Oral Answers to Questions
Angus Brendan MacNeil Excerpts(8 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
We have put a huge amount of investment into Cambridge, including of course the renovation of the famous Cavendish Laboratory, and I congratulate my hon. Friend on the strong start she has made in recent months in championing her constituency. That has been continued today with a big bid for the A10, which I will take a close look at.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The Chancellor promised twice—at the Scottish referendum and in his manifesto—to have carbon capture and storage at Peterhead. Why has he broken that promise?
Mr Osborne
As I have said, investment in renewables will double over the next five years, and much of that investment will go into Scotland—[Interruption.] Look, the Scottish nationalists have a choice now. They have got some extra money and increased capital spending, and if they want to invest in carbon capture and storage in Scotland they can do so. It is called devolution.
Points of Order
Angus Brendan MacNeil Excerpts(8 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
The short answer is that it does have to be tabled by the close of business tonight and, yes, that motion will be amendable. I hope that is helpful.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Further to that point of order, Mr Speaker. First, for your information, let me say that the fleet-of-foot Scottish National party is already tabling an amendment to the motion. I have two points about order that I hope you can help me with. First, have Prime Minister’s questions been cancelled at such short notice before? Secondly, does such a step need the consent of the House?
Mr Speaker
The short answer to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil)—I am advised by the right hon. Member for Gordon (Alex Salmond) that I have pronounced that correctly, and I would not dare argue with him on that matter—is that, yes, such a proposition from the Government of course requires the assent of the House and that motion 6 is before the House, so I think we are fairly clear about that. The hon. Gentleman asks me whether this has happened before. He is quite an experienced denizen of this House and he will know that there are precedents for most things. The short answer is that, yes, Prime Minister’s questions have been cancelled—relatively recently, in fact—at relatively short notice before. He can consult the record, but I think it related to marking the unsurpassed tenure of Her Majesty the Queen. That was the occasion, at least most recently; there are precedents for these things.
Tax Credits
Angus Brendan MacNeil Excerpts(9 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Scott Mann
I accept the hon. Gentleman’s point, but we are looking to increase the living wage to ensure that people are better off in work than out of work.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Surely the Government are tackling the problem the wrong way round. They should have got incomes up before they cut people’s wages. What they are doing is cutting people’s earnings now, and in four years’ time they may introduce what they call a national living wage, which in fact is not a living wage.
Scott Mann
I thank the hon. Gentleman for his contribution. I will deal with that as I continue my remarks.
The proposals presented by the Opposition over the past few days would maintain the status quo. They believe that we should not change the £30 billion tax credit bill at all. [Interruption.] I do not accept that. They have offered no credible plan to take this burden off our children. [Interruption.] I was elected on a manifesto to reduce the welfare bill and I hope we will do that. We on the Government Benches know that we have to take the difficult decisions that lie ahead in order to bring about spending reductions. It is all very well for the Leader of the Opposition to ask six questions on tax credits yesterday, but a policy that affects 3 million families cannot be changed on a whim. I welcome the Chancellor’s announcement that he will deal with the matter in the autumn statement.
Bob Blackman (Harrow East) (Con)
It is a pleasure to follow that thoughtful contribution from the hon. Member for Arfon (Hywel Williams). I, too, congratulate the right hon. Member for Birkenhead (Frank Field) on securing this debate, and the Backbench Business Committee on its wisdom in granting it—I had the pleasure of chairing that meeting. This is the first opportunity I have had to contribute to a debate on the vexed issue of tax credits.
It is a great shame that the right hon. Member for Birkenhead was unable to convince his party when it was in government of the wisdom of transforming the welfare system in this country, but we are where we are. My big criticism of the previous Labour Government is that instead of reforming the welfare system, every time a new problem arose they set up a new benefit. The system therefore became unwieldy and unworkable. When I was elected in 2010, a series of people came to see me about the hugely complicated financial arrangements they faced, both with working tax credits and child-based tax credits.
Mr MacNeil
The hon. Gentleman says that when the previous Labour Government had a problem they increased tax credits. The real problem is low wages. This Government are weakening trade unions and undermining the right to collective bargaining, which is what allows workers to strive for higher wages, and that will not help the situation at all.
Bob Blackman
That is not quite what I said. I mentioned the welfare system and said that we had a series of different welfare benefits. Whatever the problem was, the Labour Government set up a new benefit, whether a tax credit or another arrangement. During a period of relatively high employment they failed to deal with the fundamental issue, which, as the hon. Gentleman rightly points out, is low wages.
This debate was billed as the last chance to review what the Government are proposing before it became fact, but events in the other place mean that we are now in a position to make alternative proposals. Contributions this afternoon will therefore be helpful to the Chancellor in deciding what to bring forward in his autumn statement. Clearly, we have to strike a balance. The Conservative party manifesto laid out that we were going to save £12 billion in welfare. The challenge is therefore to come forward with alternative proposals on how welfare savings of £12 billion will be found. Some £4 billion of savings are envisaged from this change.
I start with sympathy for the people affected. When we reduce people’s benefits, they will always complain. When we increase the tax threshold so that they pay less tax, they will be quite happy and will not complain. When their wages are increased, they will not complain. But if we take benefits away, they will squeal. We clearly must look at the effect on individuals in the round. We must have the utmost sympathy for those people who are working full time and have no alternative but to receive tax credits to top up their wages. What can they do? They suffer a loss of income, and that will have an impact on their families. Therefore, the first thing I would like the Chancellor to do is examine the measures so that people in full-time work suffer no impact whatsoever, because this is grossly unfair on them.
Equally, we face a challenge in both the public and private sectors. Over time the Government have quite rightly reduced business taxation to encourage businesses to grow and to locate within the United Kingdom. That has got to be good news, because it has created jobs. However, they have also kept wages artificially low, and that has to change. Therefore, I greatly support the principle of a living wage, but clearly it is far too low at the moment. We need to see it increase dramatically so that work pays, instead of relying on the taxpayer to subsidise work in private industry, which cannot be right. I hope that the Government will look at that, in particular, so that we can encourage businesses to pay their staff more for the work they do. That has to be the right way to demonstrate that work should always pay.
We hear constant criticism from the Labour party about the creation of large numbers of part-time jobs in this country. One of the reasons for that is the fact that a large number of people know that if they take on a part-time job, perhaps working 16 hours a week, they will still have access to a large range of benefits. That is a lifestyle choice.
Sammy Wilson
That issue will be addressed if we deal with it as I have suggested, by which I mean that the safety net is not removed until the issue of wages has been dealt with. That is the first important principle.
The second proposal is that we must be sure that we have identified all the groups that are likely to be affected during the transition. The one group I have mentioned time and again in debates includes those who will not be affected by the national living wage—the under 25s. Many of them will have families. If we set the pattern that work does not pay at the very beginning of their working lives, they will stay in that pattern. Therefore, it is important that we address the needs of that group.
Then there are the families with children. On that point, I would appreciate some answer from the Minister on the childcare allowance and the extra childcare funding that is available. It is a devolved issue in Northern Ireland, but will there be a Barnett consequential so that the same arrangements could be put in place as the Chancellor has suggested for England and Wales?
Thirdly, there must be recognition that different sectors in different regions are at different points in the cycle. There are some places where the labour market is buoyant, and where profits are increasing. In those sectors and regions, an increase in the national living wage can be afforded. However, there are other sectors and other regions where that may not be the case. There is no point in simply treating everywhere as if it were the south-east of England and the IT or banking industry and then imposing burdens on them. Small businesses and retail sectors have been identified here today. It is important that cognisance is given to the fact that there is uneven performance across the economy.
Mr MacNeil
We must also pay some attention to the larger picture. In the United States of America, for example, the top 0.1% have as much wealth as the bottom 90% and the gains of productivity go to those at the tops of firms, who get 350 times what the average worker in the firm can get. Certain people are taking the most and leaving the crumbs for everyone else.
Sammy Wilson
That brings me to my last point, which is how we fund all this. It is a reasonable question, and the Chancellor and the Prime Minister ask it all the time. Are we simply going to keep on borrowing or should we find other ways to fund it? There is one thing that I do know. I had the pleasure of being the Finance Minister in Northern Ireland for four or five years—I cannot count, which was not a help. In my first year as Finance Minister, the previous Government took over and that July 5% was taken off our budget, three months into the financial year. It was still possible to make the changes required because necessity required that. We are now talking about two thirds of 1% of the total UK budget that has to be found. No one can tell me that with planning that is not possible. Many suggestions have been made and different people will have different political priorities for the cuts, but I believe that it is doable if we have the will.
My fear is that because the Government are cocky at the moment and because the Opposition are perhaps not in the shape that they should be—I will not start making points about that, but they are not in the best shape—the temptation will be to use that disarray to try to force things through. We have heard time and again that the Government have a majority for their measures in the House of Commons. That does not matter. The question is whether their actions will be perceived as fair. If they are not, they will not have support across the country, regardless of what happens here in the House of Commons. My fear is that the Government, which taunts Labour time and again with being unelectable, might well annoy and anger people so much that the unelectable become electable. People can judge whether that is a good or a bad thing, but if the process of making that happen means that the strivers in society suffer or that the low paid workers suffer, I do not believe that it is a price worth paying.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The hon. Member for East Antrim (Sammy Wilson) was right to talk about the rush to get involved in a policy. It is a pleasure to be in the Chamber today for that rarest of treats, where we all furiously agree on the right thing to do, which is to make a radical change to the approach. It is like seeing people who have been slumbering at the back of the bus awakening to see that the driver is about to drive them straight into a lorry that is coming the other way. The tone of the contributions has been terrific, and it is worth repeating as it is so rare in this environment. I was cynical and sceptical before I was elected, but it is great to be in the Chamber for this debate.
Let us talk about the basics. A lot has been said today that makes sense. We all know that there must be a change, as the policy means that more families will be driven below the poverty line and more children will be in poverty. There is a clear dawning of awareness that the minimum wage—what Government Members are calling the living wage, which it clearly is not—will not bridge the gap. It especially is not going to bridge the gap that will be created for people under the age of 25, who will not have the comfort of getting even the diminished living wage or minimum wage that is coming in, because it will not apply to them.
The right hon. Member for Haltemprice and Howden (Mr Davis) talked about the minimum wage cutting crime, and my hon. Friend the Member for Dumfries and Galloway (Richard Arkless) spoke about the effect of it on changing people’s circumstances. If we create a bigger division in earnings between young people and those over the age of 25, we may well find there is a problem. We should be aware of that. I do not believe that the outcomes that will be created by the Government’s policy have been taken into account by certain Members in this House.
