Finance (No. 2) Bill (Fourth sitting)

Alison Thewliss Excerpts

Committee Debate: 4th sitting: House of Commons
Thursday 11th January 2018 Public Bill Committees

[Peter Dowd]

The measures in clause 26 are aimed at aligning and consolidating tax and accounts. This clause will freeze the indexation allowance currently in place for companies’ gains that are chargeable to corporation tax. As things stand, companies do not have to pay tax on the proportion of their capital gains attributable to inflation. Instead, as hon. Members know, what happens is that when calculating a gain on the disposal of an asset, companies apply an indexation factor on the acquisition, enhancement or disposal of the asset that reflects movements in the retail prices index over the period since the expenditure occurred.

This system is different from the treatment of individual taxpayers, for whom the allowance was first frozen in March 1998 and then abolished in April 2008. That prompts the question: why was the allowance for companies not reformed and abolished at the same time, to avoid the situation that we have had for the past nine years, whereby there has been one set of rules for individual taxpayers and another for companies? However, we are where we are. It is another example of a needless complication in the tax system that causes problems for lawmakers, tax accountants, financial advisers, Her Majesty’s Revenue and Customs and taxpayers alike.

The indexation allowance is in effect a tax relief from capital gains tax on inflation. The allowance may have been minimal before the drop in the pound, but with inflation at 2.8%, 3% and so on, it is potentially becoming a substantial amount of money. According to the Treasury’s estimates, the change could be a significant revenue raiser. It estimates that it will raise £30 million this year alone, and that that will go up to £525 million for 2022-23. Of course, that revenue would be a welcome addition to the public coffers, but we have a degree of scepticism about the figures, because in the past we have had from the Government figures and costings for measures that have been out of kilter quite heavily.

The most recent example was the revenue to be raised from the soft drinks industry levy, which was introduced in the first Finance Bill last year. Hon. Members may recall that that was dealt with in the wash-up. Opposition Members agreed to it going through its stages pretty smoothly. We always have concerns when there is a question about whether we can sufficiently challenge Government proposals, but as this was the sugar tax, and it was not just a tax-raising measure but had broader public health benefits, we were happy to allow it to go through. It was suggested in the draft proposals that the levy would raise an ambitious £520 million. However, the Chancellor announced in the 2017 spring Budget that its estimated revenue had been revised down to £380 million, and the Office for Budget Responsibility forecast in December, on the basis of the Government’s Red Book for the autumn Budget, that it would raise only £300 million. That is a whopping £220 million less than the Government’s original forecast, and a further £80 million less than the revised figure that the Chancellor provided in the spring Budget.

It is important for us to be clear. If the Government provide us with figures—I believe that they did so in good faith—we have a duty to challenge them. That miscalculation—I use that word rather than any other—only adds to the growing hole in the public finances. It is important for us to challenge the Government’s figures and assumptions.

That is why the Opposition tabled amendment 48, which would require the Government to commission a review of the revenue effects of freezing the indexation allowance for gains chargeable to corporation tax. I am sure that the Minister is sympathetic to our concern that some companies may still seek a way round the change, rather than paying an increasing amount on the inflationary element of gains. The amendment is an attempt by the Opposition to say, “Fine, the Government’s indexation proposal is okay—but let’s test the figures a little more.” Let us have a review. Let us ensure that we are not in the same situation as we were with the soft drinks levy, which does not raise as much revenue as we thought it might.

[Alison Thewliss (Glasgow Central) (SNP)]

The Minister will be aware that the insurance industry has raised concerns about the impact of the clause on fairly small savers, such as people with endowments that were sold door to door. There is a report on the BBC website that quotes Steve Webb, a former Minister who now works with Royal London, on the impact that the clause will have on Royal London’s savers. Standard Life is also reported to have concerns. We are therefore not entirely content with the clause. We will not oppose it at this stage, but we reserve the right to look at it again on Report.

We would like the Government to address the industry’s concerns, and I have a few questions for the Minister. It is estimated that the clause will affect 11.6 million policyholders, most of whom are basic rate taxpayers, and the industry estimates that the impact will be in excess of £250 million per year—double the figure implied by the Chancellor at the Treasury Committee in December. Individual life insurance policyholders may pay an average of £21, and in some cases up to £150, per policy per annum. That is a considerable impact given that such people have relatively small savings.

The Chancellor said in December in response to my hon. Friend the Member for Dundee East (Stewart Hosie), who sits on the Treasury Committee, that the change will have a “modest impact”, but that is not a modest impact for those savers—it is significant. The policies that the clause will affect include non-pension unit-linked, non-pension with-profits and whole-of-life policies, as well as endowments, which I mentioned. On what basis did the Government reach the conclusion that the change will have a modest impact and affect a relatively small number of policyholders? We are talking about 11.6 million people—not a small number by any manner or means. Those policies may represent a relatively small amount of money to the Government, but the change will have a significant impact for those people.

Have the Government made an assessment of the number of policies affected? Have they produced a detailed impact assessment that can be shared with members of the Committee? Will the Minister commit to providing further information on the impact of the policy on individual savers? The coverage in newspapers at the time of the Budget and since raises concerns that more policyholders will be affected than the Government at first assumed.

I would like as much clarification as the Minister can give us today. If he could write to me later with more detailed information, that would also be welcome. We want to put on record our concerns about the impact there might be; perhaps there will be unintended consequence, and maybe the impact has not been fully considered. Given the concerns that the industry is raising, it would be good get a commitment from the Government on how those will be addressed.

