Economic Update

Anthony Browne Excerpts

Wednesday 8th July 2020 Commons Chamber

[Rishi Sunak]

I know that this will make a big difference. It is important though that it is time limited. That is in keeping with most other countries that have done something similar—they have also run theirs through to the end of the year. I will happily bear all future tax suggestions in mind, but, in the short term, I hope that the right hon. Gentleman’s constituents and businesses get the boost in confidence and demand that they will need.

[Anthony Browne (South Cambridgeshire) (Con)]

It is bold, it is imaginative, and it is well-targeted. I congratulate my right hon. Friend the Chancellor on this package, which will do so much to promote jobs and growth across the country. I very much welcome the cut in VAT and in stamp duty, but most welcome of all is the kick-start scheme, which brings hope to young people in these difficult times. Unlike Labour’s future jobs fund, it is not just focused on the public sector. Does he agree that it will have most impact if it is fully embraced by the private sector, and private businesses take advantage of the opportunity to take on young workers?

[Rishi Sunak]

My hon. Friend is absolutely right. It is important that we provide as many opportunities for young people as possible. One thing we want to improve and build on is the involvement of the private sector. I hope that this becomes a galvanising cry to businesses, small and large, up and down the country to take on a kick-starter to help play their part in the recovery, and I know that this is an area in which he has strong experience from his time in London. I appreciate the advice and suggestions that he has given me about how to encourage and incentivise businesses to create jobs and opportunity.

Finance Bill

Anthony Browne Excerpts

Report stage & Report: 2nd sitting & Report: 2nd sitting: House of Commons
Thursday 2nd July 2020 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con)]

I have followed the Treasury’s Budgets professionally for a quarter of a century and contributed to many of them, but this is the first time I have helped to legislate for a Budget. As well as speaking in various stages of the Finance Bill, I served on the Bill Committee. I have been impressed by the thought, the hard work and the dedication that Treasury Ministers and officials have put into the Bill, taking on board many of the concerns that have been raised throughout the process. I particularly pay tribute to my right hon. Friend the Financial Secretary and my hon. Friend the Exchequer Secretary, who have steered the Bill through its various stages with patience and humour.

When I first sat on the Finance Bill Committee, I never expected that in our discussions I would learn about Burkean philosophy or why there are different rates of take-up of driving licences among different ethnic groups. I pay tribute to the work of the Clerks on the Bill, who made it work so smoothly, and to my own staff, who have supported me throughout the process.

This Budget is one of the most unusual in history. Announced just weeks before lockdown, it was legislated for during the deepest recession and the biggest economic support package in modern times. It is notable that, almost without exception, the measures have withstood these exceptional circumstances and they are as justified now as they were before.

I sat through the amendments that the Opposition tabled in the Bill Committee, and I observed that none of them had anything to do with promoting economic growth. I was reminded of a conversation that I had with a peer of the realm when I first came to this House. I had always thought that he was a Labour peer, but he told me that he was a Conservative. I asked him why he was Conservative rather than Labour, and he said, “The trouble is that they know only about spending it, not about making it, but you can’t spend it unless you have made it first.” That could not be more true.

There are some much-debated measures in the Bill, but I think that in the end it gets the balance right between tackling tax avoidance and encouraging entrepreneurialism. It is right that everyone pays their fair share. I am at heart an economic liberal who believes that if a Government are going to take a person’s hard-earned money, the burden of proof lies on the Government to justify doing so. In general, I get more joy from cutting or scrapping a tax than introducing a new one, but it is notable that the Bill introduces new taxes. The possible carbon tax is needed to tackle climate change by ensuring that companies pay what economists call the externality of emitting greenhouse gases. The plastics tax is a great nudge tax, pushing industry into recycling more plastic by imposing costs on not recycling. As economists say, we should tax bads, not goods.