The Office for National Statistics has provided the Scottish Government today with figures that show that in Scotland 250,000 families will lose £1,500 a year right away. As we heard earlier, that rises to £3,000 when the measures are fully implemented. The Centre for Social Justice already puts household debt in the UK at £34 billion. That devastating cocktail is a possible outcome if we do not make a change to the policy.
When families are put under pressure, the effects can be devastating, with overwhelming stress affecting mental health and work performance. We should be aware of the impact on productivity further down the line. The strain on personal relationships resulting from the measure could provide some of the stepping stones for more children going into care and so on. We will see the effects of these measures when they hit people. None of us will have to stare into an empty cupboard. None of us will sit in the cold in our own homes because we have no choice. None of us, as a result of the Government’s measures, will look at a pile of bills, afraid to open them.
My constituency of Inverness, Nairn, Badenoch and Strathspey has a unique problem of being a low-wage, low-unemployment community. Perhaps that is not unique, but it is a particular problem for us. In my constituency, 7,100 children will be pushed further into poverty. Low wages, coupled with the increased cost of living, will push 210,000 children in Scotland into poverty. In the highlands we have had a drain of young people over the decades. We have encouraged people to stay and to have larger families, yet the two-children cap is going to punish highland families disproportionately. I know that will affect other constituencies in exactly the same way, so our big family tradition is being attacked. We heard China mentioned earlier. This is an effect almost amounting to population control for us.
The limit to two children will cost £7.2 million, the removal of the family element £4.02 million, and the taper increase £7.77 million. We heard from my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) about a range of measures that could be taken to put some money back into the system. It does not all have to come from the welfare budget. That is an ideological approach. We can make sure that we are not wasting money where we do not have to waste it.
It is an obscenity—it has to be repeated—an obscenity to seriously consider spending £167 billion on weapons of mass destruction that we can never use because if we do, what follows is mutually assured destruction. It is mad to consider using them.
Mr MacNeil
My hon. Friend hits on an interesting point about the waste of money on the weapons of mass destruction programme of the British Government. They wrap themselves up in patriotism and speak of great Britain. The patriotism is never ending, but the sad fact is that we are dealing here with a time when all Britons cannot live greatly. Some Britons will be in terrible poverty, but the Government’s patriotism goes only to weapons of mass destruction. O that their patriotism would reach the people and the poor of the country as well!
Drew Hendry
I could not agree more. When we look at the choices that we are asked to make in this place—this was mentioned earlier—we see that the effect will be on people further down the line. That kind of nonsensical excess, when we are talking about people looking into empty cupboards or sitting in the cold, is simply obscene.
I am grateful that the motion in the House of Lords on Monday night has allowed us to have this debate, but it only delays the measures—one swallow does not make a summer. If we want savings that can make a difference, and if we want a better system of democracy in this country, we must get rid of the other place. We should not have an inflated second Chamber, with people claiming £300 a day while other people are having their benefits and tax credits cut.
Mr MacNeil
I am grateful to my hon. Friend, who is being generous in giving way. Was he as surprised as I was to learn from a Twitter feed that seven Labour peers—perhaps at one time there were signs of socialism in their lives—voted with the Tories for these obscene welfare measures?
Drew Hendry
That was incredible, and it is worth repeating that fact in this House today.
There are lots of measures that the UK Government could take. They do not have to continue down this ideological path by squeezing the money out of the people who can least afford to pay it in order to ensure that other people enjoy the finery that they have had over many years. The words that have been spoken across the House today have been worth listening to. I hope that the Minister will take into account the thoughts he has heard expressed across the House, including from his Back Benches, and persuade the Chancellor to come back with something that is radically different and that supports the people in our constituencies who will otherwise be badly affected if this is not changed dramatically.
Ian Blackford
The hon. Gentleman often speaks up, rightly, for those in BME communities, for which I thank him. He is absolutely right: those in disadvantaged communities will feel the brunt of the cuts—and not only them, but those in constituencies up and down the land. This must be stopped to protect people throughout the whole of the United Kingdom, regardless of where they come from.
We keep hearing that we cannot afford tax credits. This is bunkum. The reverse is true: we cannot afford to impact families in the way these measures will. We all want to reduce the deficit and the national debt. We need to drive sustainable economic growth in order to drive up tax receipts and improve our financial position. We cannot do that by taking £4.4 billion out of the economy.
It is the failure to deliver sustainable economic growth that constrains our ability to reduce the deficit and the debt. If the Government’s fiscal policy had been working, the Bank of England would not have intervened to the extent it has had to during the past few years by establishing an asset purchase programme—so called quantitative easing—to the tune of £375 billion. When we talk about our debt crisis and the need to reduce spending, we seem to airbrush away the fact that we owe £375 billion to ourselves—debt created by ourselves. SNP Members understand that quantitative easing was necessary. I might add that the financial markets have benefited massively from this injection of liquidity. The FTSE 100 index was at 3,700 in March 2009 when the programme started; today it is at 6,370—a gain of 73% over six and a half years. The Bank of England has acknowledged that those with financial assets have benefited enormously from the quantitative easing programme over the course of the past six years, and 40% of the benefits of higher asset prices have gone to the top 5% in society. Do not talk to us about all of us being in this together.
This is important because the outcome—I am being charitable in using that word—of fiscal and economic policy has been to enhance inequality, and today we are being told that the poor, particularly the working poor, must pay the price of the Government’s desire to balance the books. That is unfair and it is wrong.
In yesterday’s Prime Minister’s questions, the Prime Minister said:
“printing money, hiking up taxes—we see that it is working people like Karen who would pay the price.”—[Official Report, 28 October 2015; Vol. 601, c. 340.]
I gently point out to the Prime Minister that it is his Government who, through quantitative easing, have in effect been printing money and that the tax credit cuts are in reality a tax increase for Karen and millions of others.
The point is that this is about political choice. Those who have benefited enormously from the quantitative easing programme are now getting an additional bonus for the changes to inheritance tax. The poor are getting their income cut. Where is the social justice in that? Where is the social cohesion that we should be striving to deliver going to come from?
In the spirit of co-operation, let me help the Government.
Ian Blackford
Indeed they do. The Public Accounts Committee report on fraud and error stocktake, which was published yesterday, states:
“High levels of benefits and tax credits fraud and error remain unacceptable. Overpayments cost every household in the UK around £200 a year and waste money that government could spend on other things…Since 2010 both departments”—
the Department for Work and Pensions and Her Majesty’s Revenue and Customs—
“have made progress in reducing headline rates of fraud and error, particularly HMRC in tax credits. However, in 2013–14, DWP and HMRC still overpaid claimants by £4.6 billion because of fraud and error”.
The fact that in 2016-17 the Government are expected to save £4.4 billion from tax credit changes just goes to show that if the DWP and HMRC were not making errors in overpayments, that money could be used to protect those low-income families who are reliant on tax credits, if the proposals were reversed.
I say to the Chancellor and his colleagues on the Treasury Bench: cut out the mistakes and fraud inflicted on HMRC and you will achieve the savings. Do not go after the poor. Eliminate fraud and mistakes and it’s job done.
The Government’s economic policies have created inequality, and the coup de grâce is that the poor are having to pay again. Before Christmas, letters will be delivered to our constituents who receive tax credits, informing them of the cuts they will experience from next April.
Ian Blackford
As my hon. Friend says, happy Christmas from Ebenezer Osborne!
We will all be faced with constituents writing to us and coming to our surgeries in despair about how they are going to make ends meet.
Let me turn briefly to the proposals of the right hon. Member for Birkenhead (Frank Field). I commend him for seeking a way out of the difficulties the Government face. His alternative tax credits plan would involve introducing a secondary earnings threshold, which would be paid for by a steeper withdrawal rate for those earning above the new minimum rate. We do not agree, however, that only those earning less than £13,000 should be protected from the cuts. Everyone in receipt of tax credits ought to be protected.
It is admirable that, under the right hon. Gentleman’s proposals, those earning very modest amounts would be protected, but those on modest means would still be hit. For example, a family with two children and gross earnings of £20,000 would still lose £1,656. Simply put, that is not acceptable. The tax credit cuts in their entirety should be stopped. They must be reversed, and reversed in full.
Tax Credits
Angus Brendan MacNeil Excerpts(9 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Mak
This is a national minimum wage that gives 2.5 million hard-working people a salary rise, which is the right approach. We have also increased the tax-free personal allowance and doubled free childcare for working people, while the fuel duty has been cut and council tax has been frozen as well. These reforms are all linked: they go hand in hand; they should not be seen or analysed in isolation. As many hon. Members have said, these are all part of a coherent, long-term economic plan, and it is simply not acceptable to deliver higher wages through the national living wage while at the same time leaving tax credits unreformed when they are such an important part of our reform package.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Will the hon. Gentleman give way?
Mr Mak
No.
The hard truth is that our tax credit system is unaffordable and unsustainable. It required deep reform to make it fair to the working people who pay for it. As I said to the shadow Chief Secretary, the original tax credit cost the Government £1.1 billion; today, it costs £30 billion. We spend more on family benefits than France, Germany and Sweden. Our reforms focus tax credits on the people they were meant to help—the very poorest and those in the lowest possible income brackets. In 2010, tax credits intended to support the lowest income brackets were instead available to nine out of 10 families; under our reformed and properly focused system, it is still available to five out of 10 families—a fairer and much more sustainable approach. These changes to tax credits are not necessarily easy, but they are fair and right. They return real-terms spending on the tax credit system to the level we had in 2007-08.
We must also consider these reforms in the wider economic context in which they sit. The deficit was halved over the last Parliament, but there is still more work to do. We need further savings in spending to make sure that Britain can live within its means. These tax credits go towards 50% of the total savings we are aiming for in this Parliament. They are substantial and important, and deserve our support. As many hon. Members have said, we must not leave our children and grandchildren with ever more debt. The only welfare system that is credible is a welfare system that is sustainable and affordable as part of our long-term plan to save our economy.
This Government can be proud of the fact that we have gone further than any other Government in introducing a living wage of £9 an hour. Some 2.5 million people will have a direct pay rise in their pay packets. At the same time, business has been incentivised to pay workers more. We have heard from the Exchequer Secretary how more than 200 businesses are already making these reforms.
Opposition Members opposed our welfare cap, and they opposed our fiscal charter—eventually. The only welfare system that is sustainable and credible is one that is affordable. We were elected on a mandate to transform our economy, and our reforms put that mantra into practice. I urge all Members to reject the Opposition motion.
