, in that case, I cannot see why this arrangement—

2019 Loan Charge

Alex Chalk Excerpts

Tuesday 20th November 2018 Westminster Hall

[Mr Baker]

My hon. Friend makes a very good point. I hesitate to trespass far beyond my expertise, but I make the point that it is often thought that the opinion of a QC determines the truth. That is not the case. QCs and barristers argue among themselves in court, and the court determines the facts. I am often struck by people relying on the opinions of lawyers when what they actually need is the judgment of a court.

[Alex Chalk (Cheltenham) (Con)]

On the judgment of courts, does my hon. Friend share my concern that individuals are sometimes effectively left without a remedy, because the person who gave them that advice so many years ago no longer continues to trade? There is then effectively no remedy for the individual and no ability for them to claw back their significant losses.

[Mr Baker]

My hon. Friend raises an important point. In concluding my remarks, I shall allow what he says to stand.

I really think that it is perfectly natural for people to want to pay less tax, but I would be failing in my duty if I did not say to all those paying attention to the debate that, when something seems too good to be true, it probably is. We ought not ever to allow ourselves to be lured into schemes that offer absurdly low rates of tax. However, I save my strident condemnation for the promoters of these schemes, who, in their advertisements, seek to persuade people that this is legitimate activity and to create the impression that DOTAS registration conveys some kind of legitimacy or endorsement by the state. That is an outrage, because of course it encourages people to participate. These promoters are, frankly, wicked. It is a great evil to encourage people into these schemes and to leave them in misery afterwards.

Finally, we must insist on the rule of law. Notwithstanding the wicked conduct of promoters, the greater wickedness in the end is to undermine the rule of law—the certainty that comes from someone knowing that if their actions were lawful at the time they were carried out, they will not subsequently be challenged through retrospective legislation. I feel most strongly about that, as I have throughout my time in Parliament. I urge the Government, whatever evils have been done by the promoters of these schemes, to abandon the practice of retrospective legislation.

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[Ross Thomson]

My hon. Friend is absolutely right and I could not agree with him more. For many, this option seemed to be the obvious choice. The retrospective nature of this decision is causing great distress. As has been said, there is a huge human cost. I want to take this opportunity to share with the Minister and hon. Members the stories of my constituents.

One constituent wrote to me and said:

“It’s been going on for a few years now and taking its toll on my family. As we are unsure where we’ll get the money to pay any outstanding tax, their bullying tactics in getting you to sign up to pay and the fact they demand you to reach a settlement with them, even though when we have done everything they ask, they have still not come back with any settlement figures.

Not only that, they are saying even if you settle or pay back the loans, there’s a strong possibility it won’t end there, so we go back to their scaremongering tactics they’ve deployed for you to pay up front and ask questions later, it’s totally unjust for our future as being a democratic society”.

Another constituent said:

“I like to think I understood the risk I was taking and had every confidence in the scheme I was using, I did not entertain the prospect that the Government would be prepared to violate the core principle of the rule of ‘legal certainty’ by introducing retrospective legislation going back 20 years…This weekend I have received my settlement ‘offer’ under HMRC’s settlement offer and am currently in the process of deciding whether or not to accept their terms. Whilst I sincerely would like to settle and move on, I am deeply concerned that their CLSO2 is extremely unfair and punitive.”

[Alex Chalk]

My hon. Friend is making a powerful point. Does he agree that the fundamental unfairness is that HMRC is going after the easiest of targets, namely the individuals, rather than those who may be the most culpable?

[Ross Thomson]

I could not agree more. It seems to be easy pickings for HMRC. It is not going after those who are truly culpable. That is why such great distress is being expressed in our surgeries.

My constituent continued:

“This whole sorry affair has imposed life changing levels of stress on both me and my family, especially with the backdrop of the recent downturn in the oil and gas industry where I have been out of work for about 50% of the past two years.”

Another constituent wrote:

“This is a complicated situation, however fundamentally, HMRC have closed down the opportunity to use these ‘loan’ schemes.”

My constituent accepts that it is a positive move to end ambiguity.