Then there is the new digital tax, discussed broadly in this House, which ensures that global technology companies pay their fair share. These technology companies bring us all so many benefits, which is why many of them have grown rapidly into some of the most valuable firms in the world, but their global business model and the joys of internal transfer pricing, basically mean that they can decide how much corporation tax they pay in each different country where they operate. The ultimate solution to this is a global agreement on the taxation of technology companies, but these agreements can take forever to reach, not least if those countries that benefit from the lack of an international agreement drag their heels. So it is absolutely right that countries such as the UK take the lead in introducing interim national measures. With declared national profits at the discretion of finance directors, the only option for the digital tax is to be that unprecedented thing—a tax on turnover. So the carbon tax, the plastic tax and the digital services tax are three taxes that can all clearly be justified. I welcome them.

Finally, I want to look ahead at the biggest economic challenge of our time. Yesterday in the Treasury Select Committee, on which I sit, the chief economist of the IMF and the OECD both paid tribute to the Government’s economic support package. Economists rarely agree about anything, but they do agree that things would have been a lot worse without this unprecedented Government support. I welcome the news yesterday from the Bank of England that we are bouncing back quicker than many had feared, but we are still set to have one of the sharpest recessions in modern history. Thousands of jobs are already being lost across the private sector, and the risk is that we undo the hard work that we have done since the 1980s to become a country of high employment and low unemployment. We must do everything we can to prevent that. We must not go back to the 1980s.

We now need to have a laser-like focus on getting the economy going again. We need to stop jobs being lost in the first place and then ensure that the short-term unemployed do not become the long-term unemployed. That means getting them back to work as quickly as possible. We have rightly all been paying tribute to the NHS staff who have done so much to look after us during the pandemic, but we should also pay tribute to the dedication of private sector workers—from supermarket staff who have kept us fed to drug companies that have developed treatments and companies that have built ventilators. It is private enterprise that has taken the brunt of this recession, and it is private enterprise that will pull us out of it. Private enterprise is not the problem that some on the Opposition Benches see it as; it is the solution. Across the House, we need to focus in the coming months and years on helping businesses get going again, so that they can create the jobs and pay the taxes that pay for our public services and our welfare system. We need to build, build, build, and that leads to jobs, jobs, jobs. I commend the Bill to the House.

Finance Bill (Eighth sitting)

Anthony Browne Excerpts

Committee stage & Committee Debate: 8th sitting: House of Commons
Tuesday 16th June 2020 Public Bill Committees

Only the Treasury can now provide the support that our aviation industry needs. People’s jobs up and down the country are counting on them. It is wholly unacceptable that the Chancellor made a commitment back in March, but has not put his money where his mouth is since. I hope that Ministers might give some semblance of explanation or hope to people in the airline industry and those whose jobs rely on it more broadly that the Government are listening and are going to act in short order.

[Anthony Browne (South Cambridgeshire) (Con)]

This is my first ever Bill Committee, but I was under the impression that we were meant to talk about the actual elements of the Bill, rather than wider economic policy or industrial strategies for business. The hon. Member for Ilford North has kindly emphasised all the support the British Government are giving the airline industry, but it is completely irrelevant for discussion now.

[The Chair]

I would just say to the hon. Gentleman that the decision on what is spoken about and what is not is mine. My general attitude is to encourage participation and comment. I will show the same latitude to both Government and Opposition Members. I call the Minister.

--- Later in debate ---

[Anthony Browne]

As somebody who used to run the British Bankers Association, which turned into UK Finance, I was very involved in some of those earlier lobbying efforts. I must say that in this case, I simply do not believe it. I do not think this measure would have any impact on business lending; it is quite clear that the tax has already been paid by employers or customers, and it would have a very limited impact—virtually no impact—on the actual risk of a loan or the risk of default. I fully support the Government on this.

[Jesse Norman]

I am grateful to colleagues for their comments. I will talk about the clauses in a moment, but I will first enjoy this moment in Committee: a senior Opposition Member of Parliament says that he is resistant to financial sector lobbying, which I am thrilled about; and on the other side, someone who headed up the lobbying organisation says that, from an inside standpoint, we are talking about irrelevant minutiae. Let us enjoy for a second that rare moment of harmony and joy in Committee.