Huw Merriman (Bexhill and Battle) (Con)
I have the greatest concern for anyone who loses out and finds that these measures have an impact on their household budget. I came into this place not to reduce incomes but to see them increase. However, in making good our manifesto commitment, savings in Government spending were always going to have to be made, with a proportion of our population unfortunately being affected by the need to make them.
Ultimately, I feel that it is right to introduce this measure to reduce tax credits for the following reasons. First, it moves the country away from a position in which Government and taxpayers subsidise the wage bills of employers, acting as a disincentive to pay rises. Secondly, as a cost-saving measure it moves the country to a position where the books are balanced and we can reduce the interest bill on Government debt.
Huw Merriman
I will not give way just now.
In 1998, the amount spent by the Labour Government on tax credits was £6 billion. That figure rocketed to £30 billion by 2010. Three of our largest supermarket chains have employees who claim tax credits to the tune of almost £800 million. I contend that it is not for Government or taxpayers as a whole to contribute a portion of pay, but for employers to pay staff all their wages and to pay them properly. Of course, the Government can and should act to incentivise pay—by reducing tax for the employer and employee and not by paying a contribution to the wage packet.
As for balancing the books, last week the House debated the motion for fiscal responsibility and as a result the Government have pledged to deliver a surplus by 2020 and through normal times. This measure is essential to meet that task. I recognise that we need to help those the measure will impact on and I am glad that the Government are doing so in a number of ways, which I shall not repeat. I recognise that these measures do not mitigate the cost of the tax credit changes in full. If they did, the reduction in Government spending would not be delivered, the surplus would remain out of reach and the Government interest bill would continue to be wasted.
National Insurance Contributions (Rate Ceilings) Bill
Angus Brendan MacNeil Excerpts(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Kit Malthouse
My hon. Friend has made a strong point. During the debate on the referendum concerning our possible divorce as nations, businesses piped up very loudly about what was likely to be a very uncertain horizon for them on the far side of the debate. The majority opted for the status quo, because a bird in the hand was worth God knows what in the bush.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I can tell the hon. Gentleman that it was certainly worth two Lords in the Lords.
In fact, the uncertainty has arisen as a result of our lack of independence. Scotland lost powers under the Energy Act 2013. The Government made a lot of promises on that. Now we are to lose the renewable energy obligation in Scotland because of the uncertainty caused by our losing the referendum. I wanted to put that on record, and to give the hon. Gentleman a bit of clarity.
Stewart Hosie
That is the kind of thing any Opposition politician should say about any set of Tory policy decisions that ends up with the kind of outcomes the hon. Gentleman describes.
The Government also committed to legislating within 100 days of the election to rule out increases in the rates, which is what we are seeing today, but of course serious unintended consequences for spending and for other taxes may flow from this measure. Let me explain. The Government laid out in the summer Budget discretionary consolidation—that is, cuts and tax rises to you and me—amounting to £97 billion in this Parliament. Of that, new draconian cuts to welfare amounted to a full third—£33 billion—but the entire spending plan was predicated on, among other things, NICs bringing in £115 billion this year, £126 billion next year, rising to almost £152 billion in 2021. That is a forecast rise in revenue yield from NICs of 9.6% this year to next, 4.3% the year after, 4.7% in 2017-18 to 20118-19, and a rise of over one third—£37 billion—between last year and the end of the forecast period.
One of the questions the Minister has to answer today is this: given the arbitrary freeze on NICs and some other rates, should the forecast yield be significantly less than expected, will other taxes rise and if so, which ones; and will the Chancellor take the axe to yet further spending, perhaps on pensions, or will borrowing rise and deficit reduction forecasts simply be abandoned, delivering exactly the same failure on debt and deficit we saw in the last Parliament?
Mr MacNeil
Of the options my hon. Friend has given, may I go for option three, which means the Government will borrow? As every schoolboy in Scotland who has been paying attention knows, the UK has not paid its way since 2001; it has borrowed each and every year since then. I would go for option 3 for the UK: in debt, with a black hole.
Stewart Hosie
My hon. Friend is right. Harking back to 2009 and the Fiscal Responsibility Bill, the then Chancellor made great play of legislation to bring down the debt and deficit, and what was the sanction should he fail? “We would just change the targets,” he said. I suspect the current situation is rather similar, and I may come to what the current Chancellor said about that particular legislation shortly.
Helen Goodman
Well, it might or it might not, depending on the circumstances.
This quest for certainty is quite reasonable in regard to small businesses—
Helen Goodman
I shall give way to the hon. Gentleman from the Scottish National party.
Mr MacNeil
In any debate about taxes, it is instructive to look at what the OECD tells us about global tax-to-GDP ratios, which is what I have just done. Denmark has a tax-to-GDP ratio of 47.2%. Mexico, at the other extreme, has a tax-to-GDP ratio of 19.7%. The Conservatives’ mantra is “lower taxes, lower taxes, lower taxes”, but that would appear to be sending us in the direction of Mexico. That is not the sort of society I want; I want a society that is high on the UN human development index such as Denmark. The figure for the UK is 33%. How far do the Government want to go? Do they want to give us a society like that of Mexico, or do they want us to be like Denmark?
Finance Bill
Angus Brendan MacNeil Excerpts(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sammy Wilson (East Antrim) (DUP)
As a party that believes in low taxation, we welcome a number of measures in the Bill, including those to take more people out of taxation and allow them to hold on to the money they earn. The changes to tax thresholds, the reduction in corporation tax and the tax allowances to encourage businesses to invest in capital or research and development will contribute to the health of the economy and help to close the productivity gap that concerns Members across the House. We will not be voting for the reasoned amendment because we believe there are positive measures in the Bill and because we disagree with some aspects of the amendment anyway.
We do, however, have a few concerns—we discussed some of them yesterday in the welfare reform debate—including about the impact of removing tax credits from people in low-paid jobs and the Government’s misplaced faith in their being compensated by the rise in the national living wage. Rather than making work pay, the measure will act as a disincentive to work for many people, especially young people, to whom the national living wage will not apply and for whom the reduction in tax credits will result in lower incomes. The Government cannot ignore that aspect of their policies.
The hon. Member for Dudley South (Mike Wood) was optimistic that the gap would be filled by businesses volunteering to pay the national living wage to those not officially covered by it. I sometimes hear Government Members talking about the pressures on small businesses. We cannot have it both ways. On the one hand, we talk about businesses being under pressure and requiring help, including with taxation and business rates, but on the other hand, we say, “By the way, they will volunteer to pay higher wages to those not officially covered by the national living wage.” We cannot gloss over the impact of these changes. I believe the Government are being optimistic about the impact. If it backfires—if many people find themselves less well off in work and work therefore becomes less attractive—one of the key policy objectives of the Budget will not be achieved.
That point is particularly pertinent to places such as Northern Ireland, where, because of low productivity in industry, the preponderance of small businesses and other structural factors, a high proportion of people are employed in low-wage businesses and rely on tax credits to bring them up to a reasonable standard of living.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I am grateful to the hon. Gentleman for giving way. While we are not political friends, we are at least friendly. He started by saying he was in favour of people keeping more of their tax, but then bemoaned the loss of tax credits. Will the loss of tax credits not enable a lack of redistribution by acting as a cover for the rich to keep more of their money and as further camouflage for inequality, especially with inheritance tax being cut for the very wealthy while the poor are losing out? When we say we want people to keep more of what they earn, we have to be sure what we mean. Quite often it is a cover for growing inequality and an opportunity for the rich to keep even more for themselves.
Sammy Wilson
Of course, some of the measures in the Bill will take people out of tax altogether, which I am sure the hon. Gentleman will welcome, and some will take people out of the higher tax brackets, especially people on middle incomes, which I am sure he would welcome too. When I referred to people being able to hold on to their income, I was thinking specifically about some of the measures in the Bill. It would be churlish not to acknowledge that the Government have at least recognised the need to find a mechanism to lift those on low incomes out of tax altogether. Administratively, that is a good thing too. Why tax people and then give it back to them in benefits?
The second issue I want to raise is about infrastructure, and the Minister’s answer to me on that was a bit woolly. I do not know how much will be available in the road fund arising from the tax changes to vehicle licence duty applying to cars sold and driven in Northern Ireland, but it is important—and this seems to be an afterthought—that in those parts of the UK not covered by the road fund, which is available as a result of directing vehicle licence duty to infrastructure projects, there be a speedy resolution with the devolved Administrations to ensure that the funding is available to them to develop the road infrastructure in their own areas.
I am also disappointed that the thorny issue of the extension of the hub airport, whether at Heathrow, Gatwick or wherever, is not being addressed in the infrastructure measures in the Bill. Regional connectivity is important for places such as Northern Ireland. That matter cannot be kicked into the long grass. If Britain is to remain competitive and not lose out more and more to Holland, Germany and France, where they are developing hub airports, it is important that we develop our own infrastructure. In Northern Ireland, we are increasingly worried about slots being lost at Heathrow because of the pressure on the runways there. The first places to look at are the flights coming in from other areas of the UK, but that connectivity is vital to the promotion of industry in Northern Ireland and has been part of the secret of our success with inward investment.
Sammy Wilson
That is exactly right, but if we do not have the proper infrastructure to do that, we will be disadvantaged. A continual theme in this Parliament has been the question of how to ensure that growth is spread across the UK and not concentrated in the south-east of England. One way is to ensure that our infrastructure enables the prosperity generated in the south-east of England to be spread across other parts of the UK.
Mr MacNeil
I am grateful to the hon. Gentleman for giving way again; he is underlining our friendliness. To build on the point from the hon. Member for East Londonderry (Mr Campbell), I wish to say that the hon. Member for East Antrim (Sammy Wilson) is absolutely right about the problem of connectivity with the south-east of England, where the airports are being built. It is not by accident. In the 40 years after world war two, there were bilateral air agreements specifying that planes had to fly into London airports, and we have paid for that. He is right about the Netherlands. The London docks lost out to Rotterdam, and it looks like it will happen again with the air infrastructure. As the chief executive of Schiphol said, it would be a good idea—
Mr MacNeil
The chief executive said it would be a good idea to have a long inquiry, and that is what is happening. It is taking too long.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Wilson, have you given way or have you finished your speech? None of us is sure what has happened.
Mr MacNeil
And on my birthday, too. I am sure that the hon. Member for East Antrim (Sammy Wilson), the gentleman that he is, will of course give way to the Member from the Green party and to my hon. Friend the Member for Glasgow North West (Carol Monaghan).
