Finance (No. 2) Bill

Baroness Laing of Elderslie Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

It is a pleasure to follow the hon. Member for Swansea West (Geraint Davies). Before I begin my short remarks on the Finance Bill, I would like to put on record—because I was not able to be here yesterday—my condolences and those of my constituents to Her Majesty the Queen on the death of the Duke of Edinburgh.

This Finance Bill follows a year of unprecedented economic disruption unknown in the modern era, as well as a year of unprecedented support from the Government to business and individuals, ensuring not only their jobs but their lives and livelihoods. That has been true for millions of citizens, including those in my constituency of Wimbledon. This Finance Bill therefore needs to enact measures that ensure not only that our economy is in a place from which to recover and bounce back, but in one from which we can also see sustainable future growth—growth that is clean and green.

We all know the OBR forecasts that were set out in March; I will not reiterate them now. What is clear to me from reading economic commentators since then is that people are now expecting the economy to grow more quickly and more strongly, and for that recovery to be more sustained. That must be in large part due to measures in the Finance Bill that build the necessary confidence and give people necessary security for the future, including the extension of the universal credit uplift; the one-off £500 to those on working tax credit; the job retention scheme; and the self-employment income support scheme. All those measures are combined with the restart grants of up to £6,000 for non-essential retail and £18,000 for hospitality businesses. Those provisions are now extended to my constituency; initially the £51,000 threshold was not in place. I have to say to the Treasury Bench that I am extremely grateful on behalf of the hospitality industry in Wimbledon.

My hon. Friend the Exchequer Secretary to the Treasury will not be surprised that I wish to make two very quick points about the people who have been left out. First, I make the plea yet again on behalf of the English language teaching sector. Those schools received no support and are hugely important to constituencies across the country. Secondly, I know that my hon. Friend will have read clause 117 and schedule 29 on the prevention of tax avoidance and promoters of tax avoidance schemes. The explanatory notes state:

“This clause and Schedule have also been introduced in order to see the responsibility for the obligations within POTAS, and for any failure to comply with them to be placed on the people and entities behind the schemes.”

I have to say to my hon. Friend that a number of us have stood up for what we believe to be hard-working small businesspeople who have been in those schemes and recommended those schemes, and we feel that if that clause had already been in place, many of those people may not be suffering from the problems of the loan charge now. Even at this late stage, if she has the chance to talk to colleagues about this issue, we would be very grateful.

It is clear that we need a Finance Bill that looks at investment and improving infrastructure, so that we see improvement in productivity. I listened carefully to the remarks of my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), who set out the clear economic rationale for the super deduction. It is a vital measure to encourage business to invest now. Historically, the UK has underperformed; we have failed to invest at similar levels to our economic peers. It is investment that drives some of the factors that I mentioned a moment go when it comes to improving productivity. Therefore, supercharging investment through a super deduction means that we are likely not only to strengthen, but to lengthen the economic recovery. That seems an entirely sensible, welcome and rational economic measure.

It is also likely that we want to see measures that improve not only physical infrastructure and capital formation, but human formation. I particularly welcome the support for new apprentice hires in the Bill. I encourage the Government to think a bit more about this, as it is the way of the future. Could we not link the new apprentice scheme to, for instance, the length of the super deduction? The super deduction is in place for two years, while the new apprentice scheme is in place for six months; I encourage the Government to think about linking the two. I know that my hon. Friend the Minister will recognise that human capital formation and investment in skills are as important as physical formation.

Like many colleagues, I was fascinated to hear the contribution from my hon. Friend the Member for Mid Norfolk (George Freeman), who spoke at length about driving growth through innovation and the adoption of new technologies. Of course he is right. When one talks to a number of the people at whom the super deduction is aimed, one learns that it will be commonplace—it almost is now—that they will be investing in things such as AI, 3D printing and big data. Alongside that, we will need a workforce that has in-demand skills, so I particularly welcome the investment in digital skills and the lifetime skills allowance that the Bill will introduce.

