Oral Answers to Questions

Christian Matheson Excerpts

Thursday 9th June 2016 Commons Chamber

[Mr Evennett]

Indeed. It is very important, for the empire and the Commonwealth, to recognise the contributions of all parts of the communities in the four nations of our country and particularly people from Commonwealth countries such as the Indians, the Canadians, the Australians and the rest. This lies at the heart of what we are trying to do, as we commemorate all those who participated in the Somme.

[Christian Matheson (City of Chester) (Lab)]

2. When part two of the Leveson inquiry will commence; and if he will make a statement.

[The Secretary of State for Culture, Media and Sport (Mr John Whittingdale)]

Criminal proceedings connected to the subject matter of the Leveson inquiry, including the appeals process, have not yet completed. We have always been clear that these cases must conclude before we consider part 2 of the inquiry.

[Christian Matheson]

Let me pin down the Secretary of State. Are we saying that when criminal proceedings have finished, there will be a part 2 or there might be? He told us on 3 March that a decision

“about whether or not Leveson 2 should take place”—[Official Report, 3 March 2016; Vol. 606, c. 1097.]

will be taken afterwards. Is it when or whether?

[Mr Whittingdale]

This will need to be considered in detail once those cases have been concluded. There are still areas that were not fully explored in the original inquiry. There have obviously been events since the original inquiry, not least the proceedings in the courts. All these matters will need to be taken into account when we consider how best to proceed after the conclusion of those cases.

--- Later in debate ---

[Tom Brake]

I am happy to agree with that comment.

[Christian Matheson (City of Chester) (Lab)]

2. What discussions the Commission has had with trade union representatives on the terms and conditions of employees of the House.

[Tom Brake]

The Commission delegates to the Executive Committee responsibility for negotiating changes to terms and conditions of House staff with the recognised trade unions. The House is currently in pay negotiations for the financial year 2016-17 with the unions representing staff in the main A to E pay bands and the catering pay bands. These negotiations are being undertaken in the context of the general pay constraint within the public sector and the requirement for the pay of House staff to remain broadly in line with that of the home civil service.

[Christian Matheson]

I thank the right hon. Gentleman for that answer. I am concerned to learn that certain members of the catering department are having to work double shifts in order simply to make ends meet. Can he confirm that, as part of the pay negotiations, staff will be paid the London living wage, not the Government’s bogus living wage? Does he agree that perhaps paying an extra 5p or 10p for a cup of coffee or a meaty wrap would be money well spent if we were paying our staff correctly?

[Tom Brake]

I am happy to confirm that staff are indeed paid the London living wage, and to ensure that the hon. Gentleman receives a response to his question about double shifts. I am also happy to raise his suggestion that a tariff should be applied to sandwiches in this place to ensure that pay is raised in the way he has indicated.

Budget Resolutions and Economic Situation

Christian Matheson Excerpts

Monday 21st March 2016 Commons Chamber

[Jon Trickett]

I shall make some progress now.

The same people who rely on the personal independence payments, which the Government so recently wanted to cut, rely on home helps and community services, yet nowhere is the pressure greater than the growing crisis being experienced by social care. The Tory-controlled Local Government Association estimates that despite the Government’s measures there is a big funding gap in social care—£700 million this year. Many of the frail elderly in our society are no longer being looked after properly. Lord Porter, the Tory leader of the LGA, put it starkly. He said that

“vulnerable members of the community still face an uncertain future where the dignified care and support they deserve, such as help getting dressed, fed or getting out and about, remains at risk.”

Yes, a Tory leader said that vulnerable elderly people will be denied help to be fed.

A few years ago my own family faced a crisis that so many of us have to confront at some time in our lives. Let me quickly describe what happened. I went to visit my dad in the fabulous St James’s hospital in Leeds, whose staff continue to amaze with their skills and dedication. But the nurse told me that my dad was coming to the end of his life and that he had to be discharged because there was little further the hospital could do. Clearly, he could not go home. By good fortune, I was able immediately to convert a downstairs room in our house into a bedroom and shower room and within days he came to live with me. He died in that room a few months later, but we spent a wonderful time together. The sun seemed to shine into our house every day that he was there. We were blessed to have the space available, and a loving family as well as loving neighbours who helped.

However, we could not have coped without the frequent house visits by the council’s care teams, who came every day, several times a day. Last year I held a fund-raising event at my house. One of our guests that day was a woman I recognised. She had been a carer who had helped me with my dad. She told me that she would always remember her visits to our house, but I felt a chill down my spine when she told me that because of the Government cuts, council carers could no longer provide the level of care to others that my family had received. “Honour thy father and thy mother” is an injunction that a civilised society should never forget.

Local government is facing £10 billion of additional future cost pressures. There are three main threats to council finances in this Budget. First, the Chancellor demands £3.5 billion of spending cuts, as we heard, to help to fill the black hole in the Government’s accounts. On top of that, there is the £4 billion that we heard about today.

The House knows that there are very few unprotected services left. Local government is one of them and is therefore a prime target. It is home helps, children’s centres, libraries, leisure centres, firefighters and youth clubs that are at risk.