The hon. Gentleman might find that one of the reasons why fossil fuel is so cheap is the low price of carbon, as a result of which the theory of “the polluter pays” does not apply to fossil fuels. Carbon is priced neutrally at the moment, and when that changes, the real price of fossil fuels versus renewables will become apparent. He mentions the change in the regime, but planning is a large part of that. Finally—this is my final point, Mr Deputy Speaker—the hon. Gentleman talks about the cost of energy in the UK, and the cost of the UK’s energy is actually about the highest in Europe, minus taxes.
Mr Deputy Speaker
Mr Wilson was very worried about the amount of time we are taking—we can go to any hour—and I think Mr MacNeil is trying to see whether we can get to that hour. However, as he knows, as much as I appreciate that it is his birthday, he blew out all his candles on his first intervention. We now want shorter interventions.
Maria Caulfield (Lewes) (Con)
I promise not to take as much time as the hon. Member for East Antrim (Sammy Wilson), but I enjoyed his take on things.
I rise to speak in support of the Bill because the recent Budget set out clearly a better future for this country. In the last Parliament the coalition Government had to turn around the economy that they inherited by turning around a record Budget deficit, public sector net borrowing at a high of 10.2% of GDP and a benefits system which accounted for nearly a quarter of all public spending, which left less money for public services such as our NHS, our schools and our infrastructure. The Budget and the Bill build on that progress. This is a Budget for ordinary people up and down this country, despite what others might say. This is a Budget for workers.
Four key elements support that claim. The Bill reduces personal taxation, so that people can keep more of the money that they earn. It ensures, again despite what others may say, that work actually pays; it is crazy that we inherited a system in which people are better off on benefits than in work. The Bill delivers on housing, and will make it easier for many people to have a place of their own. It also helps businesses, so that we have a thriving economy to pay for our much-needed public services. The Bill supports all those aims.
Mr MacNeil
The hon. Lady said that she would like work to pay. Is she saying that the Institute for Fiscal Studies is wrong when it says that the bottom four, five or six deciles of earners will actually be worse off as a result of the Budget? Surely if work is to pay, it should be paying more, not less.
Maria Caulfield
I wish the hon. Gentleman a very happy birthday. I take his point, but what has been missed from the argument is the raising of tax thresholds that will benefit people, especially those on the lowest wages. I shall come to that in a minute.
The Bill will make important differences to ordinary families. First, it will reduce personal taxation. During the last decade, under the Labour Government, more than 1.6 million people were dragged into the higher rate of tax, including hundreds of thousands of nurses, teachers, police officers, and other public sector workers. Our measures to raise the higher-rate threshold to £43,000 will make a difference to those people and their families. All in all, a basic rate taxpayer will be £905 a year better off. The families who will benefit from those changes are not wealthy; many of them work long hours and commute long distances, and deserve to keep more of the money that they earn.
The Opposition parties believe that the way to reward hard work is not to increase wages or reduce the tax that people pay, but to increase benefits in the form of tax credits. That is what Labour did in government, to such an extent that the welfare bill rocketed, accounting for about a quarter of all public spending. That meant that there was less money for our hospitals, our schools and our infrastructure.
Why are Opposition Members so adamant that the only way to improve people’s lives is to increase their benefits? I will tell you why: because they do not believe in aspiration. They do not believe in the fundamental principle that if people work hard enough, no matter what their background, they can achieve anything in life. A life on benefits is not inevitable, nor should it be the only way forward for working families. Conservative Members support workers by not only increasing the national living wage, which I cannot believe Opposition Members actually—
Catherine West (Hornsey and Wood Green) (Lab)
First, as this is the last day of term—or at least it has the feel of the last day of term—may I thank you, Mr Deputy Speaker, and all the team in the Speaker’s Office for their warm welcome to all us new Members? That has made a huge difference to the beginning of what I hope is a long parliamentary career.
When I saw that today’s business would be a Second Reading debate on the Finance Bill with such exciting Ministers giving their remarks I thought it might be a bit dry, but in fact it has been stimulating and interesting, in particular the discussion of wages. I am glad we have got on to the question of low pay; that came up in the election and I am very pleased that the Treasury team has given it some thought. However, as somebody who worked hard on the living wage at local government level, I am a little concerned that it took a long time to introduce it in a meaningful way; the current living wage is £9.15 in London and introducing that in inner London takes an enormous amount of work for a large organisation such as a local authority or a business.
I am also a little worried about there being a cliff-edge in respect of the removal of working tax credits from those on low pay. We need a sliding scale to cover the fact that we have such a flexible workforce, which many say is a good thing. The trouble with that is that people can be in and out of work, on varying rates of pay in different sorts of employment, and have numerous different employment situations. Working tax credits tend, therefore, to be a safety net for people on low incomes, so, although this debate about low pay is to be welcomed, I am concerned that we will end up with less security for low-paid people. It may even create a perverse incentive: people may not want to take risks in the workplace and may even turn back to benefits. They may be worried that over the long term they will not be able to sustain themselves on what the Government call a living wage but which, in fact, is just an increase in the minimum wage.
Mr MacNeil
I hope the hon. Lady agrees that the Chancellor, in his description of the new wage that he has earmarked, has tried to downgrade what we all know as the living wage. That is reprehensible.
Catherine West
I thank the hon. Gentleman for his intervention and wish him a happy birthday. I am sure it is wonderful to be 21 again.
I understand that there are many examples of the living wage up in Caledonia, and many London authorities and others are trying their darnedest to introduce the living wage, which is a good and positive step.
Clause 45, on the climate change levy, removes the levy exemption for renewable source electricity generated on or after 1 August 2015. Unhappily, that is an example of the Tories undermining investor confidence in renewable energy. They have already tried to halt the development of the cheapest form of clean energy, by pulling the plug on onshore wind, and that comes hot on the heels of the rather flat green deal. I am not sure whether any Members know about the green deal. It was introduced back in 2010, it was heralded and much money was spent on it. The promotion money probably helped a few public relations companies to keep going, but the number of households that took up the deal was very low.
Catherine West
I am very concerned about those people who are on that level. Indeed, many people in the financial sector, a large percentage of whom live in my constituency, work very long hours and are on low pay. I welcome some of the new tax changes, which is why I will abstain rather than vote against Second Reading tonight. However, we also know that certain others who go in on the tube with those lower paid workers, or ride their bikes in with them, might, in a good year, be earning between £1.2 million to £15 million or more. Using the private equity industry’s own statistics, we estimate that the “Mayfair” loophole may be sacrificing UK tax revenues of between £280 million to £700 million every year. That is likely to be a conservative estimate as it does not take into account forgone national insurance contributions, or the effects of some fund managers qualifying for additional entrepreneurs’ relief. Given that the Chancellor’s smaller plans are predicted to raise more than £350 million a year, we can be confident that a further tightening of the rules will raise substantially more. A simple legislative change, similar to those already achieved in our neighbouring European countries— I make no apologies for mentioning the word “Europe” in this Chamber—could ensure that some of the highest earners of the financial sector start to pay a fairer share in tax. That could be introduced as early as in this Bill, with a small change to the proposed legislation.
In conclusion, let me make some general points about productivity. The first relates to childcare, and this Budget and Bill and the various elements of productivity that need to accompany them. I understand from press reports this morning that various Departments face a difficult time on their savings targets, and I am worried that some of the good things that have come out of this Budget, small though they be in number, will be undermined by things such as the lack of childcare provision. In particular, I am thinking about cuts to local authorities, which are trying to introduce the Government’s 30-hour pledge on childcare. Children’s centres and Sure Start centres will once more be facing terrible cuts. We know that it is crucial to get women, and parents in general, back into the workforce, and that that is key to proper growth in the economy. Many economists have estimated that if we can return women to the workforce within two years after the birth of their first child—and indeed after the birth of subsequent children—the economy can take off exponentially. In many local authority areas, however, children’s centres and nurseries are closing, whereas they should be remaining open to provide that crucial childcare.
Mr MacNeil
I fully support what the hon. Lady is saying, and she had no less an authority than Tim Harford in the Financial Times writing, about seven or eight weeks ago, on exactly the same point. He highlighted how Sweden has done exactly what she is describing: enabled women to go back into the workplace, to develop their skills and to go further—and of course this yielded higher taxes—unlike in the UK, where they decide to stay at home and the taxman and mothers lose out.
Catherine West
I agree. There are many positive examples of universal free childcare in other European countries and I wonder whether that is the sort of measure we should be looking at, rather than just cutting back for cutting back’s sake.
Childcare is crucial, but so, too, is transport. Unfortunately, in the past fortnight the Government have announced that important rail projects are no longer going to go ahead, including electrification in the midlands, and they have dithered over the airport decision, perhaps because there is division in the top ranks of the Conservative party. Those sorts of decision need to be taken quickly, at the beginning of the Parliament, so that we give the right signals about getting on with investing in our infrastructure and in social mobility.
We know that young people will be negatively affected by this Budget, not just by the cuts to housing benefit and the reduction in working tax credits for younger families, but by the transition from university grants to loans. This does not specifically relate to the debate on this Bill, but we know that the background to the Bill is the situation young people face when coming out of university. I know of a student at London Metropolitan University who will come out with a £54,000 debt after three years of studying social care and will be virtually unable to pay that back over her working life. The good announcements on the employment and training levy are undermined by the university grants situation and the 24% projected cuts to further education, which we know provides the glue to bring together the crucial employment provisions.
I could not sit down in this Chamber without quickly mentioning housing, which, as we know, is crucial, and not only to a vibrant economy and not only in the social housing sector, which I have specialised in over the years. Affordable housing is also crucial to the workforce and to those who wish to rent in the private sector, given that in London and the south-east that sector is ridiculously expensive. A family with three children who wish to rent in Finsbury Park—not Chelsea, but Finsbury Park—would require a household income of £75,000 to do so. Indeed, the average age at which Londoners get on to the housing ladder is now closer to 40 than to 30. It is crucial that we address this situation in this Parliament so that we can address social mobility and productivity. Unless a young person has access to unlimited family funds for education and housing, they face, under this Government and with this Budget and this Finance Bill, a genuinely bleak future.
Lucy Frazer (South East Cambridgeshire) (Con)
There are two questions we ought to consider when thinking about passing this Finance Bill: first, if now is not the right time to balance the books, when is; and, secondly, is it right that our laws should ensure that it pays to work and that work pays?
Let me turn to the first question. Our GDP grew by 2.6% in 2014 and our economy is now the fastest growing in the western world. We have seen an increase in jobs growth, with 2 million more jobs created over the past two years. In the three months to April 2015, employment continued to rise and unemployment continued to fall.