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

The clause freezes the indexation allowance—a relief for inflation—for a company’s chargeable gains for disposals on or after 1 January 2018. It may be useful for the Committee if I set out the background to the clause, although other Members have touched on it, before I turn to amendment 48 and the questions posed by the hon. Member for Glasgow Central.

Removing this outdated allowance supports the UK’s competitive rate of corporation tax by removing a relief that is not available consistently across corporation tax to individuals, as the hon. Member for Bootle pointed out, or in most major comparable economies. In doing so, the Government recognise the importance of being fair and proportionate. As companies may have factored in relief for inflation before the autumn Budget, relief will remain available for inflation before January 2018. However, it will no longer be available from 2018 onwards.

Companies pay tax on the capital gains they make on the disposal of certain assets, such as property. In most circumstances, the capital gain is based on the rise in value of the asset over the period of ownership. Indexation allowance relieves a proportion of that gain from the charge to tax, based on the rise in the retail prices index, during the same period. Companies therefore pay tax only on the gains they make over and above inflation.

The economy and tax system have changed substantially since the allowance was introduced in 1982, when the rate of corporation tax was 52%; inflation in the preceding decade had been in double digits. While I certainly take on board the hon. Gentleman’s point about the current level of inflation owing to the depreciation of the pound and other factors, the Office for Budget Responsibility projects that inflation will peak at 3.1% and tail off towards 2% across the period. While there used to be a rationale for such an allowance, it has become something of an anachronism.

The amount of indexation allowance due is calculated by multiplying the purchase price of the assets by the indexation factor. As I set out, that is currently based on the increase in the retail prices index over the period an asset is owned, from the date it is acquired to the date it is disposed of. Going forward, the allowance will no longer be calculated by reference to the date an asset is sold; instead, it will be calculated by reference to the final month before the relief is removed—in other words, December 2017. That means that, where a company acquired an asset before 2018, relief from inflation will be available from the date the asset was acquired up to December 2017. The indexation allowance will not be available for assets acquired from January 2018 onwards.

I turn to the questions posed by the hon. Member for Glasgow Central. I recognise the points that she makes. While these changes affect corporation tax, they do, in the context of life assurance policies, have potential impacts on individuals and their income net of tax. I do not recognise the large number of 11 million policyholders that she mentioned. I am not sure what the source of that figure was. However, as she requested, I am happy to hear from her, speak to her or have a letter from her on any of the aspects she may have an interest in.

Finance (No. 2) Bill (First sitting)

Alison Thewliss Excerpts

Tuesday 9th January 2018 Public Bill Committees

[Kirsty Blackman]

I appreciate the chance to speak, Mr Owen, and I thank you for being our Chairperson.

Last year, the Chartered Institute of Taxation, the Institute for Government and the Institute for Fiscal Studies produced the “Better Budgets” report about the parliamentary process for dealing with the Budget. They raised a number of concerns, some of which have already been dealt with by the Chancellor, such as the fact that there are two fiscal events a year; he has moved to having one fiscal event a year, which is welcome.

The beginning of the report summary says:

“During conversations with people across the tax system, from officials and experts through to practitioners and representative groups, we have heard that the exceptional processes around tax policy making—in particular, secrecy, more limited scrutiny and challenge, and the power of the Treasury—have led to an ever-lengthening tax code, beset by a series of problems: confusion for taxpayers, poor implementation, political reversals and constrained options.”

Some of those are issues with the Budget, but others are issues with the Finance Bill process. One of the report’s key suggestions, which I have been pursuing in this House, and will continue to, even if I do not win today, is about the fact that the Finance Bill Committee does not take evidence. We have been told that that is due to lack of time, and that scrutiny of the Finance Bill needs to be curtailed and completed in a very short period. However, measures in the Finance Bill are very technical, and we have a short time in Committee. If we added just one extra day, we could take evidence.

The “Better Budgets” report said:

“The lack of stages in the House of Lords should mean that the Finance Bill is subject to particularly intense scrutiny in the House of Commons. But the reverse tends to be true”.

It also said:

“debate on the Finance Bill could be improved by using some of the committee sessions to take oral evidence”.

The three programme motion amendments that I have tabled allow us to do that. The Bill has already been in Committee of the whole House. I think it is reasonable, after Committee of the whole House, to take evidence on the generally more technical measures debated in Public Bill Committee.

The three amendments that my hon. Friend the Member for Glasgow Central and I tabled suggest that this Thursday we take evidence from the Treasury, Her Majesty’s Revenue and Customs, the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chartered Institute of Taxation. All those organisations will know more about tax, and probably about the impact of the measures, than most of us in this room. Obviously, the Minister will have briefings, and a whole team who can explain the issues to him, but we need to hear from those organisations and to be able to question their representatives. I have been frustrated in the past when asking the Minister questions during debates on the Finance Bill. Perhaps I have had a bit of an answer towards the end of his speech—the Minister is quite good at attempting to give answers—but that is too late. If we had had that conversation with many other people at the beginning, we would all have been in a much better position. That would have meant much better scrutiny.

[Alison Thewliss (Glasgow Central) (SNP)]

My hon. Friend makes a very good point on the need for evidence. Some of the written evidence submitted to the Committee —it was made available very late, I must say; it came yesterday at around 4 pm, which gives us very little time to read a huge amount of evidence—suggested that there are things that need to be changed and that people would like to see tweaked. However, without having oral evidence and being able to interrogate people for it, it is very difficult to weigh up the evidence in the context of the Bill.