Finance Bill (Fifth sitting)

Anthony Browne Excerpts

Committee stage & Committee Debate: 5th sitting: House of Commons
Thursday 11th June 2020 Public Bill Committees

We believe that a more ambitious approach is demanded by the unique and challenging circumstances that we are in, and we remain concerned that the measures today simply do not go far enough.

[Anthony Browne (South Cambridgeshire) (Con)]

I am generally a low-tax Conservative. I prefer lower, simpler taxes, but I thoroughly welcome this new tax. It is clearly welcomed across the House. The public are frustrated at seeing these big technology companies and other multinational corporations not paying their fair share of tax.

I have a few observations and then one question for my right hon. Friend the Financial Secretary. It is absolutely welcome that he is co-ordinating globally on this. I have led tax talks with the OECD on things like common reporting standards, and they take a very long time, so it is welcome that he has come forward with a national measure aligned with what we expect from the international measures, and we are not waiting for the international measures to come into place.

I notice that the shadow Chief Secretary says that the measure has not gone far enough, but it is still one of the first in the world and it also breaks the mould in being a turnover tax, which the UK Government have always resisted. As globalisation continues apace, the arguments for turnover taxes as opposed to profit taxes get a lot stronger and we now have one in the UK on digital services. I suspect that in years to come there will be arguments made for expanding turnover taxes to other sectors.

The case was made that the tax is modest in terms of revenue, but all taxes start out modestly. When we look at the history of value added tax, stamp duty or income tax, they started out modestly and tended to increase as we saw what their impact was. The digital services tax is an entirely new tax on a sector where we do not really know the dynamics. The data has not been collected by the companies, so it is absolutely right that we see what the impact is before deciding in what way to extend it.

When I was chief executive of the British Bankers’ Association, I was involved in many discussions with the Treasury on new bank-specific taxes. With a new tax, it is always the case that we do not know what revenue we will get. There is always a high amount of uncertainty because people have not collected the data for that tax. It is inevitable that for the digital services tax there will be a degree of uncertainty, as has been pointed out.

My question for my right hon. Friend the Minister is about enforcement and implementation. The digital services companies will have to collect a lot of data that they might not have been already collecting. HMRC will be dependent on them for providing the data because it will not have direct access to all their internal accounts and that level of detail. I want to know what work is being done with HMRC to make sure that it can get the right data and have confidence that the companies are paying the amount of tax that they should be paying and not playing games, as they are sometimes wont to do.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I am also not usually somebody who likes to find new ways to tax people in the UK. The digital services tax is totally new, but it is the right thing to do. The clauses detail the scope and the mechanisms for the tax and its collection. We even have a clause with an algebraic formula, which should certainly raise an eyebrow. [Laughter.]

The main thing to note is that the economy is changing fast and the tax is a part of that change. The Government’s response is to work internationally as we plot the course to a digital economy. Such economies are by definition international, so it is right to respond in a multinational way. I also know that it is very hard and takes a long time to achieve the objectives, so it is clearly right to proceed in the short term with this measure. Digital firms must pay their fair share.

It is increasingly hard for Governments to raise revenue from their traditional routes. The Government obviously have to raise revenue to fund the public services that we want. There is therefore an underlying, fundamental challenge for the Treasury. Work and consumption patterns change. I recognise that I possibly view this through the prism of somebody who has had responsibility for raising Government revenue—once a Treasury Minister, always a Treasury Minister—but this tax and the thinking behind it are the shape of things to come. Tax has to evolve to reflect the way the economy evolves.

The rise of the digital economy means different things for different companies. The opportunities for productivity and environmental gains are absolutely immense, so we must do all that we can to encourage the shift into a digital economy. Most people encounter it through social media search engines and online retail, which are the target areas for the tax. The growth of online retail has placed ever greater pressure on traditional high street retail businesses: a trend compounded, as colleagues have said, by the current crisis.