Secondly, there is the overhaul of the business rates system. We welcome the extra help being given to small business in rate relief. That was in our manifesto; we campaigned for it, and it will cost about £7 billion. The Government have said they will compensate local government for this loss. The Secretary of State quotes page 84, line 15 in the Red Book, but he is wrong. That does not indicate where a single penny is coming from. Where is that £7 billion coming from? The Tory-chaired LGA has said that this will mean that once the 100% rate retention has been brought in, the resources to be retained will be less than previously projected as a consequence. By contrast, we would have financed these cuts to small business rates because we would have maintained, not cut, the level of corporation tax.

The third threat that the Budget outlines is the decision to ring-fence business rates in London, ahead of the rest of the country. But Westminster alone takes more business rates than Manchester, Liverpool, Sheffield, Birmingham and Bristol combined—£1.8 billion. If prosperous Westminster keeps this £1.8 billion, there will be a significantly smaller pot of money to be redistributed to less affluent areas. Tucked away in the Office for Budget Responsibility’s report are the implications of all this for the hard-pressed council tax payer—something on which the Secretary of State was silent.

The OBR estimates that 95% of councils will increase council tax by the maximum allowed, and they are being encouraged to do so by the Government. This means that for the first time ever, the average council tax bill payer will be paying £1,500 a year. Over the next five years local residents face a 14% increase above inflation in council tax. In return they will get a worse service. So much for the Tories being the party of low taxation: capital gains tax cuts for the well-off and council tax increases for ordinary families. It is an unacceptable set of priorities.

[Christian Matheson (City of Chester) (Lab)]

Is my hon. Friend aware that the Chancellor’s decision to remove retail rate relief for small shops will mean that more than 400 shops in Chester will be paying about £1,300 a year extra? Is that consistent with the argument that he has just made?

[Jon Trickett]

Of course. The Tories are not interested in looking after ordinary people and small businesses. They are interested in directing money at the privileged few.

Let me turn briefly to the subject of devolution, which the Secretary of State mentioned. In his Budget statement the Chancellor announced a number of devolution deals, about which concern has been expressed in all parts of the House. The Minister cannot say we did not warn him that there would be trouble on that from the Labour Benches. The whole process is far too top-down. The insistence on a single mayoral model has caused much resentment, especially in cities where the idea was recently voted down by local people in referendums.

It is not councils’ fault that there are these tensions—our councillors are under enormous pressure to get whatever they can for local residents. The fault lies entirely with the process imposed, not by the Secretary of State, but by the Chancellor, who is stubbornly refusing to allow ordinary citizens to have a say in how their areas should be governed.

DRAFT Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2016

Christian Matheson Excerpts

Thursday 3rd March 2016 General Committees

[Christian Matheson (City of Chester) (Lab)]

I intend to speak only briefly to seek reassurance from the Minister on one particular matter. My hon. Friend the Member for Salford and Eccles and the hon. Member for Banff and Buchan both spoke eloquently about the problems that this measure may cause to people in insecure, low-paid work or on zero-hours contracts—some of the most vulnerable members of society. We hear a lot from Government about helping such people, but we are seeing less and less practical assistance. My hon. Friend the Member for Bristol South mentioned the problems with HMRC, and anybody who has tried to phone HMRC over the past few years will know of the difficulties there.

It could be that I need to apologise to the Minister as I have may have misunderstood this, but something that has not yet been mentioned is the effect that the requirement for real-time reporting will have on businesses, and small businesses in particular. They may have to report from week to week or month to month on fluctuations or changes in their employees’ pay. I am not talking about large corporations with big payroll departments and good IT infrastructure that can perhaps report automatically. Real-time reporting will be an additional strain on small and medium-sized businesses that are already doing monthly VAT returns and other returns for HMRC. Is not there a danger that, in addition to a burden on the lowest paid, there will be a burden on small and medium-sized businesses, in having to keep up with payment week to week and month to month? I should be grateful if the Minister could clarify that.

HMRC and Google (Settlement)

Christian Matheson Excerpts

Monday 25th January 2016 Commons Chamber

[Mr Gauke]

My hon. Friend puts it very well. It is a pity that previous Governments have not taken this matter as seriously as we have.

[Christian Matheson (City of Chester) (Lab)]

The problem is that the Conservatives have form when it comes to arranging mates’ rates for taxation. They gave a massive tax cut to big City banks, particularly in relation to profits brought in from abroad. They also gave a massive tax cut to hedge funds, £25 million of which arrived in the Conservative party’s coffers last year, and now we have this deal. City banks, hedge funds and globalised corporations—the three bodies the modern Conservative party exists to serve. So let me ask the Minister: why should my constituents in Chester, who work hard and play by the rules, subsidise these big globalised corporations?

[Mr Gauke]

The fact is that in the last Parliament we increased taxes on banks and on hedge funds. The hon. Gentleman’s constituents should be asking why their Member of Parliament could not ask a better question.

Oral Answers to Questions

Christian Matheson Excerpts

Wednesday 9th December 2015 Commons Chamber

[Mr Letwin]

We are fully committed to bringing more under-represented groups into electoral participation. That is why we are working with Operation Black Vote and other such groups to bring people in from the black and minority ethnic communities. I also draw my hon. Friend’s attention to the very interesting experiment being tried at Sheffield University to nudge the student population to sign up for an automatic registration system. We are looking very carefully at that.