[Kirsty Blackman]

I would go so far as to bet that all Committee members have not read all the written evidence that has been provided. I bet that they have not had time, given that the customs Bill is running at the same time, and the majority of us who are Front-Benching for that Bill are also Front-Benching for today’s Bill.

The timescale is not working. If we were to allow evidence sessions this Thursday, and then allowed the Public Bill Committee stage to stretch slightly—I am not sure it would even end up stretching as far as 18 January, because we could have a number of sittings before then—that would be a really positive change for the Committee. We would all be better informed, and it would be a good step for scrutiny and transparency, which the Government and the ministerial code suggest that we should have.

--- Later in debate ---

[Mel Stride]

I thank the hon. Member for High Peak for speaking so thoroughly to her new clause. While I recognise many of the challenges she has rightly raised, which families up and down the country are facing— nobody belittles those—I do not recognise the picture she paints of eternal gloom and night of what this Government have achieved with our economy and for hard-working families. We have done a great deal to help those who are less well off. The hon. Lady herself raised the issue of the increase in the personal allowance, which has rocketed since 2010 to over £11,000 today. Indeed, that has taken 3 million low-paid workers out of tax altogether. They pay no income tax at all. Those are 3 million low-paid workers who paid income tax under the last Labour Government and are no longer paying that tax under this Government.

We have just had a Budget in which we took a number of specific measures to help those who are less well off. We froze fuel duty for the eighth year in a row. We increased the personal allowance for the seventh year, as the hon. Member for High Peak pointed out, taking even more people out of tax. We will increase the national living wage, a measure that this Government have brought in, by over 4% in the coming April.

[Alison Thewliss]

Does the Minister accept that the national living wage is not a real living wage, as set by the Living Wage Foundation, and it is not available to those under the age of 25? How will they be helped?

[Mel Stride]

I would say to the hon. Lady that it was not available to anybody under the last Government. That is the point—it is available now. One of the consequences of these measures and others the Government have introduced in our stewardship of the economy is near-record levels of employment. That is a staggering statistic: we have the lowest level of unemployment since around 1975, or for over 40 years. We have more women in the workforce than at any time in our history. While the hon. Member for Bootle would say that we do not believe we are all in it together, we do. There is clear evidence for that, as under this Government, the wealthiest 1% pay almost 28% of all income tax. Under the last Labour Government, that figure was lower and that is a demonstrable fact: it was around 23%. There has been a huge proportional increase in the burden carried by the wealthiest in this country.

Finance (No. 2) Bill

Alison Thewliss Excerpts

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

[Kirsty Blackman]

I will not.

On transferable tax history, I am pleased that the UK Government have committed to changing the tax regime for late-life oil and gas assets. The Minister nods, because he has heard me go on about this on a number of occasions. I welcome the change. I ask him to work with stakeholder groups on a deal for the oil and gas sector. Given the changes to the oil price, there is still a feeling of pessimism around Aberdeen on some days. I would like the UK Government to commit to supporting the Oil and Gas Authority’s “Vision 2035” for the sector, which I think has cross-party support. This is incredibly important. It is critical to the future of the north-east of Scotland in particular, but also that of the United Kingdom as a whole, for the oil and gas sector to be supported and for our supply chain to be anchored in the UK so that it can continue to pay taxes even when North sea oil has run out. “Vision 2035” is key, and it is part of the sector deal that Oil & Gas UK and other stakeholder groups are seeking. I hope very much that the Minister will sit at the table with those groups and ensure that what they need for the future—what they need to ensure that they continue to pay tax—is realised in a sector deal.

As we have heard, the Bill makes changes to allow first-time buyers to get on to the housing ladder. I have already made clear my concerns about the changes to land and buildings taxation that are proposed, which echo concerns that have been raised by the Office for Budget Responsibility, as well as a number of experts. To improve access to the housing market, the UK Government should follow Scotland’s lead and commit themselves to more social housing.

I spent eight years as a local authority councillor. By far the biggest part of my casework was presented by people who came through the door and said that they were unable to obtain a secure tenancy in a social house in the knowledge that the landlord would not chuck them out in a year provided that they continued to pay rent. The fact that that problem still exists, in Scotland and throughout England, is due to Margaret Thatcher’s right to buy. Unlike us in Scotland, the UK Government have not made any reductions in the scheme, and council housing stock has been decimated as a result. We in Scotland are trying to right the damage that has been done. We are focusing on social housing and will continue to do so, and I urge the UK Government to do the same.

[Alison Thewliss (Glasgow Central) (SNP)]

My hon. Friend is making a very good point about the right to buy. Apparently about 40% of the houses that were sold off as a result of the scheme are now in the private rented sector, and a greater cost is being incurred in the form of housing benefits, so the policy does not even make economic sense.

[Kirsty Blackman]

I agree with my hon. Friend. Having observed the real-life impact on people who came through my door, who were having to squash themselves into two-bedroom council houses with their parents, brothers, sisters and children, I am certain that we need to build up our council housing stock, and that is what we continue to do in Scotland.

The last substantive issue that I want to raise is the unfairness that faces the WASPI women. The UK Government continue to fail those women. They could have made changes in this Budget and the Bill, but they failed to do so. We will not rest until fairness is won for the WASPI women.

There are so many problems with the Bill. It does not fix the many unfairnesses that the UK have created. Wages continue not to rise, and people and families are feeling poorer as a result of continued austerity and economic mismanagement. This Government are not strong and stable, and they are not helping those who are “just about managing”.