“The retrospective nature of this legislation is going to place a large number of contractors under extreme financial duress. Bearing in mind HMRC’s failure to sort this situation out sooner”.

Another constituent—this is the last example I will give—emailed me to say that he was emailed by a company stating that he could retain 78% to 80% of his salary legally. He wrote:

“The scheme was QC approved and top tax counsel advised it was sound… I learnt during the latter part of last week that my retrospective tax charge is very likely to exceed £230,000. As for HMRC’s so-called ‘Impact Assessment’ apparently finding that such sums would lead to few, if any issues for those being expected to pay such, I can only comment that they must assume that we are all multi-millionaires. Of course, they know full well that we aren’t.

It’s very daunting when the full weight of government makes demands with threats of the law being brought to bear when, according to the law, no law has been broken. I doubt very much that I can simply ignore threats, be taken to court and stand there and say such. Thus individuals are placed in the position of hiring lawyers with costs running into six-figures and this will be beyond the means of most, if not all of us.”

This particular constituent says that he is single and has

“never had a second income from a partner to assist with cost of living”.

He is facing serious financial distress.

It is right that we condemn those who sold on and encouraged such schemes. It is deeply unfair that we seek to do this retrospectively. It absolutely violates the core principles of the rule of law. I could not agree more with colleagues who have already expressed that frustration. I think that this particular measure is disgraceful. I will go further-I think it is dishonourable and should be stopped.

Finance (No. 3) Bill

Alex Chalk Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 20th November 2018 Commons Chamber

[Alex Chalk (Cheltenham) (Con)]

Not just companies but entire sectors and industries might be attracted to come here. The UK film industry is so buoyant and world-leading in very large part because of the benign tax environment that it can enjoy.

[Chris Philp]

My hon. Friend is right to draw attention to the way in which very favourable tax systems can indeed attract companies to this country. We should be proud of the fact that we are attracting the world’s leading companies to the United Kingdom.

I am sorry to refer to the speech by the hon. Member for Oxford East so often, but it was a very full speech and there was a great deal to reply to. She suggested that the Chancellor of the Exchequer said that our plan was to become a tax haven. He never used the words “tax haven”, but he did say that we could be a tax competitive economy. There is nothing to apologise for in saying that we will be a tax competitive economy and attract companies to locate here. If there is a tax haven in Europe, it is Luxembourg, so the hon. Lady should reserve her ire for that jurisdiction.

Finance (No. 3) Bill

Alex Chalk Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

I should make another point about reducing the advanced rate to £80,000. The amount of money that that would raise would be negligible, if not actually negative, and the number of spending commitments tied to that proposal are disproportionate to any sort of potential income that could be raised, even in the best-case scenario. So the tax allowances as they stand in respect of the basic rate and the advanced rate strike the right balance for our economy in the future.

[Alex Chalk (Cheltenham) (Con)]

My hon. Friend talks about the incentives created by reducing the tax on individuals, but does he agree that this has an impact on businesses, too? Where high street businesses such as my local ones in Cheltenham now have a lower tax burden, with one third coming off their business rates, that provides an incentive for them to take on new employees, grow their business and deliver a more prosperous high street?

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[Peter Dowd]

Quite simply, it is shameful—it is as simple as that.

New clause 2 would require the Treasury to undertake an equalities impact assessment of the changes to the personal allowance and its impact particularly on child poverty. This assessment will include households at different income levels, groups protected by the public sector equality duty and the regions and nations—this is the Labour party speaking for the whole of the United Kingdom.

Such an assessment is needed now more than ever. The Social Metrics Commission recently found, as I indicated before, that 4.5 million children are living in poverty in the United Kingdom. That is shameful. The Government claim that none of this matters as long as parents are finding work, which ignores the fact that work is no longer a sustainable route out of poverty. Indeed, the Joseph Rowntree Foundation found that more than two thirds of children in poverty live in a working family.

We know that the assessment set out in new clause 2 will further justify the United Nations special rapporteur’s investigation into this Government’s policy of austerity last week. The poverty envoy found that the policies of austerity had inflicted “great misery” on our citizens, and he went as far as to say that the “fabric of British society” is falling apart as a result. That is absolutely damning.