[Christian Matheson (City of Chester) (Lab)]

T7. If it does indeed transpire that there are fewer people on the new electoral register after the introduction of independent electoral registration, will the Government consider that to be a success or a failure?

[Mr Letwin]

I think what the hon. Gentleman is missing is the fact that, as a result of the measures that have been taken, people who were not at the addresses at which they had previously been registered will be eliminated. The creation of an accurate register is an aim of democracy, not a defect of democracy.

Finance Bill

Christian Matheson Excerpts

Monday 26th October 2015 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

Does my hon. Friend share my concern that the Government have been unable to drive forward the economy on any basis of productivity and are therefore relying on property price speculation, and that this would be a way to drive up property prices to cover up their failings in other parts of the economy?

[Rob Marris]

I agree with my hon. Friend, and if I can catch the Speaker’s eye on Third Reading I will be making points along those lines. The true state of our economy, driven by a housing bubble and household debt, is actually quite frightening. In terms of inheritance tax, new clause 9 simply asks the Government, after the Budget is in surplus, to look at the inheritance tax regime. Of course the Government could do it now, and I would welcome a commitment from the Minister, if he is able to make one, that the Government will do so, because the tax breaks in this Finance Bill will be about £940 million a year by 2020-21. That does not seem a wise use of revenue when it is coming in from some of the most well-to-do families—a small number of estates, as I said. It is not a good idea to be in one sense spending money in that way. I appreciate that it is not actually spending money because, technically, it is a case of simply not collecting it in taxes, but in everyday terms it is spending money, because so much of what we do in this House is to do with priorities, and so much of the prioritisation we decide on is predicated on how much money there is with which to do those things.

[Christian Matheson]

Does my hon. Friend agree that we cannot afford this measure in this Parliament, not least because it will cost, as the Budget Red Book tells us, about £2.5 billion in this Parliament?

[Rob Marris]

It is difficult to tell what we can afford as the Conservative party, in government since 2010, has consistently failed to meet financial targets for dealing with the deficit. The Opposition agree with the Government that the deficit needs to be tackled, but we disagree on the way in which it should be done. Forgoing £2.5 billion —if that is the exact figure, and I think my hon. Friend is probably right that it is of that order of magnitude—in a very regressive way is something that Labour Members would not countenance, but we need to look at the whole regime, hence the wording of new clause 9.

There will also be complications with the wording of the inheritance tax provisions. There is a feeling of unfairness among some as to the definitions—which I will not go through tonight—of a linear descendent. Many, if not all, Members will know from our own lives, advice surgeries and places we live that the definition of a family and those who are regarded by someone as being a member of their family are somewhat fluid in our society, and have become much more fluid in the last 50 years in terms of social recognition. For example, the Labour Government introduced civil partnership legislation, which I welcome—it is possible this Parliament will extend that to opposite-sex couples—and, commendably, in the last Parliament gay marriage was put on to the statute book. Those are concrete examples, dealt with by this House, of the fluidity and changing nature of family structures, but the provisions in this Bill rather lock in whether somebody is, or is not, regarded as a member of a family. Inheritance tax in this Bill is a bit of a problem, therefore, and I urge the Government to accept new clause 9 and amendment 89, which in a sense is a stand part motion.

I will now turn to value added tax, enforcement by deduction from accounts and the climate change levy—unless any Member wishes a quick run-around again on inheritance tax, but I suspect not.

Finance Bill (Sixth sitting)

Christian Matheson Excerpts

Thursday 15th October 2015 Public Bill Committees

At the end of that process, to recover that cash, HMRC—believing it is still owed money by a taxpayer—can seek a court order, in the same way as anybody else who says they are owed money, using the court system; it might be the High Court or the county court. Why should HMRC be any different? I do not think it should be. Giving the rationale that—again to put a bit of a gloss on it—“The courts don’t work very well, so we’ll just bypass them”, is not acceptable.

[Christian Matheson (City of Chester) (Lab)]

My hon. Friend the Member for Wolverhampton South West has given his usual detailed and forensic objections to the clause. Mine are a little bit more about the Minister’s tone and presentation. First, I associate myself with his comments about those who seek to evade their taxes. I have no time for such people. If people are able to pay their taxes, they should do so. That is the price that we pay for a having a stable society that is paid for by taxation. I have no time for people who are, frankly, freeloading on the hard work of others. The hon. Gentleman was correct on that.

My concern with the Minister’s presentation is the tone compared with the tone of the previous discussion about compliance for those who seek to hold their assets offshore. In the discussion on that clause, the hon. Gentleman seemed to suggest that enforcement action would be very much a last resort—a route that HMRC would not necessarily want to go down. With this measure, the enforcement action seems to be a whole lot tougher. If I am doing the hon. Gentleman a disservice, I apologise; this is a genuine point. The impression I get is that once again it seems easier, and the Government seem more ready, to go after, shall we say, the little man, rather than those who have substantial assets elsewhere. However unacceptable individual tax evasion is, I cannot help but wonder whether the real issue we face is large-scale corporate avoidance of tax. I realise that is not part of the clause, Sir Roger, but I hope you will allow me a little latitude. The Government are focusing on small individuals rather than tackling the big issues of corporate taxation. If I am doing the Minister a disservice, I apologise, but I felt that the tone of his presentation focused too much on smaller-scale enforcement.