As a matter of principle, it is right that our Government are fiscally responsible. In the previous Parliament the Labour party backed the charter for budget responsibility, recognising that it is necessary to cut the deficit. There is never a good time to implement tough decisions, but if now is not the right time, no time ever will be.
Mr MacNeil
I thank the hon. and learned Lady; I feel that I am taking advantage of this birthday— I might start claiming that every day is my birthday. Would she like to comment on the behaviour in Iceland, where there have been no cuts in public spending but where debt has fallen by 8% and the deficit has fallen to zero? It has done that not though austerity, but by growing its economy. The key metric is debt to GDP, not cuts.
Lucy Frazer
What is absolutely essential is that we have a strong economy, because through a strong economy we can build up business. Looking at one isolated country is not a great example—consider what is happening in Greece, which has not balanced its books and has a crippling economy. Balancing the books is absolutely right.
Lucy Frazer
I have already taken one intervention from the hon. Gentleman, so I will carry on.
The question arises: what are the Opposition really waiting for before balancing our nation’s books? This Budget helps make work pay for the poorest in society and encourages those who do not have a job to get one. It seeks to ensure that we build a society in which work is rewarded.
Lucy Frazer
If it was the birthday boy, I would be giving way.
It is remarkable that the position of both the SNP and the Greens is that this Finance Bill does not address the economic needs of the country and it continues to deepen the social divide between those who have and those who have not. Both amendments are very similar. But on both those questions, nothing could be further from the truth.
Huw Merriman (Bexhill and Battle) (Con)
I applaud the content of the Finance Bill, and I am keen to explore certain clauses within it. Before I do so, may I applaud Labour Members for agreeing with the annual investment allowance and rise in the tax allowance? There may not have been as many Labour speakers as one would expect, but those who spoke have been considered in their tone towards the Bill. However, as someone from a socialist background, it makes me sad to see no Labour Back Benchers in the Chamber. I was always told proudly by my parents that Labour was the party of Keir Hardie and Nye Bevan, and those empty Benches would be a huge disappointment to them. None the less, we can perhaps all agree that the argument is being won on the Government side of the House.
Huw Merriman
No, I will not give way. I will make some progress, if I may, and refer to my predecessor, Mr Greg Barker, who organised the husky trip that was lamented by the hon. Member for Hornsey and Wood Green (Catherine West).
Clauses 1 and 2, on the income tax and VAT locks, and clauses 3 and 4, on the personal allowance and national minimum wage provisions, demonstrate that making work pay means giving workers more of their pay. Raising the personal allowance to £12,500 shows that the Government are committed to that aim. The increase in the tax allowance will take more than 800 of my constituents in Bexhill and Battle out of the tax system altogether, and a further 50,000 of my 80,000 electors will also benefit from the tax allowance increase. Indeed, my constituents will further benefit from the tax locks over this term, which will allow them to plan, save and spend in an organised manner, without fear of the Government raids so beloved by Chancellors between 1997 and 2010.
Mr MacNeil
Once the hon. Gentleman’s constituents get past the Blairite spin he is giving us, I am sure they will find that their incomes have actually decreased. Does he think that his constituents will be grateful to him when the changes go through and they find that their incomes have decreased, thanks to this Tory Government?
Huw Merriman
My constituents will be delighted that after the terror that this Government took over from, we are seeing earnings and incomes get back to their pre-recession levels. They are already there for those at pension age, of whom there are many in my constituency, and are getting there for those in other age groups. My goodness, if this Government had not taken the difficult decisions that the hon. Gentleman’s party has opposed all the way through, we would not be in the positive situation we are now in.
George Kerevan (East Lothian) (SNP)
Thank you for your forbearance, Mr Deputy Speaker. I had to slip out of the Chamber to take part in the Treasury Committee’s questioning of the Chancellor, and I bring a few bon mots from him to add to the debate.
The test of the Finance Bill and Budget is whether it will raise productivity—one might ask why the Chancellor has waited for five years to get round to that necessary development, but that is the test. Does the Bill meet the test? No it does not. Between the March Budget and the summer Budget, the Chancellor has reduced projected capital spending, and we raised that point in questions to him this morning, but in his boyish way he avoided answering it. Nevertheless, we have seen a reduction in the projected capital spend.
Capital spending is vital. It is the basic thing we need to get the plant, machinery and infrastructure that raise productivity, and Britain’s fundamental weakness in productivity is that we do not spend enough on capital and plant per worker. The Chancellor is cutting his projected capital spending, and he has done that in the five months since the March Budget and now—I wonder why.
The Chancellor had an interesting explanation for why he is doing that—in the Treasury Committee he could not avoid saying that that is what he was doing—because he said that he had discovered a way of making the outcome of his spending more efficient so that he needs less of it. If he goes on in that way, in another five months and by the time we get to the autumn statement, he will have reduced capital spending projections even more. I am talking about capital spending projections to 2020, so there is no real indication in the Budget that productivity will rise.
There are other things wrong with the Budget. Consider the investment allowance that the hon. Member for Bexhill and Battle (Huw Merriman) alluded to. De facto, the annual investment allowance is being cut from £0.5 million to £200,000. I know that, formally speaking, the available capital allowance was a marginal £20,000, and an emergency £0.5 million level was introduced in a previous Budget. Like some classic huckster trying to sell, the Chancellor pretended that the capital allowance was going to be removed on 1 January 2016, so that he could suddenly appear and say that actually it will be £200,000. We all knew that he was going to do that because in the autumn statement and the March Budget, while talking about his desire to raise productivity, he somehow neglected to tell us that the annual investment allowance was going to be not £20,000 but £200,000 in January.
Mr MacNeil
My hon. Friend might recall that before the general election, if memory serves me right, only one party was praised in the Financial Times for its plans to raise productivity, and that was the SNP. Could that be why we polled 51% of votes in the seats where we stood, but the Conservatives polled only 37% across the seats where they stood?
Mark Durkan (Foyle) (SDLP)
Mr Deputy Speaker, you and others have made the comment that today is a day on which a birthday has occurred, so before I have to, in response to interventions, may I say to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) breithlá sona dó? Go maire sé on lá.
I should also make an apology, because I missed a birthday yesterday in the debate on the Welfare Reform and Work Bill, which relates to the Budget measures.
Mr MacNeil
The hon. Gentleman gives me the opportunity to make a bilingual intervention—in Irish and in Scottish. Go raibh míle maith agat agus mòran taing.
Mark Durkan
We are getting far off the Finance Bill.
The Government told us that the Finance Bill should be taken as part of a whole suite of measures from the Budget, including those in the Welfare Reform and Work Bill. Yesterday, we missed the six-year birthday of the Second Reading debate on the Child Poverty Bill in 2009, when the then shadow Secretary of State for Work and Pensions, now the Home Secretary, said:
“When we talk about child poverty, we are also talking about family poverty. Children are poor because their parents are poor…I would almost like to change the name of the Bill from the Child Poverty Bill to the child and family poverty Bill.”—[Official Report, 20 July 2009; Vol. 496, c. 613.]
The measures in the Welfare Reform and Work Bill and the Budget tell us to forget that child poverty has anything to do with parental and household income, and that the Government are going to abolish definitions of child poverty. We heard from the Chancellor of the Exchequer today at Treasury questions that he believes the Budget is offering a contract: higher wages for less dependence on welfare. He said that people would support that contract. I think more people will see the con trick in what the Chancellor is doing than the contract.
Mark Durkan
The right hon. Gentleman makes a very good point. I think many people will wonder about the paucity of attendance on the Benches at such an important debate today. We have been served notice that there will be various amendments in later stages of the Bill, but I think people would have expected a bigger attendance here today. Given the impact it will have on many people with marginal incomes and the consternation that many people feel about MPs’ pay increases and other matters, they will be wondering where everybody is.
Mr MacNeil
There are questions about where Labour and Tory Members are at the moment. Will the hon. Gentleman hazard a guess that they are perhaps off at merger talks?
Mark Durkan
Maybe they are away celebrating other people’s birthdays. [Laughter.] Maybe the hon. Gentleman, having had so many interventions, can now safely go and celebrate his. We all know he was here and not somewhere else.
In the provisions on the national living wage and some of the other early clauses, the Chancellor seems to be doing exactly what he decried his predecessors for doing: passing legislation to put restraints or constraints on himself. He is advertising in legislation his own behavioural discipline. It is the ultimate political selfie to put oneself into legislation. Some only last for the life of the Parliament, yet are being put into legislation. How gratuitous a political exercise is that? Perhaps that is why other hon. Members cannot see fit to indulge the Bill too much.
Government Members have said that the charter for budget responsibility is a key issue, which it is, but a key aspect of the charter is the welfare cap. In yesterday’s debate, we heard references to the benefits cap—there has been much discussion about the benefits cap, which affects households—but less attention has been paid to the overall implications of the welfare cap, which was first introduced as part of the charter last year. If we look at what the summer Budget, as opposed to the March Budget, does for the welfare cap over the next four years, we find some revealing figures. In the March Budget, the overall welfare cap for the UK for 2016-17 was £122.3 billion; in this Budget, it is £115.2 billion. For 2017-18, it was £124.8 billion in the March Budget; it is £114.6 billion in this Budget. It was £127 billion for 2018-19 in the March Budget, ahead of the election; it is £114 billion in the summer Budget, after the election. For 2019-20, it was £129.8 billion in the March Budget; in this summer Budget, it is £113.5 billion. Over those four spending years, that is a cumulative cut of £46.5 billion, as a result of the charter for budget responsibility and the welfare cap.
Many Opposition Members—or perhaps not many of us, as I think only 20-odd of us voted against the welfare cap when it was introduced—said that what the Treasury was bubble-wrapping as a neutral budgetary tool would turn into a vicious cuts weapon, and now we see it, in the name of the welfare cap. When there is so much discussion about the benefits cap, people forget that the real story is the welfare cap, and that will bear down on people in my constituency and lead to more conflict around the next wave of welfare reform when it comes to the Northern Ireland Assembly.
We heard earlier from the hon. Member for East Antrim (Sammy Wilson) and we heard yesterday what he thinks the implications of the cap will be. If he was still here, I would be saying to him directly that on this issue he and his party need to catch on; they have been wrong in the past, and it is a bit late to be scrambling now, when they have invited this very situation. Many of us told them that their support for the welfare cap, on top of their support for the last wave of welfare reform in the Assembly, would lead to this very situation, but they told us to forget about those concerns because there was nothing we could do about it.