[Alex Chalk]

The hon. Gentleman is talking a lot about the politics of austerity. The United Kingdom last lived within its means in 2001. Under a Labour Government, when would the United Kingdom next live within its means?

[Peter Dowd]

I do not accept the premise of these trumped-up ideas from voodoo economics presented by the Tory party. The reality is that the report was absolutely damning. It was absolutely devastating, and Government Members should be ashamed that somebody from the United Nations should come to this country and objectively lay out the facts as they are.

Sadly, in true Trumpian style, the Government chose to ignore the UN special rapporteur. Live on “Channel 4 News”, the Financial Secretary to the Treasury buried his head in the sand, saying

“there is a…strong push to reduce poverty”.

Well, it is not getting pushed hard enough. The Financial Secretary refused to acknowledge that there are 1.5 million people living in destitution, despite repeated questioning. A cursory look at this Government’s policies demonstrates that, for eight years, they have felt it was reasonable to punish the poorest to let the bankers off the hook. How can this Government be so out of touch?

I now turn to new clause 3. According to HMRC’s own statistics, over £400 billion a year is spent in tax reliefs. Entrepreneurs’ relief costs £2.7 billion a year alone, and benefits only 52,000 people.

[Alex Chalk]

The hon. Gentleman is very generous in giving way a second time. If Labour Members were to get back into power, would they change the tax system so that people had to pay tax from £6,750, as in 2010? Does he agree that that would cost working people an additional £1,000-plus a year?

[Peter Dowd]

I suggest that the hon. Gentleman reads the shadow City Minister’s article on LabourList, which sets that out very clearly.

Finance (No. 3) Bill

Alex Chalk Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Mel Stride]

Hopefully, the hon. Gentleman will welcome the announcement that the Chancellor made in the Budget that we will provide a £1,000 uplift to the universal credit work allowance, which will be worth, when we reach full roll-out, a total of £630 million for 2.4 million recipients of that benefit.

[Alex Chalk (Cheltenham) (Con)]

Does the Financial Secretary agree that were we to go back to the situation in 2010, when people had to start to pay tax after their first £6,750-odd, that would mean that ordinary, hard-working taxpayers would have to pay an additional £1,000 in tax and would therefore have less money to meet their day-to-day priorities?

[Mel Stride]

My hon. Friend is right. The problem with Labour’s approach to taxation, and to personal taxation in particular, is that it is a huge discouragement to going out and creating wealth and jobs and the kind of economy that supports the vital public services that Members from all parties wish to see prosper.

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[Peter Dowd]

Look, we are always prepared to look at any idea, but we are trying to deal with the problem today. We are trying to deal now with the hundreds of thousands of elderly people who are not getting the service they are entitled to.

[Alex Chalk]

Back in 2010, at the height of the crisis the hon. Gentleman’s party left us with, it was a Labour Chancellor, Alistair Darling, who said that Labour would close the deficit by 2020. That will not now happen until 2025. How can the hon. Gentleman credibly suggest that this is an austerity Budget?

[Peter Dowd]

That is remarkable coming from an hon. Member who is a member of the party that promised us all that the deficit would be gone by 2015.

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[Alex Chalk (Cheltenham) (Con)]

What a pleasure it is to follow the hon. Member for Warrington South (Faisal Rashid), but I profoundly disagree with what he has just said. In his last point, he referred to eight years of economic failure, but nothing could be further from the truth. It is worth pausing for a moment to consider some key figures. In 2010, this country was spending a total of £700 billion or so a year and bringing in just £548 billion of tax revenue. In other words, a full £152 billion was borrowed. Fast forward eight years, and this country will spend £842 billion in the next financial year. Why? Because the economy has grown by 17% in that time. Crucially, of that £842 billion, a full £810 billion will be raised in tax revenues. In other words, that £152 billion deficit has shrunk, and shrunk dramatically. The reality is that a country that in 2010 was staring into the abyss can now look forward to a future and say, “Our best days are ahead.” Had this country not got on top of its finances over the past eight years, it would have been not the rich who would have suffered but the poor, the needy, the vulnerable and the hungry. If we look at countries such as Greece and Venezuela that have lost control of their finances, we see that it is the poorest in society who suffer most.