There have been concerns about the nature of competition and whether there has been a level playing field between online and offline: the argument between bricks and clicks. We should make every effort to level the playing field and the tax is a part of that. High streets have a role beyond their traditional economic role. They have a social role and bring people together. They create hubs for communities, but they also have to evolve to reflect the changing nature of competition, and a more level playing field in taxation will help give them the space to evolve.

I had some concerns that the tax may discourage digital start-ups; we have seen a good period for start-ups in the UK and I think that we have led Europe in this sector. However, I think those concerns have been dealt with by the threshold at which the tax becomes payable, which will only capture the very largest of businesses.

So, we have a very interesting new area for taxation, which I do not think any Government can enter into lightly. The Minister is an old friend—we have worked together for many years—and I commend him, because this is not easy stuff; it is pioneering for the UK and indeed for the world. But we have found a way forward that updates our taxation system and introduces more fairness to it, and through the operation of the new system we will learn how future taxation may work. So, as we go through further clauses in detail today, perhaps he could comment on how any learnings from this tax might influence and develop future taxation thinking.

The Economy

Anthony Browne Excerpts

Monday 27th April 2020 Commons Chamber

[Rishi Sunak]

I thank the hon. Member for that comment, and I like his phrase at the end—we will see whether it shows up in a future speech. He is absolutely right that we are all in this together. We have gone through this as a collective endeavour as a country, whether as business, Government or individuals, and it is right that people act responsibly during this process. That is something I have urged all businesses to do, and I hope they continue to do that. He is correct: as we emerge from this, it is right to look at things in the round. As we went through this together, we must repair the economy all together.

[Anthony Browne (South Cambridgeshire) (Con)]

I congratulate my right hon. Friend on the bounce-back loans, which I am confident will provide much relief to a lot of small businesses in my constituency. I also congratulate him on the strong support measures across the range, which have helped a lot of people in South Cambridgeshire. Will he confirm that he will keep the package of measures under review, both to identify any other groups that we can help, but also to make sure that as we transition out of lockdown, we do so successfully? In particular, the job retention scheme, which, as he said, now employs 4 million people, has been very successful in protecting jobs. We need to make sure that when it does come to an end, it does so in a way that minimises redundancies.

[Rishi Sunak]

My hon. Friend is well informed on these issues. I know he has put a lot of specific thought into this topic, and I welcome further engagement with him. He is right. We must think carefully about exiting these schemes to provide maximum support to the labour market and businesses, and to ensure that we do not inadvertently distort things and hamper our recovery by stopping people going to work and businesses re-employing them, which is the outcome we all want to see.

Finance Bill

Anthony Browne Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution
Monday 27th April 2020 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con)]

I have been engaged with Government Budgets for over two decades, either as an economics journalist, a political adviser or chief executive of the British Bankers Association, but this is my first speech in the Second Reading of a Finance Bill, and it is almost certainly the most surreal that I will ever make—not just because this debate was virtually entirely virtual, but also because many of the measures announced in the Budget, as well as the fiscal projections, have been overtaken by events.

Since the Chancellor made his Budget speech, he has announced the most comprehensive and generous package of measures to support businesses and individuals that any industrial country has made in this crisis. As someone who has in the past been involved with launching business support schemes throughout the banking sector, I have to say that I am amazed by the speed at which these packages have been launched. The Chancellor and his Treasury team, including the Economic Secretary to the Treasury, my hon. Friend the Member for Salisbury (John Glen), have packed years’ worth of work into weeks. It is an extraordinary achievement, but I still share the frustrations of others that the banks have not quite stepped up to the plate; things are moving faster now, I hope.

Many of my constituents—individuals and companies—are really hurting, but many are also really appreciating the support that the Government are giving. I think we all appreciate the new announcement today of the bounce-back loans, which should really help the smallest businesses to get quick access to the financing that they desperately need.