[Mark Garnier (Wyre Forest) (Con)]

I sympathise with some of what the hon. Gentleman says, but his party surely cannot be advocating that just because someone is a small person, they can avoid paying taxes. The Government are bringing in measures to tackle every level of tax avoidance. Clearly, some cases will be more obvious than others, but where someone has blindingly obviously not paid tax and has a cash asset, rather than go to the huge trouble and cost of taking them to court, seizing their assets and selling those assets, why is this the wrong thing to do? Surely we must collect tax from everybody who owes it.

[Christian Matheson]

I certainly do not think we should not take enforcement action against people who can but do not pay their taxes. That is not the issue. I agree with much of what the hon. Member for Wyre Forest said about enforcement for non-payers. I was slightly concerned that in the tone of what the Minister said, there was much more zeal for enforcement action at the lower end of the market than at the higher end. If that is a mistaken impression, I apologise, but there has to be more focus on large-scale corporate taxation, which may of course be covered in other parts of the Bill.

[Mr Gauke]

Let me say first that I am disappointed the Labour party will not be supporting the measure. I reiterate: these powers will be used at the end of an exhaustive process, whereby there will have been many opportunities for a debtor to have paid the debt and to have challenged the application of the debt to them. It is a measure targeted at individuals and businesses that are making an active decision not to pay or to delay paying the money they owe, despite having sufficient funds in their accounts and despite attempts by HMRC to contact them and encourage them to put their affairs in order. We must remember that we are talking about allowing £5,000 or so to remain in an account, so that people have the sums to make ends meet in the short term. I accept that court action is appropriate in some circumstances, but it imposes significant costs on both the debtor and HMRC.

--- Later in debate ---

[Mr Gauke]

I come back to the practical operation of this power. Let us remember that the existence of this power will encourage some debtors to pay tax at an earlier stage in the process, knowing that HMRC is able to pursue them more effectively. In Committee, and on the Floor of the House, we often debate the need to reduce the tax gap. The shadow Chancellor made that point on the Floor of the House yesterday. Of course, the tax gap consists of many things, including corporate tax avoidance, which I did not specifically address in my remarks because this clause does not specifically relate to corporate tax avoidance, but these powers could apply to any debt owed to HMRC, including debt involving corporate tax avoidance. If it is determined that a debt is owed, HMRC may pursue it in that way.

[Christian Matheson]

Will the Minister confirm that this clause will not simply apply to personal accounts but will also apply to corporate and business accounts of corporations that owe tax?

[Mr Gauke]

The clause will apply to both individual and business accounts, so it could be used in such circumstances. I will not detain the Committee for long on this subject but, on corporate tax avoidance, we have strengthened the capabilities of HMRC’s large business teams, introduced a diverted profits tax and led the way on the OECD’s work on base erosion and profit shifting. The Government have a proud record in that area.

However one looks at the tax gap, and there are different views on the size of the tax gap, corporate tax avoidance is a relatively small proportion. Whether one looks at the authoritative and well-respected HMRC numbers or at Richard Murphy’s numbers, no one claims that corporate tax avoidance is a large part of the tax gap. That is not to say that corporate tax avoidance is not important. It is important, but we also need measures that address all types of people who fail to pay the taxes that are due.

Finance Bill (Fifth sitting)

Christian Matheson Excerpts

Thursday 15th October 2015 Public Bill Committees

[Christian Matheson (City of Chester) (Lab)]

Does the hon. Gentleman agree that this is an excellent early opportunity for the Conservative party to put words into action by showing that it is, as it claims, the party of ordinary working people, as opposed to, for example, the political wing of the City of London?

[Roger Mullin]

I fully agree; indeed, I look forward to the Minister’s response in that regard. This may have been a missed opportunity that the Government now recognise and will want to correct.

Let me make another comparison. In my own constituency, my wonderful constituency manager, Lynda Holton, pays about the same effective tax rate as many fund managers who earn 100 to 200 times more than her. [Hon. Members: “Pay her more!”] When I was on the phone to her this morning, she did want me to say “my underpaid constituency manager”. And she is underpaid, but of course I am a devotee to the rules of the Independent Parliamentary Standards Authority in this regard. Surely it cannot be right that people on much more modest incomes have effective tax rates that are higher than those for some of the highest paid people in our society. I am prejudiced in favour of the simplification of tax as well as justice in tax. For both those reasons, I hope that the Government will respond positively to our new clause.

--- Later in debate ---

[Rob Marris]

It may be nice for the hon. Gentleman, but it will not be so nice for his great-grandchildren when they reap the havoc from climate change. That Audi emits 181 grams of CO₂ per kilometre. Under the new scheme, assuming it is still on sale in March 2017, the car will move up from band I to band J, yet those emissions will receive a discount, as it were, of £60; the current seven-year cumulative duty would be £1,700 but under the new scheme it will be £1,640. The change is not huge, but it is a 3.5% change in the wrong direction.