--- Later in debate ---

[Mr Alister Jack (Dumfries and Galloway) (Con)]

Thank you, Madam Deputy Speaker. I will shorten my words accordingly.

I would like to congratulate the Chancellor of the Exchequer on proving that he can do a lot of good with what is, at 184 pages, a relatively—I stress the word “relatively”—short Finance Bill. While the Bill is short on sheer word count, it is certainly not short on provisions that will help to make both Scotland and the United Kingdom fairer and more prosperous places to live. For example, as my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) has said, the Bill gives effect to the announcement in the Budget that the UK Government will clear up the Scottish National party’s mess and create a special exemption from VAT for Police Scotland and the Scottish Fire and Rescue Service. That special exemption has had to be made because of the stubbornness and incompetence of the Scottish Government, who pressed ahead with the centralisation of Scotland’s police and fire services even though they knew that the way in which they were conducting that centralisation would cost those services their VAT exemption.

[Alison Thewliss]

Is the hon. Gentleman aware of the extensive correspondence on the Scottish Government’s website that provides evidence of the Scottish Government’s efforts to persuade colleagues down the road here that the exemption was valid? If the exemption in the Budget for combined authorities in England and Wales is valid now, surely Scotland’s fire and rescue services are due their £140 million back.

[Mr Jack]

This House made it clear at the time that if the Scottish Government went ahead with the centralisation, they would not be able to reclaim the VAT. It is no good the SNP having a grievance and looking back to claim that £140 million when Budgets are clearly forward-looking and we have to be responsible for the public finances. However, we have now sorted that problem out.

--- Later in debate ---

[Jack Brereton (Stoke-on-Trent South) (Con)]

This is an important Bill for the long-term future of our country. It builds on hard-won progress, develops on the transition to Brexit, and sets out necessary measures to ensure that the UK economy is fit for a successful and sustainable global future. I welcome the emphasis the Chancellor gave in his Budget to the importance of improved skills, cutting-edge technology, world-class infrastructure, and the domestic fairness of a sustainable cost of living for the British people.

At a time when we are focused on the historic change that will come from Brexit, it is critical to stick to the Government’s commitment to financial and fiscal stability so that we can build a Britain and a Stoke-on-Trent fit for the future. I particularly welcome continuing efforts to make the tax system fairer and simpler. The latest raft of anti-avoidance measures ensures that legitimate reliefs are not abused.

It is important that the tax system can encourage behaviours that are beneficial to the economy, thereby supporting businesses to create more jobs and allowing our workers to prosper. For my constituency, it is essential that we continue to support our communities enabling them to flourish, and a critical part of that is ensuring families can take home more of the money they earn.

I am pleased that the Government are doing more to ensure we see not only more jobs, but better pay and improved skills. Continuing to increase the national living wage and the personal tax-free allowance will mean that my constituents will take home more in their pay packets.

[Alison Thewliss]

The national living wage that the hon. Gentleman speaks of is not actually set at the national living wage rate. Does he agree that there needs to be a real national living wage that is available to everybody, including those under the age of 25?

[Jack Brereton]

If the hon. Lady looks at this, she will see that the national living wage is continuing to increase. I know what she is referring to, but we are continuing to increase the national living wage, which will mean people taking home more money in their pay packets. We are reducing taxes on people’s earnings and helping constituents right across the country.

For areas such as Stoke-on-Trent that have a strong manufacturing tradition, opportunities have arisen for a sustained revival of our industry. Goods exports have been rising faster than service exports. “Despite Brexit”, as some attempt to say, the latest purchasing managers’ index for manufacturing activity hit an encouraging 51-month high. The revival is in no small part thanks to the path of national financial stability that the Bill continues, working in tandem with our modern industrial strategy. In addition to that work within the UK, we can look forward to the Government championing new trade agreements beyond our shores, both with our close friends in the EU and with overlooked partners in the wider world, allowing manufacturers in my constituency to trade more of their fantastic products abroad.

Only last week I was delighted to welcome the Secretary of State for International Trade to my constituency to see with his own eyes the reality of, and the further potential for, Stoke-on-Trent’s manufacturing export revival. He told me that in the past year there have been 58,000 tech start-ups across the UK, which is more than in any other country, and that our uniquely attractive intellectual property regime is key to this success. I want to ensure that Stoke-on-Trent shares in this growth, that our industries feel encouraged by IP protection, and that tech jobs are increasingly accessible to my local residents. By getting our skills base right, including the skills that many businesses need to become exporters for the first time, we will enable our businesses to trade more of the fantastic goods we produce. Having a workforce that is more skilled and productive means that our people and communities can become more prosperous.

Stoke-on-Trent’s part of the deal is to keep making the best products in the world, particularly in ceramics, which is the lifeblood of Stoke-on-Trent. The Government’s role as the driver of global Britain must be to open world markets to our local manufacturing excellence while, of course, guarding against unfair dumping by rogue competitors. In short, we need to grow our skills base while ensuring a level playing field in global markets.