But even with all the support, the economic damage caused by this lockdown is deep. Some forecasters are predicting the sharpest recession for a century or more. As the Chancellor has made clear, he cannot save every business and every job, but with this package of measures, most of the productive capacity of the economy should be preserved for when the economy bounces back, which it surely will. We do not know how long the lockdown will last or to what degree it will cause permanent damage, but we do know that the UK and most other developed countries will be left with vastly bigger national debts.

The Office for Budget Responsibility, in what was widely deemed an optimistic scenario, said that the national debt could rise to as much as 100% of GDP. That is why I wanted to speak tonight—to touch on our longer-term economic strategy. How do we deal with this huge public debt? What impact will it have on the Government’s other plans, such as investing in infrastructure, levelling up and becoming carbon neutral?

I have long been a believer in sound finance—that we should all strive, in the long term, to live within our means. There is an intergenerational unfairness in one generation passing on their debts to another. I believe in fixing the roof when the sun is shining, but we are in the middle of the worst hurricane for a generation and the roof has been blown off.

It is absolutely right that the Government are being so generous in support of the economy, but how do we deal with the inevitable growth in national debt? The traditional answer to that question is to raise taxes or cut expenditure, or a mixture of both, but we have just had roughly a decade of so-called austerity that was necessary to reduce the huge annual budget deficit—getting the Government to live more within their means, and starting to patch up the roof. But I think even the strongest advocates of austerity would agree that there will be very limited public appetite for another wave of it, and big question marks about the impact on growth.

When it comes to raising taxes, there are also limits. According to the Office for Budget Responsibility’s recent Budget forecast, taxation is already heading to its highest level for 50 years. We know from decades of economic evidence that the risk of raising it further is that that slows economic growth, and that will make the national debt less affordable.

There is another solution: go for growth. The national debt is large, but interest rates are so low that it is actually surprisingly affordable. The debt interest to revenue ratio is below 4%, and at the time of the Budget it was predicted to carry on falling. If there was ever a time for a country to reconcile itself to high debt, it is after an historic economic crisis, with historically cheap borrowing costs. The national debt is a ratio of absolute debt to GDP. We might not be able to get the national debt down that much in absolute terms, but an alternative is to focus on growing GDP. That will steadily make the national debt more affordable. If the GDP growth is higher than the budget deficit, the national debt will go down.

After the economic shock we have had, we need a determined national focus on growth. We need to fire up the engines of the national economy. That means pursuing supply-side reforms, supporting free enterprise, taking advantage of some of the opportunities we have from leaving the EU, and pursuing trade and innovation. Despite the crisis, we still have dynamic growth sectors such as fintech and biotech—as we have in South Cambridgeshire, where we are in many ways world leading. We must promote them. We are combating the coronavirus crisis now, and soon we will have to deal with the consequences. This ambitious Budget is a good place to start. I commend it to the House.

Tax Avoidance and Evasion

Anthony Browne Excerpts

Tuesday 25th February 2020 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con)]

I too want to pay tribute to my two colleagues who made their maiden speeches today, my hon. Friends the Members for Stourbridge (Suzanne Webb) and for West Bromwich East (Nicola Richards).

The general principles of tax evasion and avoidance are simple, and I think from listening to the debate that they are agreed across the House: everyone should pay their fair share of taxes. It is an offence to our sense of natural justice if someone manifestly does not pay the tax that most would judge as fair. The fact they are not paying means others have to pay more; otherwise, we do not have money for public services.

But, even more than in most policy areas, the devil is in the detail. I have been reporting on and tackling tax avoidance and evasion for 25 years or so. As a business and economics journalist, I often covered it. As chief executive of the British Bankers Association, I led the banking industry in efforts to tackle tax evasion both here and internationally.