Scotland Bill
Angus Brendan MacNeil Excerpts(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
For the benefit of the Committee, will the hon. Gentleman explain the difference between the agreement the UK Government have with the Isle of Man and what they are now proposing for Scotland?
Mr Gauke
The Isle of Man has different constitutional arrangements. What we are proposing is consistent with the conclusions reached by the Smith commission.
The hon. Member for Dundee East (Stewart Hosie) made a number of technical points about how that will work. I accept that a number of details will need to be worked out as part of the fiscal framework. There is a need to agree the methodology for estimating how much VAT is generated by Scotland and by the rest of the United Kingdom. The UK and Scottish Governments will also need to agree the operating principles, including mechanisms for verifying that the methodology has been applied correctly, how many adjustments might be carried out and arrangements for audit and transparency, including publication of results. It is worth pointing out that other countries operate similar systems and could provide a reasonable starting point from which to build.
Again, those considerations will be part of the fiscal framework, and I think that it is agreed on all sides that it would not be helpful to provide a running commentary on it. Of course, there have already been meetings with the Deputy First Minister and the Chief Secretary to the Treasury on some of those points. All I will say to the hon. Member for Dundee East is that the UK Government are determined to work constructively, as I am sure the Scottish Government are, to ensure that we reach an agreement that is fair and reflects the appropriate assessment that should be made.
Graham Stringer (Blackley and Broughton) (Lab)
Amendment 36 would, in essence, have opposed clause 16 standing part of the Bill, because I want the Committee to explore the specific issues related to air passenger duty and the more general principles about tax competition between Scotland and the rest of the United Kingdom that may well evolve from a discussion on air passenger duty.
Some of us who voted to set up the Scottish Parliament in the first place now think that, although it seemed a very bold decision at the time, it was less bold than it might have been and that if we had the benefit of being able to go back in time—we do have the benefit of hindsight—the proposals that the Government are making might well have been those that should have been put before the House after the 1997 general election, with us now moving towards full fiscal autonomy for the Scottish Parliament. It was a fundamental mistake to set up a Scottish Parliament with mainly spending powers and no tax-raising powers, apart from the plus or minus 3p on income tax.
Mr MacNeil
The hon. Gentleman is absolutely right. One of the mistakes is that there is no incentive for the Scottish Government to grow the economy. A great example that we have in the Hebrides is that the Scottish Government have put a road-equivalent tariff on to the ferries. This has grown the economy in the west of Scotland, but the increase in tax revenue is not going to the Government that funds it but to Westminster, which gives no extra cash and further incentives to roll it out further across the west coast. It is similar with childcare and a number of other issues.
Graham Stringer
The hon. Gentleman makes a pretty fundamental point about devolution. When the House was making a decision to devolve powers, it would have been sensible to settle on a grant basis that was fair between Scotland, England and Wales, which the Barnett formula was not, and then allow the Scottish Parliament to raise taxes on that basis, so that if it wanted better-quality services, it could have had higher taxes and, if it was more efficient, it could have had better services or lower taxes, and so on. That is a very clear principle.
Mr MacNeil
The important point I am driving at is that, if the Scottish Government had proper control of their taxes, they could have grown the economy more and that growth would have delivered far more than the zero-sum game of who has got and has not got what in the UK. It is the ability to grow the economy that tax powers would give that is really fundamental.
Graham Stringer
If the hon. Gentleman is saying that Scotland, or any other devolved authority, should benefit from the initiatives it takes and from its own efficiencies, I agree completely. We are moving that way, but the Bill does not move far enough. No Minister or shadow Minister has been able to explain to me, in any of our debates, why we should have the unfair funding in the Barnett formula.
Those are the basic principles. I now want to explore how, if taxation is devolved to the Scottish Parliament, the United Kingdom Government will respond to competition. Air passenger duty is a very good example. As I understand it, the SNP intend to reduce air passenger duty by 50% and then reduce it to zero. That is quite a sensible policy for the SNP to follow. For that matter, it is a sensible policy for the United Kingdom Government to follow, because a number of consultants’ reports have shown that there is almost certainly likely to be a benefit for the whole United Kingdom if air passenger duty is taken away.
Every other country in the European Union has moved either to very low rates of APD or, as in the Netherlands, to zero. It is therefore a sensible policy, but the Government do not seem to have a clear position on what they will do about the very unfair competition between regional airports.
Mr MacNeil
Air passenger duty is a perfect illustration of what I said earlier. If the Scottish Government decided to lower APD and that upped the rate of economic activity in Scotland, they should benefit from the fruits of that activity. The benefits should not go to Westminster, because it would not compensate the Scottish Government for that initiative.
Graham Stringer
On 20 January, the Chancellor of the Exchequer told the Treasury Committee, in response to a question asked by my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) about that very point:
“I think the best approach to dealing with this concern, which I think is perfectly legitimate, is to cross the political boundaries of our two parties to try to find a solution that helps these regional airports that can be affected by an air passenger duty decision north of the border.
HMRC has done some work on this and I think it anticipated that Manchester airport would lose around 3% of its traffic and Newcastle could lose around 10% of its traffic. That was work carried out a couple of years ago… I think you and I—I made the same offer to Ed Balls—could work to help regional airports in the north of England if the Scottish Government were to go down the road of dramatically cutting its air passenger duty.”
Further to that, the Chancellor told the House of Commons on 27 January:
“We have a couple of years to work this out—it does not have be done tonight or tomorrow—and we can work out a plan that protects the brilliant Newcastle, Manchester and other regional airports.”—[Official Report, 27 January 2015; Vol. 591, c. 726.]
What progress has been made on that? This is about a loss of 3% and 10% of business, which are not trivial amounts.
This will result in not only an economic benefit for Scotland, but in real competition, which will come in two forms: there will be competition for passengers on short-haul flights, for which APD is £13 per passenger, and for those on longer-haul flights, for which it is £71 per passenger. Obviously, the same amount is paid for the return flight. A passenger from Newcastle therefore has an incentive—this applies to large families in particular—to travel to Edinburgh or Glasgow in order to save some money. Someone travelling long distance from north America or China has the same incentive.
Graham Stringer
I agree with that perfectly sensible point.
The Government may have a number of possible solutions, and I hope that the Financial Secretary will be able to respond in some way. Manchester airport has made the case strongly to the Government that there should be an air passenger duty holiday on new long-haul routes, and that would be helpful. The Government could devolve decision making to other parts of the United Kingdom as well as to Scotland, although it would be difficult to find a mechanism for doing so. The Government could also agree to compete with Scotland, because if there is no competition, there will be an unfair loss of jobs through lowering the rate of air passenger duty.
Such solutions seem sensible to me, given the experience in the rest of Europe and, indeed, in the rest of the world. The tax was brought in not for environmental reasons, as is sometimes said, but entirely to deal with the hole in the budget after the 1992 general election. It is an inefficient tax: consultants have estimated that it costs the economy more than it brings into the Treasury in cash. Even if the Financial Secretary cannot give an absolutely definitive answer today, I hope he will assure us that he is willing to look at some of the sensible responses to this new competition in tax regimes.
Mr MacNeil
The hon. Gentleman has been very kind in giving way. The tax is about more than just a hole in the budget; it is actually a demand-management tool for Heathrow and perhaps for Gatwick as well. If airports are full, APD is a demand-management tool that might work. It is certainly not helping in Edinburgh, Glasgow or Manchester. The solution is not to worry about each other, but for us to be rid of it, and for the Government to keep the demand-management tool in airports that are already saturated.
Graham Stringer
I do not agree with the point the hon. Gentleman makes in his fourth intervention. Demand management is not the solution for our regional airports, which have huge extra capacity, but if I went down that line, I expect you would rule me out of order, Mr Crausby. I look forward to the Financial Secretary’s response.
Rob Marris (Wolverhampton South West) (Lab)
I do not share this cosy consensus. The hon. Member for Dundee East (Stewart Hosie) made it very clear in his usual honourable way—I have sparred with him many times—that if APD is devolved, the Scottish Government, if controlled by the SNP, will cut it markedly and have the goal of abolishing it. He helped the Committee by quoting the Prime Minister to the effect that there would be—these are my words, not the Prime Minister’s—a “beggar my neighbour” attitude downwards on APD. Call me old-fashioned, but I think environmental laws should be state-wide and international, and I consider APD to be an environmental law, which is why I voted for it years ago.
As ever, the SNP has been totally open with the House: it wants to see the number of airline passengers increase throughout the UK. That is an environmental step backwards. Fortunately, we have environmental laws internationally through the EU, for example on waste disposal and air quality, something on which the UK is, to coin a phrase, falling foul at present.
Mr MacNeil
Following the hon. Gentleman’s argument, does he want to increase the rate of APD or is he saying the Tories have got it at just the right rate?
Mr MacNeil
Does the Minister see any advantages in other tax revenues from the cutting of APD or does he think the countries that have cut APD have done it as a result of lemming-like behaviour?
Mr MacNeil
The hon. Gentleman will be aware that between 2007 and 2009 the UK’s deficit quadrupled. Given the significance that he attaches to deficits and to one year, what significance does he attach to the quadrupling of the debt of a state in a two-year period?
Ian Murray
I am not sure I understand the intervention. We are debating a deficit in Scotland being £7.6 billion over and above any UK deficit, rising to £10 billion by 2020. If we are defending Scottish jobs and livelihoods, that seems not just economically incredible, but economic illiteracy. Hon. Members need not take my word for it. The Scottish Trades Union Congress general secretary, Grahame Smith, commented that the Scottish Government’s own accounts were
“a sobering reminder of some of the risks of full fiscal autonomy”.
That is from the trade unions in Scotland.
The Scottish Government sneaked out their own oil and gas bulletin, their first since May 2014, last week on the last day of the Scottish Parliament. It would be good to look at that alongside the independence White Paper. The bulletin was very much in accord with the Office for Budget Responsibility that was rubbished just a few days before. It showed that North sea oil revenues and projections have fallen drastically in recent times, so let us have a look at those figures. The Scottish Government’s own oil and gas bulletin of June 2015 estimated North sea tax receipts for the period 2016-20 to be £5.8 billion. The same scenario from the same bulletin 13 months earlier estimated the receipts to be well in excess of £26 billion. Even if we compare one year—say, 2016-17—revenues had fallen from a projected £6.9 billion to £1.1 billion, and the lower estimates are as low as £500 million.