Despite the sheer hard work of my constituents to improve productivity locally—it is, indeed, up—gross value added in Stoke-on-Trent is comparatively low compared with that of the rest of the country. It can be tempting to say that this is all a function of trends of economic geography, yet we have shown in recent years that we can indeed increase our local rates of productivity. We clearly have a great deal of potential that is yet to be realised, and key to achieving that will be to work with an enabling Government in developing a sector deal for ceramics. We need to invest in new infrastructure to enable businesses to innovate, prosper and create the skilled jobs that people need. This means local partners coming together to diversify and advance skills, working towards our global ambition for a dedicated ceramics research park. This will turn an old quarry into a world centre of excellence: a place rooted in the authentic heritage of the potteries where innovation in science, technology and design come together to drive economic growth. As I stressed to the International Trade Secretary, in Stoke-on-Trent we make not just world-class ceramic art and decorative goods, but advanced components for the high-tech automotive, aerospace, defence, digital, renewable energy and medical industries.

Far from being an industry of the past, ceramics is at the very forefront of the digital, high-tech future that the Government have rightly chosen to champion and that the Chancellor absolutely dedicated himself to in his Budget. Just as there is an internationally important life sciences cluster just to the north of Stoke-on-Trent, so there can be an advanced design and manufacturing cluster in Stoke-on-Trent itself. The UK ceramics industry is hugely ambitious. It seeks to secure significantly increased year-on-year growth and to increase our international market share. A sector deal could double the GVA and exports of the industry within the next decade. I am delighted that my hon. Friend the Minister for Climate Change and Industry wrote to me recently to confirm that the Government are actively considering the proposals from the sector, and that she welcomes the sector

“being so positive about the future opportunities”.

We are indeed positive about the future opportunities, no matter how much the Labour party seeks to talk Britain down.

One area where more needs to be done is in improving the rail services in Stoke-on-Trent, as there has been a lack of attention to this over many decades. I welcome, however, the commitment made by the Secretary of State for Transport that Stoke-on-Trent will be served by HS2. Enhanced rail connectivity could transform the future prosperity of the city and help to deliver new housing and jobs growth. I also welcome action to expand the rail network’s capacity, and to open, or reopen, many new local stations. There is also clear potential for increasing the frequency of services through my constituency, and for new or rebuilt stations at Fenton, Meir and Barlaston, and for World of Wedgwood and the bet365 stadium, for Stoke City football club. All those are in my constituency. With a heritage action zone now announced for Longton in my constituency, an enhancement of rail services there could propel the town as a visitor destination. There will be similar projects across the country, and it is to the Government’s credit that they have enabled so many of them to come forward as part of the localism agenda.

The Government have worked hard to increase our international competitiveness and to rebalance the economy domestically. We are also working hard to enable smaller businesses to grow and compete with global players. Local workers on the ground in Stoke-on-Trent should be the focus for a global Britain. We are talking about those who voted overwhelmingly for not just Brexit, but an improved quality of life. Improving the skills base, alongside boosting wages through lower taxes and an increased national living wage, will enable local workers to access the opportunities of global Britain. I am glad the Government recognise that embracing our global future means delivering for my constituents. That is what Brexit must mean, and it is in this context that this Bill moves the Government’s agenda of reform forward. I will be proud to support it in the Lobby tonight.

--- Later in debate ---

[Luke Graham (Ochil and South Perthshire) (Con)]

I rise to speak in support of both the content and the intent of this Finance Bill. As I said in a previous debate, a Budget is not simply a piece of accounting but a statement of intent by the Government for the coming year. As a new Member, it was an honour to lobby and to argue on behalf of my constituents and to be able to see, on 22 November, that the Government had delivered for all of our constituencies in Scotland. I thank my right hon. Friend the Financial Secretary for that.

I wish to take a moment to reiterate the key areas in which the UK Government have delivered for those of us who represent Scottish constituencies: a duty freeze for the Scotch whisky industry; a tax break for the oil and gas industry through the transferable tax history scheme; and a funding commitment to a number of city deals across Scotland, including for my constituency of Ochil and South Perthshire with the Tay cities deal and the Stirling and Clackmannanshire city deal.

Finally, and perhaps most significantly, the Chancellor removed the VAT payments for the Scottish police and fire services, which are worth an estimated £35 million to £40 million a year. That in particular should not be underestimated. The Scottish police and fire services were liable to pay VAT in the first place only due to the centralisation of the services by the Scottish National party Administration in Edinburgh. Since that centralisation, the cost to Scotland and its key services has been £140 million.

[Alison Thewliss]

Will the hon. Gentleman give way?

[Luke Graham]

Not just now. I wish to make more progress.

That decision was made in the face of warnings. It was an entirely political decision, fuelled by the SNP’s central belt bias and obsessive power-grabbing in Edinburgh. It therefore fell to the Scottish Conservative group to fight for Scotland and to the Conservative Chancellor to rectify those extremely damaging errors inflicted on Scotland by the SNP.

Having been shown who is truly “stronger for Scotland”, the SNP has made it its mission to undermine the hard-won successes for Scotland and to dismiss the efforts of the Conservative group here in Westminster and the Conservative Government, who have helped to deliver so much for Scotland. We all know why it has done so: it does not fit in with its narrative of grievance for the Conservatives not only to act in the best interests of their constituents and to have them at heart, but to deliver on those interests.

Ahead of Thursday’s Scottish Budget, we can all safely expect the SNP Administration in Edinburgh to carry on with their shameless Westminster finger-pointing, blaming Westminster for giving them the exemption on VAT; chastising Westminster for giving them the “wrong” money; and demanding even more from the Scottish people in the form of tax increases imposed by Holyrood.