It is important to note a point that increasingly seems to be lost but should not be, and that is how far we have come in respect of employment. The country risks taking it for granted. We have 3 million more jobs than in 2010. In 2010, unemployment had gone up by half a million; that is half a million people whose futures were curtailed, whose opportunities were reduced and whose dreams were eroded. Unemployment means misery, lack of self-esteem and wasted potential. It means hollowed-out communities and a corrosive sense of despair. We should reflect on the successes that have happened since 2010.

Unemployment in our country today stands at just 4%. In Cheltenham, it is under 2%, compared with the rate in France, which is 9%. It is 8% in the eurozone. In Italy, youth unemployment stands at 32%. When I speak to young people in my constituency—last week over the recess, I was speaking to young people at St Mark’s Junior School—I am able to say that, as they grow up and reach the age of 18, I want them to be in a position where they can choose whether to go to university, which is fine, or whether to have an apprenticeship, which is also fine, but, if they want to go into the world of work, driving true social mobility, there also are opportunities for them to do so.

[Danielle Rowley (Midlothian) (Lab)]

The hon. Gentleman talked about success. Unemployment may be falling, but in-work poverty is rising much more quickly. Is that a success?

[Alex Chalk]

Income inequality is declining. Any poverty is, of course, something that we want to address, but the best route out of poverty is through employment. If we were to ask individuals whether we should turn the clock back to 2010 when we had half a million more people unemployed, I do not think that they would choose to do so. The reality is that there is no true economic strength without fairness.

I must take issue again with the point made by the hon. Member for Warrington South. He suggested that raising the personal allowance a year early to £12,500, resulted in only “meagre” benefits—that was his expression. For the average family in my constituency, two wage earners each earning the average wage of about £28,000, that will mean a combined addition to the family budget of £260 a year. Does he want to stand up and seriously suggest that that is a meagre benefit? Does he? It is not a meagre benefit. It is more money in people’s pockets to focus on their priorities—on support for their children, support for their futures and support for their daily lives.

Strong families and strong communities require strong healthcare. It is important to note what managing the economy—taking a balanced approach—means for healthcare. It was the Leader of the Opposition who suggested during the last election that a 2.2% increase in health spending would make the NHS the “envy of the world”. Well, it is this Government who will be spending 3.4% above inflation every year. The figures are stark: the total budget will go from about £122 billion a year today to £149 billion a year in 2023—a real-terms increase above inflation of £20.5 billion a year.

[Karen Lee]

Does the hon. Gentleman agree that, to recruit enough nurses to fill all those vacancies and all those jobs that his party is going to create, we need to reinstate the nursing bursary?

[Alex Chalk]

It is critically important that we do not have a cap for those people who want to become nurses. One thing I found very depressing when I was first elected back in 2015 was that people wrote to me saying, “I want to become a nurse, but I can’t become a nurse, and yet the trust is off taking trips to other parts of the world to recruit nurses from overseas, while I cannot do it here in the UK.” That is something that we should not allow to continue. It is important that the money is spent in the communities that require it. In Cheltenham at the moment, trust managers want to shift all general surgery facilities from Cheltenham to Gloucester, but, as 58 clinicians wrote only today, that would be a mistake. It would be unsatisfactory for care in the whole of Gloucestershire, and I am calling on the trust to think again.