These are the Scottish Government’s own figures—all in all, an 85% drop. That tells us two things. First, it blows apart the financial basis for full fiscal autonomy. Secondly, like my new clauses 1 and 21, it calls for a more robust and impartial analysis of the Scottish economy and public finances. That is why we tabled new clauses 1 and 21. New clause 21, alongside new clause 1, would provide for the creation of a Scottish office for budget responsibility to exercise independent and impartial fiscal and budget oversight over Scottish Government devolved competencies.
The Smith commission recommended that
“the Scottish Parliament should seek to expand and strengthen the independent scrutiny of Scotland’s public finances in recognition of the additional variability and uncertainty that further tax and spending devolution will introduce into the budgeting process.”
The new clauses would do just that and take away the politicisation of one of the fundamental underpinnings of the Scottish economy, the financing of Scottish public services and, crucially, though it tends to be forgotten in this debate, the livelihoods of everyone living and working in Scotland.
I would go further and ensure that the Scottish office for budget responsibility assesses and reports on individual party manifestos, so that the public can be confident that what they are being sold is both credible and desirable. This is about simple transparency and accountability. That transparency and accountability, as I have said, has not been forthcoming on the current manifesto commitment on full fiscal autonomy. If we had had a Scottish office for budget responsibility at the last election, it would have reported that FFA would be hugely disadvantageous to Scotland. It would have backed up the IFS analysis that showed that FFA did not work and that Scotland would need a real-terms growth rate of 4.5% per year at least between 2013-14 and 2019-20. The assistant general secretary of the STUC, Mr Stephen Boyd, commented exactly on this and said:
“The implication across the board is that taxes would be cut. There are a number of examples where the Scottish Government would be trading a real and immediate cut in revenue for benefits that may not be great in the long run.”
That shows that it would not be achievable in the figures from the IFS. The IFS’s conclusion is that FFA would incur deep, deep cuts in spending or huge tax rises.
It is easy to talk about figures, percentages and statistics, but this has to be about the everyday lives of ordinary, hard-working Scottish families. Inflicting a policy on Scotland that would leave a deficit larger than the entire education budget, or more than three quarters the size of the NHS budget, will not assist Scotland. We all reject the Conservative Government’s misguided austerity, which we know is ideologically driven, rather than an attempt to balance the country’s finances, but we must also reject any policy that would inflict harsher and deeper austerity in Scotland. [Interruption.] This is not, as some would claim—they are claiming it as I speak—about being anti-Scottish, anti-aspiration or anti-hope for the ingenuity, passion and entrepreneurial spirit of Scotland; it is a sobering response to a key manifesto commitment from the Scottish National party.
SNP Members dismiss the views of the IFS, the OBR and even their own GERS reports, but even Jonathan Portes, the director of the National Institute of Economic and Social Research, has said on FFA:
“If the SNP plan for full fiscal autonomy were to go ahead, then, as a number of commentators have said, that would lead to very, very severe austerity in Scotland.”
That is why Labour is against full fiscal autonomy; that is why we believe in the pooling and sharing of resources across the United Kingdom; and that is why the public voted to remain part of the United Kingdom.
European Union (Finance) Bill
Angus Brendan MacNeil Excerpts(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I do not know whether the hon. Gentleman has ever been to Iceland, Norway, the Faroe Islands or places further north of Scotland, but he would see greater use of land there than in the highlands and islands of Scotland, because the agricultural support is so much better. On repatriation, would there not be a danger to some countries that the Anglo-Saxon or Anglo-American model of economics would suck out the little money that is there and give it to London, which does not put it around its own state? At least with Europe we have some sort of guarantee that we will get the money, even though we are among the least favoured areas of the land.
Kelvin Hopkins
The hon. Gentleman’s point tempts me to talk at greater length about a broader, more socialist approach to running the world, with which I strongly agree. If I did so, however, I think I would set too many hares running and Mr Williams would call me to order very quickly.
The CAP is nonsense. We ought to abolish it and repatriate agricultural policy to member states. We can decide in our own country which parts of agriculture should be subsidised and to what extent, and we can decide where and when we buy food. We might choose to subsidise to keep agriculture sustained in this country for strategic reasons. During the second world war we needed to produce food for ourselves, and all countries have to bear those sorts of factors in mind when deciding what they produce.
Interestingly, the right hon. Member for Gordon (Alex Salmond) obviously does not like the common agricultural policy or the common fisheries policy very much. I am surprised that the SNP is in favour of the European Union at all.
Kelvin Hopkins
The right hon. Gentleman makes a strong point. I have said that if we were outside the EU, we would be better off financially and could choose what we subsidised, how and to what extent. We could choose what sort of farming we wanted to sustain. I have made the point before that small hill farmers in Wales, who are part of our rural culture, ought to be preserved. They might not be very efficient, but we could perhaps choose to subsidise them. For other forms of farming we might choose to maintain the subsidies at the current level, but we would make that choice democratically through our Government and this Parliament.
Mr MacNeil
The glib answer that has often been given to me in the House in years past as to why we should maintain the common fisheries policy is that fish do not have passports. Of course that neglects the reality that there are three types of stocks: migratory stocks, non-migratory stocks and straddling stocks. We can look at what happens in countries that control their own fisheries, such as Iceland. Jóhann Sigurjónsson, the chief fishing scientist of Iceland, tells me that its fishing has so improved, and trawlers are catching the cod stocks so much more quickly, that fishermen are actually getting frustrated. They are being so successful and doing their work in so little time that they want to go and catch more. That is a sign of their success, having managed their own stocks for a number of decades.
Kelvin Hopkins
Indeed. The hon. Gentleman is well ahead of me in his expertise in the matter, but the basic point is that we should control our own fish stocks and manage them properly.
I have one or two other points to make about expenditure in the EU budget. From time to time we have discussed international aid. My view, and I think the view of the Department for International Development, is that we would spend international aid better than it is spent through the European Union. We would target and manage it better and try to ensure that it was spent in a less corrupt way in certain countries. Countries would do better to manage their own aid donations abroad than have them dealt with through the European Union. Aid is therefore another component of the EU budget that could be taken away.
Then we come to structural funds. Again, I believe that member states, particularly our own country, are best able to judge what regional assistance they need to provide. We could target that assistance better than when it is decided by the European Union. As part of our regional policy, we might want to have state aid to assist the growth of manufacturing in some of the less successful regions of our country. Manufacturing is too small as a proportion of our economy, and if we want to expand and improve our manufacturing sector to help investment, we might want to use state aid, which is forbidden under the EU arrangements.
Mr MacNeil
Is not the great danger that the high priest of the austerity cult, the Chancellor of the Exchequer, would drive austerity further and we would not see the spending that we currently see in areas of Wales and in the highlands and islands of Scotland?
Mr MacNeil
He would keep it all in London. If that were to happen, we would need full fiscal autonomy, or indeed independence, to ensure that areas of Scotland were well protected.
Kelvin Hopkins
I thank the hon. Gentleman, but it is a counsel of despair to say that because we cannot trust our own Government, we have to go to the European Union. I was on a march through London opposing austerity last Saturday, and there were tens of thousands of people there who felt strongly about it. Even though we may have Governments we do not like from time to time, we have the chance of pressurising them in the short term and getting rid of them and replacing them with more progressive Governments in the long term. Pressurising Governments is what I do in politics, as I think Members of all parties do. I want to see the Government elected in this country governing this country, not giving away our powers so that we are governed by a bureaucracy in Brussels or wherever.
I have mentioned spending on the CAP, aid, structural funds, regional policy and so on. If we had responsibility for those things, some of the fiscal transfers that effectively take place between the richer and poorer countries in the European Union might no longer happen. If we want fiscal transfers, the way to do it would be for us to make substantial contributions to a fund that could be allocated to the Governments of less well-off countries. Lithuania, Latvia, Poland or wherever could benefit from donations, but they would go to those countries’ Governments, who would decide how that money ought to be spent in their countries. It would not be about the European Union subsidising certain sectors in a way that may or may not be beneficial to those countries. As I said, in Lithuania, and no doubt in other countries, they are being paid not to grow agricultural products and their own food. That is nonsensical, and I wish to see an end to it. If we want fiscal transfers, let them be up front. Let us contribute to a fund that poorer countries in the EU, or in a new association of member states, could draw on. That would be a more sensible way forward.
Of course, that would loosen the bonds of the European Union. We would not have decisions about all sorts of sectors being made by the Commission in Brussels. They would be made by democratic Governments, and we would have a looser association of states within Europe, which would be a much more sensible way of operating. I support what my hon. Friend the Member for Worsley and Eccles South said, and I support her probing new clauses and her amendment 1, which we hope to be voting on soon.
Productivity
Angus Brendan MacNeil Excerpts(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie
There is indeed a problem in the shift away from the added-value, higher-skilled economy that we must have to maintain our place in, and indeed win, that famous global race. If we think that we can do it simply by chasing lower-wage, lower-skilled markets, we will never ultimately succeed relative to other countries.
Chris Leslie
This might be a shock to the hon. Gentleman, and I am not sure where he was at the time, but there was a global banking crisis—[Interruption.] I know it is a shock to Conservative Members, because in their script it has been expunged from the record, as if it never happened.
Mr MacNeil
The hon. Gentleman is making a very good speech. Does he agree that the culture of long working hours can often be the enemy of productivity? The textbook example is Volkswagen 10 or 20 years ago: when the working week was cut from 35 to 28 hours, productivity went up. When workers feel that they do not have all day to do the job, they get on with that job and productivity rises.
Chris Leslie
I think there is a case to be made for ensuring that we focus on the morale of those in employment. There is an optimal point from which morale can dip and fall. We have to focus on what creates the optimal circumstances for those in work to produce the amounts that our economy needs. That is all part of this complicated picture.
When we have managed to get the Chancellor to talk about productivity in the past, he has referred to a “productivity puzzle”. If we are looking for clues to the solution to that puzzle, looking more closely at the nature of our economic recovery is important. It still feels a bit stressed, quite fraught and fragile. Reflecting on that is part of the solution.
On skills, just a few weeks ago, the Office for National Statistics published its analysis showing that the share of high-skilled jobs in the economy is falling relative to the share of low-skilled work, which is of course taking its place. The Bank of England’s last inflation report stated that since mid-2013 employment growth had been more concentrated in lower-skilled occupations, concluding that this shift in the composition of the labour force could have dragged down aggregate productivity growth over the past two years.