Those are all significant broad-brush statements, but I wish to go into some detail about what the measures in the Budget mean for our constituencies in Scotland. For those who are not familiar with the hugely beneficial impact of the Barnett formula in Scotland, let me explain that Scotland benefits to the tune of £1,750 per head by remaining a part of the United Kingdom. It is also worth reminding Members that, in practice, that represents a higher rate of spending per head than England and Wales. Before we get into a dispute about figures, let me tell the House that those statistics are from the SNP’s own Government expenditure and Revenue Scotland figures. In addition, we very much welcome the £600 million more that will be spent on rail, which is an increase on the last spending period.

[Luke Graham]

I could not agree more, and I will go further into those dividends shortly.

The Government have delivered an additional £2 billion to Scotland in the Budget, which should be a reason to rejoice. However, they are being criticised by SNP Members. [Interruption.] The House can hear them trying to talk me down now, which is not a surprise, because no matter how high the price or how good the deal, the SNP is not satisfied. It reminds me of the Roald Dahl story, “Charlie and the Chocolate Factory”. We have the political manifestation of Veruca Salt sat just across from us; SNP Members go from room to room, shouting what they want and demanding more and more, yet they are never satisfied. Conservative Members have heard the interests of our constituents and we have delivered for them.

[Alison Thewliss]

Does the hon. Gentleman not accept that the Government are actually creating far more families like Charlie Bucket’s, with old people huddling together in bed because they cannot afford to live?

[Luke Graham]

I could not disagree more. More money is going directly to frontline services, and we are lowering taxes for the working families who are most in need, so the hon. Lady will see that Charlie and Grandpa are on the Government side tonight, not the SNP side.

As we look ahead to the Scottish Budget on Thursday, colleagues in this House and in Holyrood will be waiting with bated breath to learn precisely how the SNP plans to pass the additional money to local authorities for the roll-out of broadband and other key areas of investment that it has thus far undermined. To see how contradictory some of the SNP’s behaviour is, it is worth looking at how the party misuses the powers it has, refusing to pass some of the increases in the block grant to education and health funding—matters that are explicitly devolved. As we heard in the Budget, the block grant has increased to more than £31.1 billion, which is a real-terms increase over the spending review period and up from £27 billion in 2011-12. What does that mean for our constituents? Well, we have a breakdown of how devolved spending is carried out in public services, thanks to Jim Gallagher. Under the SNP, NHS Scotland is underfunded and understaffed. Health spending in Scotland has increased more slowly than in England over the past 10 years, growing by 34% compared with 50%. Per head, that translates to spending growth of 39% in England but only 28% in Scotland.

SNP Members may complain about Tory austerity, but their argument does not stack up. Her Majesty’s Treasury figures show that total health spending increased by 9% in England between 2011-12 and 2015-16, but only by 3.4% in Scotland over the same period. After 20 years of devolution and 10 years of an SNP Administration, people living in Scotland still have the lowest life expectancy in the United Kingdom. That is a damning indictment of the financial choices the SNP has taken in Holyrood with funding from this place. I could go on, but I am conscious of time.

Budget Resolutions

Alison Thewliss Excerpts

Thursday 23rd November 2017 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

I am delighted to be able to speak in this Budget debate on the issues of public services and housing, both of which are intertwined in defining quality of life. They are key aspects of what should have been a Budget for people and prosperity. Unfortunately, this chaotic Tory Government just limp on in crisis and have failed to deliver on either.

One way to inject further funds into public services in Scotland would be to pay Police Scotland and the Scottish Fire and Rescue Service in full the £140 million they are due in backdated VAT. I welcome, of course, the announcement that the Chancellor made yesterday, but if the logic of the argument is true today and yesterday, it must have been true in 2015, when we submitted it as an amendment to that Finance Bill, and it must have been true when the Scottish Government made numerous and lengthy representations to the UK Government on this matter prior to, during, after and since the implementation of the single services. I have read those representations, and it is absolutely clear that discretion has always rested with those who make the rules: the UK Treasury. We see that in the announcement yesterday. The Government could have saved not only money, but a good deal of civil service time and effort if they had conceded this point six years ago. The Tories and Labour in Scotland have supported the establishment of Police Scotland and the Scottish Fire and Rescue Service in their manifestos. Support for the principle of single services is not in dispute.

In October, Chancellor stated:

“We discussed this with the Scottish Government before they made the decision to unify the police, we warned them that under EU law they would not be able to recover VAT if they made this move, the Scottish Government told us that they had calculated that the savings they would make would be sufficiently great that even with the loss of the VAT recovery ability it was still a sensible thing to do—that’s their decision, a decision which they made, and we are now constrained by the VAT rules that are in place.”

Was the Chancellor misleading the public when he stated that to drop the VAT would break EU law?

Moreover, Murdo Fraser MSP, who was clamped gloriously today by Nicola Sturgeon, stated that

“because both Police Scotland and the Scottish Fire and Rescue Service are not part funded through local taxation, there is no justification for a VAT refund.”—[Scottish Parliament Official Report, 31 October 2017; c. 77.]

It seems entirely unclear as to why the Scottish Conservatives believed that there was no justification to scrap the VAT then, even a few weeks ago, yet now advocate it and actively celebrate it.

I also noticed, buried away on page 39 of the Budget Red Book—it is getting shorter, because the Government used to hide things on page 88 back in 2015—that there is a change relating to VAT for combined authorities and fire services in England and Wales. This is very interesting. At the top of page 39, under the heading “combined authorities” it states:

“Through Finance Bill 2017-18, legislation will be amended to ensure UK Combined Authorities and certain fire services in England and Wales will be eligible for VAT refunds.”