A petrol Infiniti Crossover, of the Nissan luxury brand, which as far as I know is not made in this country, produces an antisocial 265 grams of CO₂ per kilometre. It is currently in band M and liable for a seven-year duty of £4,130. Under the new regime, the charge will be £1,290 less, at £2,840—a 31% drop because of the interaction between the new vehicle excise duty regime and the £40,000 cost threshold, above which a different regime applies. That is a 31% drop in vehicle excise duty over a seven-year period for one of the most polluting light passenger vehicles currently on sale in the United Kingdom.

Now let us look at a Jaguar XF, which currently costs just under £50,000. It is now in band F because its CO₂ emissions are 144 grams per kilometre, and costs £1,015 over seven years in vehicle excise duty. Under the new regime, if a car costs less than £40,000, it will move up—up being less polluting—to band H and cost £1,040 over seven years, an increase of £25, or £3.57 a year, as my wonderful researcher, Imogen Watson, tells me. But as for the Jaguar XF, fine vehicle as it is, no doubt with an engine made in Wolverhampton, because its price tag is over £40,000—and remember: its CO₂ emissions are 144 grams per kilometre, which is still high, but nothing like the Infiniti’s 265 grams per kilometre—it will cost an extra £310 per year for the first five years, meaning that over seven years the duty will go up to a total of £2,730, an increase of £1,715 or 169%.

Now, I have nothing against the Infiniti—as far as I know I have never been in one—and Nissan is a fine manufacturer, but its luxury model emits 265 grams of CO₂ per kilometre, and yet there will be a 31% drop in duty for it over the seven-year cumulative period, whereas the Jaguar is much less polluting, at 144 grams per kilometre, but its duty will increase by just under 169%. That cannot be right.

I urge the Government to think again. They should think about the pulmonary diseases from which thousands of people are dying already. Much—not all, but much—of that illness is arising because of vehicles, including light passenger vehicles. The Government also need to think again about the mixture of bad gases, to put it in lay terms, used as the metric for calculating vehicle excise duty. I also urge them to think again about the CO₂ based regime they are proposing from 2017 onwards, because it cannot be that the successor to the greenest Government ever, which is a phrase that hon. Members have no doubt been waiting for me to utter, are moving in the wrong direction by jettisoning what has been—I will try to be dispassionate, although it was my Government who introduced it—a vehicle excise duty regime that has been extremely successful in lessening considerably the CO₂ emissions from the fleet of light passenger vehicles in the United Kingdom.

I take the Minister’s point that the way in which new clause 5 is worded means that the review would happen eight months after the new clause would come into effect if the Government do not withdraw clause 42, as I hope they will. If he were to say a little more about the Chancellor’s remarks regarding a review of the impact and effect of clause 42, something to which he adverted in his remarks, I might be reassured and so not wish to press new clause 5 to a Division at the appropriate time. I therefore hope for some reassurance from the Minister; although, capable as he is, he can only rely on what the Chancellor of the Exchequer has said in that regard. I urge Members to vote against clause 42 if the Government do not withdraw it, as it will be bad for the economy, bad for the environment and bad for our children.

[Christian Matheson]

I feel I ought to add my congratulations to my hon. Friend on his research. He seems to be doing an impressive job. I was also impressed by the recommendation he gave about Honest John in The Daily Telegraph—I might cancel my Saturday subscription to the Morning Star and take the Telegraph instead.

My hon. Friend makes an important point. It is entirely legitimate to build environmental considerations into the taxation system if we want to change people’s habits in order to protect the environment, and the clause gives the impression that the Government are once again rolling back from their pledge to be the greenest Government ever and falling into bad old ways.

There is a way out. Perhaps the Minister should take a pause on the clause, as my hon. Friend suggested, because so much of it is predicated on emissions standards that have been thrown into turmoil by one company, which was not a British company—I do not believe that a British company would partake in such skulduggery. We cannot be absolutely sure that emissions standards across the industry are as they should be, because manufacturers in certain areas have been telling us, shall we say, statements that lack 100% veracity.

It is not only that motorists have been hoodwinked. The Government have potentially lost revenue as a result of emissions figures being massaged, with lower figures given. What are the Minister’s intentions, either through the Bill or perhaps more appropriately through another mechanism, on claiming back any revenue lost as a result of the Volkswagen scandal? The state has lost revenue as a result, so taxpayers have been hoodwinked as well as individual motorists, and although the Bill might not be the right mechanism for this, there must be a role for the Government in chasing down such manufacturers. Perhaps the Minister should not push through new measures linked to emissions standards until he and his colleagues in the Department for Transport are sure that a fair taxation system can be based on those standards. The Minister may wish to heed my hon. Friend’s good advice.

[Mr Gauke]

Let me try to respond to the points made. On the environmental incentives, consumer research suggests that VED is not an important factor in purchase decisions. Where VED has been shown to play a supportive role is in the highly visible first-year rates. In those we have retained, and indeed strengthened, the environmental signal: for example, first-year rates will double for the most polluting cars.

To drive real emissions reductions in transport, we need to incentivise the uptake of fully zero-emission cars such as pure electric cars. Owners of such cars will pay nothing in the VED system, while highly polluting cars will see a doubling of their rate. As more expensive cars are generally more polluting, it is the case that owners of such cars will continue to pay more than those of smaller, efficient cars through the standard rate supplement.