There was also £400 million for potholes, which is a priority for my constituents and something that I take very seriously as well. That is an extra £8 million or so for Gloucestershire. I also welcome the measures to safeguard businesses in our high streets. We all know that they are facing increased pressures, but to take a third off the business rate bill of small businesses in my constituency is a shot in the arm for our high streets and is something of which we can be proud. When I went round high streets in Cheltenham over the weekend, the news from the Chancellor was welcomed. Businesses could look towards a future with real optimism. The scope to roll out these measures is only provided by managing the economy fairly and sensibly. We do not take measures simply because we take some pleasure in eradicating the deficit for the sake of it; we do so because we want to create opportunity in our society. We want to say to our young people, “Be brave and be bold about the future because it is an exciting future.” A country that loses control of its finances loses control of the prospects of its young people. That is why I take pride in what the Chancellor has delivered and why we can say in confidence across this House that the United Kingdom’s best days lie ahead.

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[Julian Knight (Solihull) (Con)]

Thank you, Mr Deputy Speaker, for letting me speak a bit earlier than I expected. It is a great pleasure to be called so early and I will not abuse that generosity by speaking for too long, because I know that many colleagues want to speak in the debate. I just wish to cover a few areas that have come up in the debate and the Budget more generally: first, the higher rate tax thresholds, which have been mentioned by many hon. Members; secondly, corporation tax and small businesses; thirdly, debt, which my right hon. Friend the Member for Wokingham (John Redwood) spoke about so interestingly; and, finally, fuel duty and car taxes more generally, which is pertinent to my constituency, with its 9,500 car workers.

On the higher rate tax, I was interested in what was said by the right hon. Member for Twickenham (Sir Vince Cable), who is no longer in his place. There is an amendment in the name of all the Liberal Democrats and it is good to see them here this evening in such numbers. The amendment mentioned the

“provision for a £1.3 billion tax cut for higher earners”.

I pressed the right hon. Gentleman to explain what that would actually mean for productivity and for what we term fiscal drag, a term first used when Gordon Brown was Chancellor of the Exchequer. It happened in the early part of the Labour Government, which came to office in 1997, and was eased over time. In 2010, it was decided, as an issue of morality, that we would also freeze the higher rate of income tax at the threshold. The reality is, however, that in the long term that has quite a damaging effect on the economy. It means that people are being brought into the higher rate of tax who really should not be there. I know that in my constituency there will be, for example, deputy headteachers, locum GPs and middle managers in local government who are paying the higher rate of tax. They would not have done so within the last generation, but they do now.

When people—this applies in the private sector as well—who pay the higher rate of tax are offered any extra work or overtime, they make a calculation: “Do I take that or do I trade that off against what my tax will be as a result of this?” If people are being charged too much tax at this marginal rate, that reduces productivity, and that, in itself, has a damaging effect on the economy. As my hon. Friend the Member for Dover (Charlie Elphicke) mentioned, in 1987, the then Chancellor, Nigel Lawson, lowered the rate of tax from 60p in the pound to 40p in the pound—and guess what? We actually took more tax in as a result.

This is a fundamental point that also applies to corporation tax. Labour Members have made their views very clear in that they would like a restitution of the rate of 26% for large businesses and 21% for small businesses. However, with regard to corporation tax, the proof of the pudding is in the eating—that is, employment. As my hon. Friend the Member for Cheltenham (Alex Chalk) said, the unemployment rate in the UK is 4%. I grew up in a town in the north of England in the 1980s, when the unemployment rate was about 25%. We went through a horrendous recession in our light industrial town. We could not even dream of a rate of 4% at that time. In the EU, unemployment is 8%, on average, and it is 9% in France. My hon. Friend also mentioned Italy and Spain. Think about all those lost opportunities and lost lives through high unemployment. This beds down in communities—I have seen it for myself. The way in which we bring about a culture of work and of higher employment is fundamental to the development not just of productivity but of our society itself.

[Alex Chalk]

Does my hon. Friend agree that unemployment has such a crushing effect on self-esteem and self-worth, and that that is one of the key reasons we should celebrate increased employment—not just for the sake of statistics but because of the individuals whose life chances lie behind them?

[Julian Knight]

I thank my hon. Friend for his intervention—that is absolutely true. If someone is unemployed for 18 months, they are often unemployed for the very long term—for the rest of their life, in some instances. It ruins lives, shortens lives and makes those lives more miserable.