Many Members have referred to the freeports policy, which clearly brings the opportunity to boost jobs in regions and to boost economies through the use of differing tariff regimes for different sectors. My hon. Friend the Minister will know the principal criticisms of freeports—that they merely redirect economic activity and investment.

May I talk about next year’s Finance Bill, Madam Deputy Speaker, just for a very brief moment?

[Madam Deputy Speaker (Dame Eleanor Laing)]

This is a debate on this year’s Finance Bill.

[Stephen Hammond]

I urge the Government to think about learning the lessons of economic history in respect of the power of putting wider economic development zones and the encouragement that they bring alongside freeports. We all recognise that such zones need seedcorn grants from the Government; that could give the Government the opportunity to consider local recovery bonds. We have already seen the prospect of the green infrastructure bond; why do we not see some local recovery bonds to sit alongside that work and boost economic development zones? That would seem to me to be a perfectly sensible development.

The Chancellor is absolutely right to focus on infrastructure spending and investment. Infrastructure is not an end in itself—it is the driver of growth and productivity—so the policies coming through and the measures in the Bill to allow the increase in transport spending and in departmental spending limits are welcome. I also welcome the establishment of the UK infrastructure bank. It is the private sector that will drive the investment that is necessary.

As I said a moment ago, the green gilt is welcome, but just as I urge the Government to think about local recovery bonds, I urge them to think about an infrastructure bond. As many will know, there is a consultation on the capital cap for pension funds; if that change is combined with an infrastructure bond, we could see a wealth of pension funds looking to invest in the UK’s economic recovery.

Finally, the jewel in our crown is undoubtedly financial services. A few moments ago my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) talked about the need for mutual banking and to encourage small banks. I urge the Government to think about a review of the regulation of financial services and banking to ensure that the regulation with regard to conduct and capital is competitive and appropriate. That will drive not only those sectors but the investment that will sustain the economic recovery that everyone in this House seeks.

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[Richard Burgon (Leeds East) (Lab) [V]]

The coronavirus crisis has not just been a public health emergency; it has been a social emergency as well—a social emergency worsened by the Government’s catastrophic handling of the crisis, which, as the Office for Budget Responsibility says, led to one of the worst economic downturns of any major economy.

Of course, for some, the pandemic has not been half bad—in fact, it has been a very good crisis for some. Serco and the like have been able to use the crisis to get their hands on contracts that should have been in the public sector, and boosted their profits. We have seen how contracts worth billions have been handed over to those with political connections to top Tories, and the Greensill case involving the former Prime Minister is no one-off—

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. I appreciate that the hon. Gentleman is not here in the Chamber and so is not getting the atmosphere of the debate, but no matter what the rules are, this debate is about the Finance Bill. It is only about the Finance Bill and matters within the Finance Bill, which is pretty wide-ranging. The hon. Gentleman appears to be making a speech that he might wish to make tomorrow. Could he please stick to the Finance Bill today?

[Richard Burgon]

Thank you, Madam Deputy Speaker. The example I have just given is one of how our system works, and I would argue that that is entirely relevant to the Finance Bill, because while the super-rich have been able to profit from the crisis, the Government have washed their hands of others who needed support. Just this week, millions relying on legacy benefits such as employment and support allowance for disabled and sick people got a pathetic 37p increase in their benefits. What a snub, especially after already being refused the £20 additional payment that went to those on universal credit. With that 37p increase, the Government are deliberately punishing disabled people. It is yet another example of how they seek to make the vast majority pay for one of the world’s deepest economic collapses.