The point made by the hon. Member for Wolverhampton South West about the number of cars in the lowest band was correct. We are deliberately tightening the incentives at the bottom end. The current structure provides little incentive to buy a car much cleaner than 100 grams of CO₂ per kilometre and we believe that such an incentive should be there. It is also worth making the point that nobody’s VED on their existing cars will go up. I made that point earlier, but I want to reiterate it.

Finance Bill (Third sitting)

Christian Matheson Excerpts

Tuesday 13th October 2015 Public Bill Committees

[Mr Gauke]

I hope I will be able to welcome the support of the Opposition for the clauses in full, although the hon. Gentleman is quite right to ask scrutinising questions.

We are not making any claims about the effect on house prices. The OBR’s assessment is that the impact on the housing market will be small and it has not adjusted its forecast for house prices. The answer to the issue of house prices is improvement in supply—I suspect the hon. Gentleman would agree—so it is worth pointing out that housing starts are at a seven-year high. However, the Government remain focused on putting the right conditions in place so that we build more houses and more people have the opportunity to own their own home.

[Christian Matheson (City of Chester) (Lab)]

The hon. Member for Wyre Forest made the interesting point that home ownership is the principal form of saving for most people in this country—I hope I am not misrepresenting him, Sir Roger. Do the Government share that view?

[Mr Gauke]

It is up to individuals to decide how they wish to save. We are determined to ensure that the opportunity to own one’s own home is available to as many people as possible. That requires us to increase the supply of homes in this country, and that is a Government priority. We are moving in the right direction, but, as we set out during the Conservative party conference last week, we want to do more to put in place the conditions wherein more people will have that opportunity.

On the impact of the changes, there was a question about whether the measures might move a basic rate taxpayer into the higher tax band. We expect that around 94% of landlords who will have to pay more tax will have a total taxable income of over £35,000. On average, landlords own 2.7 properties. Those currently with taxable income under £35,000 who will have to pay more tax have, on average, larger rental incomes and larger property portfolios; they have an average pre-tax rental income of more than £64,000, and own six properties. It is true that basic rate taxpayers could be affected by the measures, but often—not in every case, but overwhelmingly—those people will have quite large portfolios and may have leveraged up to a greater extent than the typical buy-to-let landlord.

I hope that clarification has been helpful to the Committee, and that the measures will have the Committee’s support.

--- Later in debate ---

[Mr Gauke]

The clause makes changes to ensure that sports people who visited the UK to compete in the London Anniversary games are exempt from tax on any income received as a result of their performance at the games.

As hon. Members will know, the London 2012 Olympic and Paralympic games were an extraordinary success, with stunning wins for British athletes, beautiful stadiums and an unforgettable atmosphere. For the Olympics, the Government provided an exemption from income tax for non-resident sportspersons. That was a condition of the bid to host an internationally mobile, world-class event.

The success of the 2012 Olympics and Paralympics did not end there: we have now created a legacy programme that has delivered urban regeneration and engagement in sporting activities. The prestigious 2015 London Anniversary games were an important part of that legacy, attracting icons that hon. Members will remember from 2012.

The clause applies the same exemption policy that the Government provided in 2012. It benefits athletes who reside overseas and visited the UK to participate in the London Anniversary games, which were held in July. Importantly, this tax exemption encouraged more world-class international athletes to compete in the event. Following the announcement in the Budget, Usain Bolt confirmed that he would compete and he went on to win the 100-metre race, which drew a much wider audience’s attention to the success of the Olympics and London. The exemption was granted on an exceptional basis owing to the opportunity the event provided to build on the legacy of the 2012 games.

[Christian Matheson]

The London Anniversary games were specifically related to the Olympics, which were a great success for London and the whole of the nation. I have to say that a feeling remains in other parts of the UK that London, notwithstanding its success, does seem to get more than the lion’s share of sporting events. Is there a view in government that specific provisions such as this, which help to attract world-class athletes such as Usain Bolt, might be extended on individual bases to other great events that take place outside London, so that they too might benefit from the attendance of such athletes?

[Mr Gauke]

I can give one good example: we applied the same exemption for the Glasgow 2014 Commonwealth games. That is an example of the Government’s willingness to do that. Again, that was part of maintaining the Olympic legacy and ensuring that we could get top athletes to compete in the Commonwealth games. The hon. Gentleman raises a fair point and I hope he accepts that I have given a fair answer to it. I hope the Committee agrees that the clause should stand part of the Bill.

--- Later in debate ---

I am pleased that these changes will not adversely affect spin-out companies—I did not expect them to, but it was a helpful clarification from the Minister—because these have had success in certain parts of the country. One thinks of Cambridge in particular, where spin off has been very helpful not only to the local economy but to the national economy and to exports. Will the Minister elucidate with some trend figures on Government support for university research and development? It might allay the fears of some in the university sector observing this debate, perhaps not in real time, who are concerned that this will be a major blow to university-sponsored research.