The way in which we have approached corporation tax is absolutely correct. On small business rate relief, my hon. Friend, again—I do not wish to just copy his speech—talked about how that had been very well received in his business community and on his high street. It is a blessed relief that will bring a much-needed boost to our small businesses and to our high streets, which we have to nurture. We cannot have the high street of just the bookmaker, the pub next door, and the charity shop—although charity shops do very valuable work. We need diversity in the high street, not just in terms of retail but living space, opportunity, health and social services.

On debt, as I said in the Budget debate, with a ratio of 82% to GDP, we really should not give ourselves a pat on the back. It is not a good place to be at all. It makes us less likely and less able to effectively withstand the winds of global recession that happen on a cyclical basis. However, we have chosen a path by which, over time, we bring that under control. There are two ways to reduce the GDP-to-debt ratio: through productivity or inflation. The choice of British Governments, for years and years, was inflation. Inflation is a fool’s errand: it destroys living standards and destroys savings. The second approach is productivity. I am really pleased to see in the Red Book that many elements of this Budget really focus and home in on productivity, but we need to keep that going. We need a step change in our economy in this respect.

I turn to what I call car taxes. As the vice-chair of the APPG on fair fuel, and the former chair of said august APPG, I am absolutely delighted to see the freeze in fuel duty. However, I want to make a point about diesel cars in this respect. That is not, obviously, just because my constituency has 9,500 workers in this sector and 93% of the engines that come off the track are diesel cars. We have seen a 45% fall in diesel sales, and that hurts the Exchequer.

This problem originated in Wolfsburg. The irony is that the Germans are now changing their approach with regard to diesel, so the originators of the difficulty within the diesel market are now looking at the market and saying, “Hold on a minute—we need to ensure that clean, modern diesels are supported.” We have a higher excise duty on modern, clean diesels. According to the AA, 270 of the diesel cars currently tested are now within tolerance in that respect. If we have this disincentive, people will hold on to their older cars for longer. These cars can run for a quarter of a million miles—I know; I have one. That means that the older EU5 and EU4 engines will stay on the road longer and pollute more. We need to get really smart about this and construct the tax system to support all modern petrol and diesel engines while, at the same time, aiding the transition towards new technologies.

On the Budget as a whole, it is quite remarkable to note, as a former personal finance journalist, how we used to have a merry time pulling Budgets apart. We could almost guarantee that, by the end of the first day, we would have something to go at the Government on. With this one, that is not the case. That is a testament to the Chancellor and the team. I will be absolutely delighted to vote for this Bill tonight.

Oral Answers to Questions

Alex Chalk Excerpts

Tuesday 6th November 2018 Commons Chamber

[Mel Stride]

HMRC has a central role in ensuring that we are ready for Brexit, specifically in the unlikely event of a no-deal day one scenario. That has included the recruitment of 2,300 additional staff, and we will have an additional 5,000 staff by the end of the year. We are ready, and we will be ready, for wherever this deal lands.

[Alex Chalk (Cheltenham) (Con)]

Motorists want to see the earliest possible end to the traffic misery on the A417 caused by the air balloon pinch point. Does my hon. Friend recognise that the Budget, through its extra firepower for roads, provides the best possible platform for such a vital scheme?

[Robert Jenrick]

I have met my hon. Friend and his Gloucestershire colleagues to discuss this matter. It was with strategic roads and roundabouts, such as the air balloon roundabout, in mind that we made the largest ever investment in our strategic road network. Decisions on specific roads will be made next year.

World Menopause Day

Alex Chalk Excerpts

Thursday 18th October 2018 Commons Chamber

[Rachel Maclean (Redditch) (Con)]

Thank you so much, Madam Deputy Speaker. You speak so much truth and I am glad that you have put those words on the record from your position—they will carry a lot of weight.

I pay tribute to the hon. Member for East Lothian (Martin Whitfield), who gave an absolutely brilliant and heartfelt speech that I know will resonate with all the women throughout the country and around the world who are watching this debate. They will be so happy that he, as a man, is championing this issue. If only every man was as warm, empathetic and well informed as he is, we would not be having this debate. I look forward to working assiduously with him and colleagues from all parties to reach that position, which I very much believe we will.