How curious! Could it be that the Chancellor realised that he could not possibly make these changes for English bodies without accepting the logic for changes in Scotland? If so, claims of influence from the baker’s dozen on the Benches across from me have less substance than a cream puff. This UK Government, having accepted the logic as they did for Highways England, the Police Service of Northern Ireland and academy schools, must now make good their mistake and backdate the VAT.

There is a gaping hole in this Budget where there ought to be a commitment from the Chancellor to scrapping the public sector pay cap. Public services workers have, for years, been asked to deliver more for less, all the while seeing the cost of living increase. The Scottish Government are the only Government on these islands committed to scrapping the cap. I had hoped that, given the demonstrations, the pressure, the commitment and the U-turns, the Chancellor would have been bold and put a figure on this, rather than giving us what was in his mealy-mouthed speech yesterday.

[Chris Stephens]

Is my hon. Friend as concerned as I am that the UK Government’s approach to public sector pay is such that those in male-dominated workplaces will get a pay rise but those in female-dominated workplaces will not?

[Alison Thewliss]

As on so many related issues, my hon. Friend is absolutely correct. The UK Government should commit, as the Scottish Government have, to paying the real living wage—not the pretendy living wage, not the living wage that does not apply to those under 25, not the in-built age discrimination that they continue to perpetuate, but the real living wage as defined by the Living Wage Foundation.

We cannot hide from the fact that workers need a pay increase, because prices are up in a range of areas. The price of basics like bread and butter have increased—bread by 5% and butter by 12%—since the Brexit vote. This is just another example of the Government forcing people to spread too thinly—literally—to get by. The London School of Economics estimated this week that the average household has lost £7.74 per week because of the higher prices in shopping baskets. Ask anyone at the supermarket and they will tell you the same, and it feels like an awful lot more to many people.

I note from the Red Book that the full basic state pension will rise by only £3.65 per week and the full new state pension by only £4.80 per week. That hardly seems enough to meet the increase in the cost of living caused by the Government’s chaotic Brexit obsession. Contrast that with the £82.2 million in sovereign grant funding going to two pensioners and their hingers-oan who live along the road from this building, and it is clear that unfairness is rife in this country. The impact of a no-deal Brexit and the lack of single-market membership will only make things worse.

We cannot deliver the public services on which we all rely without well-paid and well-motivated public sector workers. We must end the pay cap and deliver pay certainty for public sector workers right across the board, not just for those in the NHS, because as hard as they work, there are many others who work just as hard.

We must see appropriate consequentials. I mentioned the money the Chancellor trumpeted for the NHS—some £300 million. If the Government were being fair, Scotland should have had £30 million, but we are getting only £8 million. That is jiggery-pokery of the highest order. We have also lost £600 million for our trains in the Tories’ great train robbery. I ask for that to be put right as soon as possible.

Duties of Customs

Alison Thewliss Excerpts

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Tom Brake]

That might be an issue on which we agree. If we are moving towards a no-deal scenario, there is an overwhelming case for parking the issue of EU and UK citizens’ rights and resolving it, because it is a question of humanity and giving safety and security to the 3 million EU citizens here and the 1.2 million UK citizens in the EU.

The border between Ireland and Northern Ireland has 275 crossings. If there is to be some sort of control, will it be at each and every one of those crossings? Presumably not; otherwise, the number of people that HMRC is going to have to recruit would be much greater than the 3,000 to 5,000 it already needs.

[Alison Thewliss (Glasgow Central) (SNP)]

The right hon. Gentleman is making a good point about border crossings. I have spoken to someone who has the border going through their kitchen. Does he agree that that would pose a practical difficulty for them, should they wish to get to their cake and eat it?

[Tom Brake]

Presumably they would have no difficulty in smuggling their cake from one side of the border to the other.

If some of those 275 border posts were closed down, many issues would ensue. I have heard examples of graveyards with entrances on both sides of the border, and of children going to school and people going to work across the border from where they live. If border crossings were closed, as happened during the troubles, that would be a major issue for Ireland and Northern Ireland. If I were to speak for the next couple of hours, that might give the Minister time to work out what the solution is. Clearly there is not one yet, but perhaps that would enable him to go away and find one.

Finance Bill

Alison Thewliss Excerpts

Tuesday 12th September 2017 Commons Chamber

[Kirsty Blackman]

I agree with my colleague. Given the uncertainty that businesses are facing and their concerns, now is the time to make those decisions and to try to raise the confidence of businesses. This is a real issue, and one that the Government have dodged.

When we debated the Ways and Means resolutions, I mentioned the proposals on museums and galleries, which are in clause 21. I raised the fact that the Value Added Tax (Refund of Tax to Museums and Galleries) (Amendment) Order 2017 has not, as far as I am aware, been laid yet. On 17 July, in response to a written question from my hon. Friend the Member for Glasgow Central (Alison Thewliss), the Government said that that would happen as soon as possible, but as far as I am aware the motion has not yet been tabled. If the Minister gets the chance later, I would very much appreciate it if he said when he does plan to lay the order, because that would be very useful for museums and galleries.

[Alison Thewliss (Glasgow Central) (SNP)]

I have asked some questions about this. My hon. Friend will be aware that organisations such as the Glasgow Women’s Library have had extensive refurbishment work done to their properties, and the VAT refund they can claim will mean quite a lot to small organisations that have made investments in their facilities.

[Kirsty Blackman]

I thank my colleague for that intervention, and I note that the Minister is paying attention.

Ways and Means

Alison Thewliss Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Wes Streeting]

And Manchester, as my hon. Friend says.