[Christian Matheson]

Will the Minister clarify one small area I am unsure of, which comes from my experience serving as Member for City of Chester? When Shell decided to close its research and technology area at Thornton in my constituency, which contains a large petrochemicals sector, it gave the Thornton research centre over to the University of Chester, which is growing in size, in stature and in academic reputation. Thornton science park has since become a very successful seedbed for growing companies as well as for academic research. My hon. Friend the Member for Wolverhampton South West talked about spin-off companies, and I am looking for clarification from the Minister on a similar issue. Some joint venture companies comprise higher education institutions, such as the University of Chester, and companies from the private sector that are engaged in research that may well bring economic development into an area or into the nation, and may lead to new technologies being developed in the area. Will the participation of a higher education institution preclude a company from receiving such grants? Is this an area on which the Government are not yet quite clear?

Finance Bill

Christian Matheson Excerpts

Tuesday 8th September 2015 Commons Chamber

[Damian Hinds]

It was necessary, because of the imperative to deliver value for money, to move quickly on this change. The Government are committed to supporting the investment and innovation needed to achieve a cost-effective transition to a low-carbon economy while ensuring security of energy supply and avoiding unnecessary burdens on businesses and households. We are making great strides towards achieving those goals, with emissions down 30% since 1990. We will ensure that our policies provide maximum value for money for the taxpayer in delivering environmental benefits without harming the economy.

Several hon. Members have voiced their concern about the impact of the clause, and I want to take a moment to address those concerns. The change will not increase household energy bills, because the climate change levy is not charged on households. Business customers should not lose out from the change either. The business energy market is competitive and wholesale electricity prices will not be increased as a result. Energy-intensive businesses are already exempt from 90% of the costs of the climate change levy for electricity by being in climate change agreements. The change will also not affect renewable generators’ long-term investment plans. Most generators were expecting to receive a negligible value from the exemption by the 2020s.

Of course, the renewables sector will also benefit from Government’s recent cuts to corporation tax, which will save businesses over £10 billion a year, giving the UK the lowest rate of corporation tax in the G20. Lastly, the change will not affect the UK’s ability to meet its climate change goals, as emissions from electricity generation are capped through the EU emissions trading system. Nor will it affect our ability to source at least 30% of electricity demand from renewables by 2020. The Government remain committed to meeting their climate change objectives but we believe we must do so in a cost-effective way.

[Christian Matheson (City of Chester) (Lab)]

The Minister has outlined the various assessments that the Government have made, but have they assessed the effect of these measures on the industry itself, and on the many companies that have built successful businesses installing and manufacturing these products? Those companies have just had the rug pulled from under their feet by the Government’s measures.

[Damian Hinds]

It is a bigger rug than that. The climate change levy is only a relatively minor part of the support that was given to the industry, compared with the support given through the renewables obligation and through contracts for difference.

It is essential that we show that our measures to achieve climate change and renewables objectives provide good value for money, in order to retain long-term public support for them. I look forward to hearing hon. Members’ views and I urge them to give their support to the clause.

--- Later in debate ---

RenewableUK, the industry body for on and offshore wind, suggests that the certificates account for up to 6% of an onshore wind project’s revenues and that they are worth roughly £5 per MWh. In its view, taking away the exemption certificates could be the difference between profit and loss for some marginal projects. It is as simple as that.

[Christian Matheson]

Was this industry not one in which we had a lead on innovation and design and technology that we could have exported across the world? There are numerous examples in my hon. Friend’s constituency and mine of companies going under as a result of the proposed changes. She may be interested to know that a major installing company in the Chester area estimates that 90% of its employees will have to be made redundant as a result of the Government’s proposals.

[Alison McGovern]

That is terrible news for our region and the rest of the country. My hon. Friend and I have a great deal in common, not least that we have both visited renewable energy firms in our constituencies. I visited one recently that was similarly disappointed at the Government’s attitude and the business now faces risks that it simply did not expect.

Of even more concern than the fact that the removal of the certificates may mean a difference between profit and loss is that such income has been factored in to the strike prices agreed for projects awarded a contract for difference to date. Surely the removal of the certificates will either open the Government to legal challenge or some contracts for difference will have to be reassessed. Which is it?

I will give an example of such an impact. One small onshore wind project in Scotland generates about 35,000 MWh per year. The loss of the certificates could cost the project £175,000 each and every year. As with many such projects, it was financed with bank loans, the terms of which anticipated an exemption certificate of roughly £175,000 a year. Somebody involved in the project told us:

“We identified each of these projects and risked development capital to secure planning permission, and invested a large amount of time, all on the understanding that the LEC would be available. We raised debt funding from banks, who look at the expected revenue from the project to determine what amount they are willing to lend—they based their calculations on the LEC remaining in place. Therefore, the sudden removal of the LEC will reduce the turnover of these projects, which at the very least will reduce the returns to our investors and in the worst cases, could cause problems with banking covenants.”

Does that example not demonstrate the responsibility that we in the House have to provide a stable regulatory environment for business? That is not a lesson I ever thought I would have to preach to the Conservative party.

NAREC Distributed Energy, the National Renewable Energy Centre in the north-east, has suggested that it knows of at least four European wind developers that have decided to cease, or significantly to reduce, plans to develop in the UK. It says that another firm from mainland Europe with which it was in talks has decided to avoid the UK completely. We have also heard from sources in the solar industry about the growing concern that the industry faces severe challenges ahead.