In my five years in the role of chief secretary to the BBA, the banking industry was accused of many different things but very rarely accused itself of tax avoidance and evasion. I think that was largely because we paid over £70 billion in tax, more than any other industry. The general attitude of the industry was, “Well, if we are paying so much tax, we have to got to do our part to make sure everyone else is paying their tax as well”, so banks play a very active role in tackling tax evasion. For example, I led the industry push for a common reporting standard, adopted by the OECD as a global practice, which enabled Governments around the world to more easily find out what money their citizens have in foreign bank accounts, in order to work out how much tax they owe. We worked closely with the Conservative and coalition Governments on a whole range of reforms to tackle tax evasion, both in the UK and internationally. There were countless measures in every Finance Bill to clamp down on tax evasion, and my team worked hard to deliver many of those reforms.

That is why I find it quite frustrating when Opposition spokespeople keep saying that the Government are not doing anything to tackle tax evasion. That is an easy political hit, but it just is not true. We have heard throughout the debate about the many measures that have been put in place. As with so many things, more can always be done, but it is frankly dishonest to say that nothing is being done. I know from my role in international negotiations that the UK is leading the world on tackling tax evasion in so many ways. In the 2018 Budget alone, there were 21 measures to tackle evasion. As anyone with any experience of dealing with these issues in many other countries knows—even some EU countries—there are many places where paying tax is seen as a voluntary activity and avoiding it as a national sport. Bing involved with that makes one realise how much more seriously the UK takes it than almost anywhere else. As we have heard in the debate, the tax gap has been falling over the past 10 years as a result of the measures put in place by the Conservative and coalition Governments and it is now down to 5.6%, one of the lowest in the world. It is a track record we can truly be proud of.

Members may have noticed that I have been talking about tax evasion rather than tax avoidance, and there is a good reason for this, which was reflected on earlier by a couple of my hon. Friends. Our national debate seems to have lost track of the distinction between tax evasion and tax avoidance, but the distinction is critical. Without understanding the difference, we will never develop policies that ensure that everyone pays their fair share of tax. When I was a young BBC business journalist reporting on tax issues, the differences between evasion and avoidance were always rigorously drummed into me by BBC management. There was a very good reason for that: failing to make the distinction could have landed the BBC with a big libel bill.

Evasion is not paying tax that you are legally required to pay. It is a crime and you can end up in jail. Avoidance is changing your affairs so that you pay less tax. It covers a wide range of activities, from the everyday to the egregious. It is playing within existing rules and it is legal. Just as it is important for journalists to know the difference between avoidance and evasion, so it is for policy makers. If tax evasion is causing problems, the solution is stronger enforcement of existing rules. However, if it is tax avoidance that is causing concern, it is not enforcement that is the problem, as no one is actually breaking any rules. It is the rules that are the problem and the solution is to change the rules.

From a policy point of view, evasion is relatively black and white: you clamp down on it. Avoidance is far more complex, however, because it covers such a wide range of activities. An everyday example—some were mentioned earlier—is buying duty free alcohol at the airport. If you take out an ISA, a pension or gift aid, you are avoiding tax. If you buy a low-sugar drink because you do not want to pay the sugar tax on higher sugar drinks, you are avoiding tax. The fact that people change behaviour to reduce the tax they pay has always been at the heart of tax policy. That is why economists always recommend, and Governments try to promote, taxing bads rather than goods—sin taxes and environment taxes.

What any fair-minded person objects to is aggressive tax avoidance which results in companies or people paying less tax than is clearly their fair share, avoids any other public good and deprives the public purse of money. The biggest examples are multinational corporations, who frequently arrange their internal transfer pricing, often of intellectual property, to ensure that most of their profits are booked in low-tax regimes. The Government have introduced many measures, such as the diverted profits tax that we heard about earlier, to tackle that, but the rise of the weightless digital economy, of global technology firms with minimal geographic presence but huge economic clout, has made it a far bigger issue. It is an offence against any sense of fairness, and certainly against the public purse, that incredibly profitable global companies, such as Amazon, Facebook and Google, pay minimal tax in the UK because of the way they arrange their internal finances. It is unfair on their rivals whom they compete with, and it is unfair on taxpayers and those who use public services. That has to change and I am glad the Government are bringing in a digital services tax. We have a track record to be proud of and I will be voting against the motion.