As has been said, we have already tackled many taboos in this place and in our society, and this is genuinely one of the last taboos. It is now okay to talk about mental health, and that is a really good thing. A lot of celebrities now talk about their mental health. It is all over social media, in the press and on the television. People are backing that, and people are coming forward to say, “It’s okay not to be okay.” Somehow, however, menopause is still left out, and this debate is a fantastic chance to put that right.

I started on this journey pretty much as the hon. Member for Lothian East described—

[Alex Chalk (Cheltenham) (Con)]

East Lothian.

[Rachel Maclean]

East Lothian—I am so sorry. Please forgive me.

I was 50 when I was elected, so I was of course well within that perimenopausal/menopausal age myself. I did not conform to the menopause stereotypes, as I shall touch on later in my speech. There is so much ignorance out there. It is generally believed that someone has to suffer from the key symptoms, such as hot flushes and night sweats—that that is basically all that menopause is—but menopause is so much more than that. It is not just hot flushes and night sweats, and I am living proof of that. I have never had a hot flush or a night sweat, but I am most definitely menopausal. My symptoms revolve around quite debilitating migraines, sometimes on an almost daily basis when I am not able to manage the stress of this job. As was rightly said, this is an incredibly stressful job and an incredibly stressful workplace, and we cannot just take a day off and go and lie down in a dark room to sleep off a migraine, much as we all might like to, even if we are not menopausal. Many women working in other walks of life who are perhaps at the peak of their careers, or who work in any stressful environment, are not able to get the support that they need.

We saw a shocking demonstration of the ignorance in society from no less a figure than the Governor of the Bank of England, Mark Carney, who not long ago compared the economy with the menopause. He said that we are suffering a menopausal economy. He came back and defended that, saying that he did not mean it or whatever, but his casual use of those words demonstrated a fundamental lack of awareness of a leading figure in our country. It is not right. With that phrase, he made me so angry—and not only me but many other people. That made me think that I could not sit there and not be a voice for all the women out there who do not have the privilege of being able to raise the issue in this place.

So, I had my personal journey, and I started to look on social media and do some more research to educate myself. As the hon. Member for East—[Hon. Members: “Lothian.”] I will get there in the end!

[Alex Chalk]

The East Lothian question.

[Rachel Maclean]

Yes; thank you.

The hon. Member for East Lothian said that social media plays a big part in this, and it is where I started my journey. From my research and conversations, I recognise that millions of women in this country do not feel listened to at this time of their lives. That was where my campaign started—from a place of wanting to represent those women.

We still have a long way to go. Last night, when I was voting in the Lobby, wearing this #MakeMenopauseMatter badge, I was approached by a very senior colleague, who shall remain nameless. His comment was: “Why—are you having a hot flush, dear?” That was said to my face. My goodness, does not that illustrate how we need to raise awareness? This is not a women’s issue; it is a society issue. It is for everybody, because every man works with a woman, is related to a woman or lives with a woman. People cannot just denigrate and belittle experiences that can be incredibly difficult for women to push through. I pride myself on being quite a feisty person. I am not afraid to say what I think and I definitely told that Member what I thought about that comment. I said, “Please, come to the World Menopause Day debate and find out why that comment is completely inappropriate and, hopefully, learn a bit more.” I am delighted to say that he is in a minority. I pay tribute to the many male colleagues from all parties who have been supportive of the debate and this issue.

I am not asking for a lot—perhaps I am, but I do not regard it as a lot. I regard these things as quite basic. The hon. Member for East Lothian has already touched on the key issues, the first of which is the workplace. We are in an extraordinarily unusual workplace where there are issues for not only the people who work here, but Members ourselves, but there are many more workplaces up and down the country. It is not too much to ask—is it?—for workplaces to be better prepared for women going through this change of life. The process can be extremely positive. If women get the support, understanding and empathy that they need from their colleagues, there is absolutely no reason why they cannot make this into a fantastic time in which they can move on to a new chapter of their lives, and flourish and contribute in different ways.