We can see the impact of clause 45 and other recent policy changes in the announcements made by key energy companies operating and investing significantly in the UK. For example, Vattenfall the Swedish energy company, has already abandoned two onshore wind projects in the UK, one in Wales and one in Lincolnshire. Frankly, those are both regions of our country that could do with the investment. In one case, it cited the Government’s changes to onshore wind planning policy, and in the other, it cited a market that had “moved on”.

What does that picture mean for the UK economy? More importantly, what does it mean for the Chancellor’s ambition, which he tells us he has, for a high-skill, high-wage exporting economy of the future? How do such policy decisions impact on our prospects for overcoming the current productivity crisis, which, as Labour Members have repeatedly set out, must be at the top of the Chancellor’s priorities?

According to the Renewable Energy Association, some 112,000 people are employed in the renewable energy value chain across the UK, some 11,000 of whom are employed in the north-west—my region—alone. Companies in the north-west turn over some £700 million a year, which is investment we can little afford to lose. According to the REA’s figures, the number of renewable energy jobs has grown seven times faster than those in the rest of the economy. Green jobs are undoubtedly vital to regional economies in the north and in Scotland, where renewable technologies are deployed much more widely, and renewables supply chains are more established there than elsewhere in the country.

RenewableUK, which is predominantly the voice of the wind industry, has said that the onshore wind industry alone supports almost 14,000 jobs in the UK and contributes almost £1 billion of gross value added. As the CBI has said,

“green is not just complementary to growth, but a vital driver of it”.

This is a central economic question for our country. It means establishing clear and stable market frameworks, as well as the UK playing a strong role internationally.

The REA agrees, estimating that the industry could create up to 400,000 high-skill jobs by 2020 and, equally importantly, contribute a cumulative £60 billion benefit to the UK’s trade balance. What could be more vital in these times of global economic uncertainty? The Office for Budget Responsibility forecasts that the UK’s current account deficit will remain broadly unchanged up to 2020—a deficit, by the way, that we rarely hear mentioned by the Chancellor. The low-carbon sector could play a key role in turning that around, yet here we have the Government stripping out the support that underpins it.

The first majority Conservative Government for years have been in office for little over a hundred days and this policy framework will severely diminish their business credibility. That fact is evident not just because I say it is, but from the reaction of the business community. The senior vice-president of Veolia in the UK and Ireland has suggested that Ministers risk

“sending this country back to the dark ages”

when it comes to green policy. She said:

“What I don’t understand is why the government would apply the carbon levy on renewable energy plants which are carbon-positive—it’s illogical.”

Jon Ferris, the head of energy markets for the consultancy Utilitywise said the decision would

“do little to convince investors of UK policy stability”.

The chief executive officers of 10 leading environmental charities penned a strongly worded letter to the Prime Minister, pointing out that the Government’s rhetoric post-election runs entirely counter to that during the campaign, concluding:

“We have, as yet, seen no positive new measures that would restore the health of the environment or grow the low carbon economy.”

If the Minister does not like to hear it from me, perhaps he will take it from those on his own side, because there has been no shortage of criticism from Conservatives. Various members of the Conservative party have, quite rightly, failed to comprehend the lack of coherence not just in the Government’s climate change agenda since the election, but in their wider approach to ensuring that the UK is an attractive proposition for investors. The Conservative peer and former shadow Chief Secretary to the Treasury, Lord Flight, in a damning verdict of the Chancellor’s revenue-raising decisions, said:

“Charging renewable companies the Climate Change Levy is a contradiction of Government energy policy, which is still seeking to encourage Renewable Energy investment.”

The Chair of the Conservative Environment Network, Ben Goldsmith, wrote a letter to the Financial Times describing the climate change levy changes as “perverse” and “contradictory”. He even drew parallels with Greece:

“Introducing a retroactive subsidy cut with one month’s notice means more guesswork over what the government will do next—the very worst basis for raising capital. This makes the UK look more like the volatile markets of southern Europe—impacting on newbuilds and undermining confidence in generating assets.”

I often hear the Chancellor compare the UK to Greece, but I never thought I would hear a Conservative activist use his own words against him.

The reaction across the business world and among other stakeholders speaks to a wider point about what these changes mean for the UK’s economic future. Despite the rhetoric from the Conservative Chancellor about a plan to boost productivity, deliver higher-skilled, higher-wage jobs, pursue cost-effective climate change policies and act always in a business-friendly manner, the truth is that clause 45, taken together with a string of other policy announcements since 7 May, symbolises the exact opposite of that approach.

As the Chancellor wrote in the foreword to his productivity plan in July:

“The drivers of productivity are well understood: a dynamic, open enterprising economy supported by long-term public and private investment in infrastructure, skills and science.”

I could not agree more. Unfortunately, the Chancellor’s actions in recent months speak louder than his words ever will. He would do well to heed the advice of some in his own party, including the hon. Member for Selby and Ainsty and those I have just quoted.

New clause 2 calls on the Government to assess all of the impacts I have just outlined. It aims to highlight the true impact of removing the climate change levy exemption for renewable-sourced electricity. It asks Ministers a number of questions that are crucial to the future of the UK’s green economy, its role in achieving a more balanced, productive economy, and the UK’s role in the world. How does the removal of the exemption affect existing renewables generators and projects currently in the pipeline? What impact will clause 45 have on investor confidence? Finally, what does it mean for the UK’s ability to meet its climate change commitments?