I will vote against the Bill because it fails to give NHS staff the proper pay rise they need, because it cuts the pay of millions of public sector workers and hands billions in giveaways to mega-corporations such as Amazon, many of which have done very well out of the crisis, because it leaves many of the lowest earners facing tax rises and because later this year it will cut social security payments for people who really should get much more help. I will vote against the Bill because it serves the few and not the many. This crisis has not only shone a spotlight on the deep inequalities in our society but widened them. We should be coming out of it with a more equal society, but, to help us do that, where is the tax on the companies that have made super-profits during the crisis? Where is the one-off tax on the super-wealthy as other countries are doing? I will vote against the Bill and table an amendment calling on the Government to take measures for a super-tax on the super-rich. We need to start to build a society that serves the many, not the few. That is what the Bill should be about, but it is no surprise that, with this Government, it is anything but.

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[Peter Grant (Glenrothes) (SNP) [V]]

I am pleased to be able to contribute to this debate and to expand on the reasons so passionately set out by my hon. Friend the Member for Glasgow Central (Alison Thewliss) as to why the SNP will vote against the Bill this evening. The purpose of the Bill is to give legislative effect to the Chancellor’s Budget. That Budget was a regressive Budget. It was an austerity Budget that turned its back on millions of those worst affected by the covid pandemic. It is a Budget that severely damages the interests of my constituents, so it is a Budget, and this is a Finance Bill, that I cannot and will not support.

Austerity is not an economy necessity. It is a political choice. It has been the first-choice response of almost every British Government of every complexion during my adult life, so it is maybe not surprising that so many people seem to have forgotten that there is a different way, a fairer way, and in fact a much more effective way to respond to an economic crisis. All we have to do is to care as much about the millions in these four nations who do not have enough to live on as we care about the lucky handful whose only problem is that they cannot count how many billions they have.

There is no disagreement about the fact that we need to start to repair the economic damage caused by the pandemic and by the measures that had to be taken in response. There are lessons to be learned, but perhaps the most vital lesson of all is that the inequalities that have been deliberately created and deliberately maintained in our society by successive Governments have also made our society as a whole much more vulnerable to the ravages of the disease. We know that the economic costs of covid have fallen much more heavily on the people who could least afford them. To give just one example, the British Retail Consortium did a survey that confirmed what we would probably have expected: during the pandemic, highly-paid people such as Members of Parliament have got better off and now have more savings than we had before, while most of our constituents on low incomes have been using up their savings just to survive, and many of them effectively have no savings left at all.

Presumably, the way we respond to that is to use the powers in the Finance Bill to redress that balance. Well, no—that is not the priority of this Government. In clause 5, we see a multi-year freezing of the income tax basic rate limit and, much more damaging, a freezing of the personal allowance at £12,570. It is not easy to find a way to change an income-based tax system so that we collect more tax but target the impact on people on lower incomes, but that is exactly what the Government propose to do. If it is accepted that the Treasury needs to collect more money in real terms from income tax, we should at the very least make sure that the impact in real terms is equally spread. In fact, the SNP would argue that whenever the time comes to increase taxes, those of us who are lucky enough to be on high incomes should be asked to bear a wee bit more of the pain.

I know that the Government will point to other provisions, such as clause 31 and the one-off uplift in working tax credit. In principle, that is something the SNP supports, but as my hon. Friend the Member for Glasgow Central mentioned, the way that it is implemented could harm some of the very people it is supposed to help. The eligibility criteria are crude, to say the least. It will not be at all easy for recipients to work out for themselves whether they qualify. What assessment have the Government made of the number of payments that they expect to be made in error, and are they seriously then going to chase down the recipients of those erroneous payments as if they had committed some kind of fraud, when in fact they have done absolutely nothing wrong?

I was interested to hear the comments of the Chair of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride), on freeports. “Freeport” is obviously a buzzword that the focus groups have told the Tories goes down well with the party faithful, so they have decided to invent, or rather reinvent, something that looks like a rehash of 1980s-style enterprise zones but call it a freeport because that sounds like a better term. Leaving aside the terminology, how do the Government know that the provisions in clauses 109 to 111 will create new investment and new jobs, rather than just move investment and jobs that would have happened anyway, as the Committee Chair asked? How will they make sure that those who buy and sell land in a designated freeport area are investing the tax breaks they enjoy in creating jobs on the site, rather than just siphoning the money off into the profit and loss account of an offshore investment trust somewhere?