[Alison Thewliss (Glasgow Central) (SNP)]

Glasgow.

[Wes Streeting]

Of course, we cannot forget Glasgow. We have several powerful financial centres in the UK. They can contribute enormously to our revenues as well as creating jobs and making the UK an attractive place to do business. However, we should never forget that the crash was a banking crisis, and the thought of politicians—not just the UK Government of the day, but Governments throughout the world—was not that they had spent too much or invested too much in schools, hospitals, teachers, dinner ladies, nurses and doctors, but that the regulatory regime that oversaw financial services was inadequate for the practices of the time. A corrosive greed took hold on Wall Street and in the City and the vast majority of people paid the price.

Economy and Jobs

Alison Thewliss Excerpts

Thursday 29th June 2017 Commons Chamber

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to take part in the debate, as I pick up the baton carried so ably by my friend Eilidh Whiteford to speak for my party here on social justice. I know that Eilidh will be desperately missed, not just by SNP Members but throughout the House. Her stellar work on a private Member’s Bill to ratify the Istanbul convention brought her much praise on both sides of the House, and we all wish her well for her future endeavours.

I congratulate the hon. Member for Gower (Tonia Antoniazzi) on her excellent maiden speech. I do not think that she is still in the Chamber, but she made a fantastic speech.

Social justice issues will once again be at the heart of this Parliament as the UK Government continue to justify their failing austerity policy and, when we leave the European Union, matters such as the working time directive, maternity rights and other workers’ rights are sadly no longer secured at EU level. Our challenge will be to ensure that those hard-won rights are not watered down in any way, and that our workers enjoy at least the same rights as those on the continent. I hope that the two main parties of opposition can work together more closely to put the maximum pressure on this fragile Government and on the Prime Minister, whose coat appears to be held on the shoogly peg by Brexit. I am disappointed to learn that Labour Members are, apparently, to be whipped to abstain on the amendment tabled by the hon. Member for Streatham (Chuka Umunna) on the single market. That is a sad reflection of where the party is at present.

Austerity is a political choice which has failed, and it has failed in terms of the Government’s own economic targets. That failure comes at the price of the people, in Airdrie and Shotts and elsewhere, who have suffered as a result of cuts: disabled people whose employment support has been reduced, the WASPI women who, at the end of a working life of employment injustice, now face pension injustice; and working families who are seeing their tax credits cut. All the social security and public sector cuts that have stretched families and services for the last seven years have failed to deliver what was intended. Perhaps we may now see the UK Government come to realise that fact, and change course.

During the election campaign, the SNP pledged to review the 1% public sector pay freeze in Scotland, which was a hugely welcome step. That appears to have prompted some movement in the UK Government: the to-ing and fro-ing and the hokey-cokey that was going on in Downing Street yesterday. At first Downing Street was briefing that the cap would end, and we could see the relief felt by Tory MPs. Then the sources U-turned on the U-turn, and now we are back as we were—and last night the Scottish Tory MPs shamefully gave the Prime Minister the majority that she needed to maintain the pay cap, without question. The whole sorry episode lasted barely three hours, and it highlights the chaos that lies at the heart of a Government who are leaderless, rudderless and clueless. They clearly want to review the public sector pay cap, so what is going on? Get on with it!

It is time for a proper assessment of the impact of the Welfare Reform and Work Act 2016 to ascertain the damage that has been done to families across these isles. It is time that the Government finally ditched the need for the disgusting rape clause by ditching the two-child rule for tax credits, and it is time that justice was finally delivered for the WASPI women.

[Alison Thewliss (Glasgow Central) (SNP)]

There is currently a great deal of talk about the position of women in Northern Ireland in relation to abortion. Is my hon. Friend aware that when women in Northern Ireland want to avail themselves of the exemption under the rape clause, the third party to whom they refer themselves must hand the case over to the police? That puts those women at risk.

[Neil Gray]

I was not aware of that, and nor, I imagine, were most other Members. It is another sting in the Tory Government’s shameful rape clause, which puts women in such a horrendous position.

Austerity is a political choice, as is evidenced by the Prime Minister’s not only very conveniently stumbling across her long-lost magic money tree, but finding its branches sagging under the weighty £1 billion-worth of DUP fruit. It is just a shame that the new Scottish Tory MPs—and, indeed, the Scottish Secretary—have not been quite so diligent in picking the low-hanging fruit for Scotland’s benefit, as the Democratic Unionist party has done for Northern Ireland. They have failed their first test by blindly following the Prime Minister without question, and that will be hard to erase from the memories of the electorate in Scotland.

On the Bills that we might see during this two-year Session, we know that this will be a Brexit-dominated Parliament, but it appears that the Prime Minister is not only hanging by a thread over Brexit but allowing her Government to be consumed by it, with little else getting done. It is time we heard more and saw greater action from this Government on inclusive growth and on ensuring that the economy works for everyone. Indeed, just this week, the Joseph Rowntree Foundation held a conference on inclusive growth in Scotland, which led to some interesting information becoming available. Dr Andrew Fraser, the director of public health science at NHS Health Scotland, said:

“We know that rising income inequality in the UK cost us 9 percentage points in the growth rate of GDP per capita between 1990 and 2010—that’s approximately £100bn. Taking action on inequalities is not just the right thing to do—it’s the economically sensible thing to do.”

I could not agree more, and I hope that we shall see greater preventive spending allocated in future UK budgets to help to tackle some of the deep-rooted inequalities being faced across this isle.