That is not something that we should simply accept. I do not believe that we are just at the mercy of events and unable to influence our economic productivity. On this side, we believe that it does not have to be that way. History shows that Britain can do better. By contrast with the traditional Conservative approach, which is to step back and hope that productivity magically springs from the market out of thin air, we take a very different view. We believe that decent infrastructure and decent public services can support business growth. Motorways that flow freely and trains that commuters can get on; tax offices that answer business queries efficiently rather than keeping their company staff always on hold; swift treatment of sick employees in a decent NHS: all that is part of the productivity story, as is an education system that supports a workforce with high-quality skills. So many aspects of our public services are crucial for our future economic productivity. Each of those depends on the Chancellor making the right fiscal choices for this Parliament. This should have been at the top of the Chancellor’s agenda throughout the last Parliament; for him not even to mention it in the last Budget speech was a grievous error.
European Union Referendum Bill
Angus Brendan MacNeil Excerpts(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I wonder whether the hon. Gentleman’s concern is partly due to the behaviour of José Manuel Barroso, the former President of the European Commission, during the Scottish referendum, and whether that model is what he envisages seeing, in amplification, in the European referendum.
Sir William Cash
It certainly is. I have heard over and over again in this debate claims that, “We all want fairness. We all want transparency. We all want to be sure that the British people are treated fairly.” The fact is that with European Union money there is not the slightest chance of that happening, and the purdah arrangements, by bringing the civil service into the equation, will have exactly the same negative effect.
Mr MacNeil
By extension, the logical conclusion of what the hon. Gentleman has just said is that the Scottish people were not treated fairly last September.
Sir William Cash
This is vital territory. In a nutshell, we will have to get it right. Opening the floodgates on that money would be devastating, especially if it were to be employed alongside the lifting of the restrictions in section 125, which would bring the whole panoply of the civil service into play. That would be a nightmare scenario, but it is a genuine possibility. I am not convinced that the European Union is not a foreign source, although I will look into that. We passed an Act of Parliament, the European Communities Act 1972, under which we absorbed into our legislation all the treaties and all the functions of the bodies in the European Union. Because they became part of our constitutional settlement—for the time being, I trust—I believe that it would be an uncertain, if not a dangerous, assumption to make that the European Union and the European Commission would not be construed as being based in the United Kingdom as well as in all the other EU countries, in other words, as not being a foreign source. This matter will have to be looked at very carefully. I shall consult and confer with my colleagues as to what we do about these amendments.
Mr MacNeil
Part of the difficulty that the UK has is the way that countries such as Ireland, Cyprus and Malta are to be treated. We also have the Foreign and Commonwealth Office; we do not consider Commonwealth citizens to be foreign but do consider some European Union citizens to be foreign. The Foreign and Commonwealth Office itself is anomalous because the Irish Republic is neither in the Commonwealth nor is it considered legally foreign in the United Kingdom. The United Kingdom’s own mess is contributing to some of the arguments that the hon. Gentleman is making.
Peter Grant (Glenrothes) (SNP)
It is a great pleasure to follow the hon. Member for Stone (Sir William Cash). I associate myself entirely with the comments made earlier in welcoming him to this debate. I will often disagree with what he says, but I am delighted to see someone who goes to such efforts to express in this Chamber views that are very clearly and sincerely held. I always think that a sincere political opponent is the kind of opponent one likes to have a debate with.
I want to focus on amendments 53 and 32. I have some sympathy with the intention behind amendment 53, but from my experience of the referendum in Scotland last year, I suggest that the last thing anybody should want to do is to artificially restrict or control the number of individuals in organisations who can play their own small but important part in what should be a celebration of grassroots democracy if we get it right; it could be something very different if we get it wrong.
The Scottish independence referendum was the biggest celebration of grassroots democracy that I have ever seen or expect to see. That was partly because neither the political parties nor anyone else tried to artificially control who was and was not allowed to take part. I am sure that on a number of occasions the SNP’s lawyers were quite pleased that they were not in control of some of the things that were happening. That is what made it so much fun, that is what gave us a record-breaking turnout, and that is why public engagement in politics in Scotland is still at a much higher level than it was just a few years ago.
I caution the hon. Member for Gainsborough (Sir Edward Leigh) to be careful about artificially restricting this debate to the great and the good and suchlike. A lot of wee people out there have something important to say, and a lot of smaller organisations will have an important part to play, on both sides of the question. We should encourage them to have their say rather than artificially restrict them.
It is interesting to hear so many Conservative MPs complaining that they might get outspent in an election campaign; in almost 30 years of party politics, I do not often remember Conservatives complaining that an election was not fair if one party was being massively funded by big business and was able to outspend all the other parties combined by a factor of five or 10.
Mr MacNeil
There is also an irony in the Conservatives’ concerns that European organisations might dip their oars in this debate, given their negligible worries about the Committees and machinations of Government during the Scottish referendum.
Peter Grant
My hon. Friend makes a good and valid point. Conservatives expressing concerns about possible unfairness in the conduct of this referendum are referring to exactly the kind of unfairness that they and their colleagues were happy to exploit in the Scottish referendum.
Peter Grant
Like many Members on these Benches, I am not comfortable with the very severe restrictions that have been put on what charitable organisations can and cannot do. A phrase I have often used at hustings is, “If I say we should give money to the poor, I’ll be called a saint. If, however, I ask why they were poor in the first place, they would call me a communist.” There is a dividing line between any kind of socially beneficial charitable work and getting political. Asking why we have food banks, for example, very quickly becomes a political matter. The hon. Gentleman makes a very valid point, but I am saying that specifically in relation to organisations that work on behalf of citizens—some of them will have a vote in the referendum, but shamefully it looks as though some may not—we have to be very careful not unintentionally to prevent them from doing the job for which they were originally constituted.
Mr MacNeil
My hon. Friend is making a fine speech. Does he agree that the difference in tone between the Scottish referendum and this one arises because in Scotland we talked about the people in Scotland, while in this referendum the talk is of the British people, which is a shame? The talk should be about the people in Britain or, more correctly, the people in the UK. That is what the referendum should be about, and we should not exclude people who live here because of where they were from originally.
Peter Grant
I have always been of the view that people’s nationality should be defined by where they want to go, rather than where they came from, but that definition is not widely accepted.
Mr Rees-Mogg
It is a pleasure to serve under your chairmanship in today’s debate, Mr Howarth, and to welcome the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Weston-super-Mare (John Penrose), as the Minister responding. The constitution is always in safe hands when it is in the hands of Somerset, so it is reassuring that he is here to respond.
I want to follow on from what my hon. Friend the Member for Aldershot (Sir Gerald Howarth) said about amendment 10, on EU funding, which was tabled by my hon. Friend the Member for Stone (Sir William Cash), and to which I have added my name. The appearance of fairness within the referendum is at the heart of what the Government must try to do. The Government, like Caesar’s wife, must be above suspicion. It would be wrong if there was any feeling that the referendum was being held improperly, that undue pressure was being brought to bear, or that funding was directed to one side rather than the other—I say that as somebody who supports the Government’s position—but it would be most wrong if British taxpayers’ money funnelled by the European Union ended up being used to campaign for us to remain subject to the European Union.
Mr Rees-Mogg
It is a delight to give way to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil).
Mr MacNeil
The hon. Gentleman’s pronunciation is as impeccable in this Parliament as it was in the last one. I congratulate him once again.
The hon. Gentleman mentions the nonsense and unacceptability of British taxpayers’ money going through the European Union and back again. He will be aware, and perhaps bemused and baffled, that there is much amusement in Scotland that Scottish taxpayers’ money funnelled through the UK Government was used in our referendum to campaign succinctly and definitely on one side. I am thinking of Sir Nicholas Macpherson and many others along with him.
Mr Rees-Mogg
The hon. Gentleman had the opportunity to listen to an excellent debate on that very subject yesterday, led by my hon. Friend the Member for Gainsborough (Sir Edward Leigh), but I think I would be in trouble if I went through the question of full fiscal autonomy for Scotland in relation to amendment 10 to the European Union Referendum Bill, so I want to stick to the subject at hand.
The European Union has a budget for this. Indeed, we passed a Bill in 2013 that allows for the European Union to engage in political activity and the promotion of the cause and objectives of the European Union. That money flows to institutions within the United Kingdom and that money comes with strings attached. It is money that is given on the basis that the institutions receiving that money support the objectives of the European Union.
Mr Rees-Mogg
No, we co-operate in far too many areas already. I have a lot of sympathy with the SNP’s position in many ways, because it is not entirely different from mine. I want my country, which I view as the UK, to govern herself, and SNP Members want a smaller part of the UK—Scotland, which they view as their country —to govern herself too. It puzzles me that, having got self-government, they want to hand it over to Brussels, but that is a question for them.
Mr MacNeil
My first quibble—the first mistake the hon. Gentleman has made—is that the British Union is not a country, but a union. Secondly, he fails to realise that we only want to change our relationship with London. Our relationship with Brussels would stay the same, under the SNP’s proposals for Scottish independence, which might come very soon.
Mr Rees-Mogg
That is a moot point that was discussed at length during the Scottish referendum campaign and to which I had better not revert.
I want to concentrate on the power, influence and resources of Governments.
Mr MacNeil
I must remind the right hon. Gentleman of what happened in the Scottish referendum. The only difference was the way that it was funded. In the United Kingdom, funds are collected centrally and go to London. If the European Union had the same model, they would be collected centrally and go to Brussels and then given out again. The point is that it is taxpayers’ money. In Scotland, we saw our taxpayers’ money come back to the UK Government and used against one side of the referendum campaign.
John Redwood
I quite understand, but I am suggesting something different. I am suggesting that to have a completely fair and independent referendum, there should be much stricter controls over the expenditure of Government money.
Mr MacNeil
I am very grateful to the right hon. Gentleman for his revelatory tone and words. He said that he wants a stricter and fairer system, so his commentary on the Scottish referendum is instructive and very welcome.
John Redwood
The result in Scotland was pretty conclusive, so the expenditure of Government money was not the crucial thing that made the difference to the result. The result speaks for itself. But we can always learn from past experiences. For my choice, I do not favour the expenditure of public money on interfering in elections and referendums. I am known to be careful with public money anyway, and I would not want the money to be spent on this area. It is for individuals to decide what they wish to do by way of political intervention, and they can make their own decisions. If we let them have more of their own money to spend, they may wish to spend it on interventions in elections. That is how I would rather it was done. In this case, it would be particularly counterproductive for the European Union to spend some of our money, which we send to them, on intervening on one side. It would cause enormous resentments. Indeed, the no campaign might even welcome it as it would be a cause in itself which it would make use of if this became a clear use or abuse of public money.