Almost a third of the Bill’s clauses relate to the plastic packaging tax, and no doubt the Bill Committee will want to spend a proportionate amount of time scrutinising the details, but for now, I draw the Minister’s attention to the National Audit Office report on 12 February this year. The report found that, although the Chancellor in his Budget speech last year was able to tell us how many tonnes of carbon the tax would save,

“the exchequer departments did not set these as measures of success in the Tax Information and Impact Note”.

A previous Tory Government brought in tax information and impact notes in a blaze of publicity, announcing that they would support better parliamentary scrutiny of tax policy, but how can Parliament scrutinise the success of this new tax if the key measure of success announced by the Chancellor does not even appear on the success radar of the Department that has to implement it?

My hon. Friend the Member for Glasgow Central raised the more general point about the woefully inadequate scrutiny that the often massive decisions in Finance Bills receive. I know that the Government will point to the number of minutes, hours, days or weeks that people have spent talking about it in Parliament, but talking about it and reading prepared speeches is not the same as proper scrutiny. For example, in this Bill we can accept, reject or amend clause 32 on the tax statement of payments under the self-employment income support scheme, which is fair enough for those who qualify, but we cannot redress the glaring injustice of the excluded millions who do not qualify at all. We can accept clause 31 or amend it to make it a lot better, to support working people whose income has been affected by covid, but we cannot vote to remove the 30 September cliff-edge when the furlough scheme is removed, because that would be an inadmissible amendment. Although the Bill can be improved in Committee and made slightly more fit for purpose, we are powerless to force the Government to undo some of the deliberately disastrous flaws and omissions in existing support schemes.

It is right that this Budget and this Finance Bill should start the process of rebuilding the economy after covid, but as the right hon. Member for Hayes and Harlington (John McDonnell) mentioned, the Government seem hellbent on taking us back to exactly the same unfair, unequal and divided society that we had before. In fact, they will probably succeed in making it even worse than before. Of course, the Tories do not want to talk about the fact that their own analysis shows that the long-term economic damage of the covid pandemic will be less than the damage of the self-inflicted and totally avoidable disaster that is Brexit.

It is an indication of how out of touch the Government are with my constituents, and with the people of Scotland generally, that the Tories, the official Opposition in Scotland, have already surrendered in the Scottish Parliament elections. They are not even pretending that they want to try and form an alternative Government after 6 May. They are delivering glossy six-page leaflets that literally have no policies on them. They are not even pretending that they have anything positive to say or to offer in Scotland—which, after all, is kind of what Scotland has been saying to them since 1955.

The Bill will get its Second Reading tonight, it will get through the Committee and it will become law. Its regressive provisions will be imposed in Scotland against the will of three-quarters of our people, no doubt to great cheers from the socially distanced Government Benches. But let me say this to them: enjoy imposing this Finance Bill on Scotland’s people, because in just over three weeks’ time, those same people will take a decisive step towards making sure that their time for imposing their policies on our country comes to an end.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I appreciate that this is a Finance Bill and technically it can go to any hour, so the House could be sitting until 11 o’clock or midnight, but I ought to say something to Members who are not in the Chamber but who I hope might be listening. It sometimes seems that Members who are at home and participating virtually do not pay attention to the rest of the debate. If they are listening, let me say to them that there is something a little bit distasteful about those who are sitting at home making very long speeches and keeping the entire operation of the House of Commons going till well into the evening. Everybody has the right to speak on the Finance Bill and it is very important that they do so, but it is generally recognised, and I particularly recognise it today, that that which can be said in 10 minutes can usually be said more effectively in five.