Oral Answers to Questions
Jacob Rees-Mogg Excerpts(6 months, 3 weeks ago)
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The Financial Secretary to the Treasury (Nigel Huddleston)
I have to say that I find this hypocrisy astounding. First, if the Opposition objected to the national insurance cuts, why did the Leader of the Opposition say that he supported them? If the Opposition are so keen on abolishing tax dodging, why did they not support our Finance Bill, which had measures in place to do just that? They did not support it; they abstained on it.
Sir Jacob Rees-Mogg (North East Somerset) (Con)
The Bank of England has said that quantitative tightening is not an official part of its monetary policy targeting, yet it is at risk of costing, fiscally, £179 billion in losses underwritten by the Treasury. That is having a major effect on the fiscal situation of the country. Will His Majesty’s Government encourage the Bank of England to hold these bonds to maturity, taking the carry cost rather than taking the hit from selling them in the market and crystallising an enormous loss?
Bim Afolami
In relation to the asset purchase facility and how that has worked over recent years, it is not His Majesty’s Government’s—or indeed the Treasury’s—intention to change the way in which that works with the Bank of England, but as with all measures, the Chancellor keeps everything under close review.
Financial Statement and Budget Report
Jacob Rees-Mogg Excerpts(8 months, 3 weeks ago)
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Madam Deputy Speaker (Dame Eleanor Laing)
As many as are of that opinion say Aye—[Hon. Members: “Aye!”] Of the contrary, No—[Hon. Members: “No!”] [Interruption.] Order. Let me explain, for the clarification of the House, that the Question on the provisional collection of taxes is asked at this stage. All Members will have the opportunity, having heard the debate in detail, to vote on each of the motions on Tuesday 12 March, at the end of the Budget debate. I would hesitate to call a Division at this point, when the House and the world is awaiting the response from the Leader of the Opposition. [Interruption.]
I will put the Question again, and if it is very clear to me that there are more Ayes than Noes, I will take the decision on the voices. The Question is—
Sir Jacob Rees-Mogg (North East Somerset) (Con)
On a point of order, Madam Deputy Speaker.
Madam Deputy Speaker
No, I do not need a point of order, thank you. We are in the middle of putting the Question. As many as are of that opinion say Aye—[Hon. Members: “Aye!”] Of the contrary, No—[Hon. Members: “No!”]
UK Economy
Jacob Rees-Mogg Excerpts(9 months, 1 week ago)
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Sir Jacob Rees-Mogg (North East Somerset) (Con)
May I thank my hon. Friend for his distinguished service as a voice of His Majesty’s Government? I refer him to what the former chief economist of the Bank of England, Andrew Haldane, said today, referring to a “double blow” to the credibility of the Bank of England, which was late to put interest rates up and missed inflation, and has been slow to reduce them, hammering the economy. Does my hon. Friend agree that the Bank of England is no longer showing itself to be competent and that its independence must be questioned?
Bim Afolami
I do not think that I will quite agree with my right hon. Friend. It is very important that we leave the Bank of England to do its work and respect its independent mandate, but that, from the Treasury, we do what we can to bring inflation down and support it in that mandate. As I said, the Labour party’s plans—whether it claims to have dropped them or not—will lead to an increase in borrowing or an increase in taxes, which will significantly damage that aim.
Loan Charge
Jacob Rees-Mogg Excerpts(10 months, 1 week ago)
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Sir Jacob Rees-Mogg (North East Somerset) (Con)
May I join the congratulations to the right hon. Member for East Antrim (Sammy Wilson) on securing this important debate? This is why Parliament exists: we are here to seek redress of grievance from an overmighty Executive who abuse their power. This is a classic example of the state abusing its power through aggressive tax collection.
Why is it that in the Bible the tax collector is seen as the villain on almost every occasion the tax collector is referred to? It is because the tax collector seeks to extract more than is by law allowed. In our system, it has always been the case that the job of the tax collector is to raise the tax set out by Parliament—not a penny more, nor a penny less. It is not for the tax collector to squeeze out extra from people if that was not intended.
We know from this discussion that HMRC did not think there was anything wrong with these schemes early on. How do we know that? As the right hon. Gentleman pointed out, it employed people using these schemes. So we are saying either that HMRC is so incompetent that it has no idea about the basis on which it is employing people, or that actually, because it saved some money, it thought these schemes were licit. The other thing we know is that constituents of ours sent in tax returns acknowledging that they were using these schemes, and HMRC did not question them.
Then, in a panic, worried about the tax receipts that were coming in—2010 is an important date when tax receipts were very low and the country had an enormous deficit—a squeeze gets put on, and that squeeze becomes retrospective. But retrospective legislation is basically unconstitutional except in extraordinary circumstances. Whenever there is any retrospective part of legislation, it has to be specifically approved and cleared by the Attorney General before it can be brought before the House. Why is that? It is to safeguard the constitutional right that people know the basis of the law under which they are operating. That is surely proper, because with retrospective legislation people who have behaved properly and honestly and followed the law that Parliament had passed suddenly find that they had not. That is entirely unfair and unreasonable, and it could criminalise any of us for actions we committed years ago.
Dean Russell
Does my right hon. Friend agree that in all these scandals, the presumption of innocent until proven guilty has been turned on its head, and we see the presumption of guilt and one being unable to prove one’s innocence? To use a biblical analogy, this is not so much David versus Goliath; it is David versus an army of Goliaths, and David has had the slingshot taken away from him.
Sir Jacob Rees-Mogg
My hon. Friend is absolutely right. HMRC, through the amalgamation of the Inland Revenue and Customs and Excise, has extraordinary powers. Customs and Excise historically maintained extraordinary prerogative powers—much greater, actually, than those of the Inland Revenue—and the coming together of those two bodies has brought a more aggressive culture to our tax system. It is a culture that assumes that taxpayers, following the law as they understand it and indeed as HMRC understood it, may be doing something wrong. That is a bad principle under which to operate. Members need, as we are, to look after the interests of constituents who are being affected in that way.
We need to allow people to know that their tax affairs are cleared after an inquiry has not been opened. That is set out: there is a 12-month period in which tax returns remain open and a seven-year period under which people have to keep records, and yet we have passed retrospective legislation that overturns all of that. My right hon. Friend the Member for New Forest West (Sir Desmond Swayne) was absolutely right that those of us who were here in 2017 should be appalled that this got through without being noticed and without being stopped. What he said to the Minister was absolutely right: we should look carefully at the ministerial responses.
HMRC is in the odd situation of being a non-ministerial Department. It is not properly accountable. With most Departments, the Minister says “Go” and—at least theoretically—they goeth. With HMRC, its independence is such that it can effectively ignore ministerial control. But that should work two ways. If the Minister cannot control HMRC, he should not read out the rubbish that it provides for him to read out from the Dispatch Box, and he should be well aware of the warnings given of Ministers who have either been willing to read out things that turn out in future to be untrue, or not asked the right questions.
I very much look forward to the speech by the shadow Minister, the hon. Member for Bristol North West (Darren Jones), because he has the advantage of independence. Not having gone native by virtue of being in the Treasury, he can bring—I hope—an independent mind to this. Bearing in mind that there will be an election this year, and who knows what may happen in that and what responsibilities may fall upon his shoulders, it is really important to know that the Opposition are on the side of proper constitutional practice.
The whole point of our system is that we come here, as we have done since the 13th century, to seek redress of grievance for our constituents when they are badly treated. This is a classic example, and Governments are absolutely appalling at answering it. People have mentioned the Post Office, but it is not just that; it is Hillsborough and infected blood. For some strange reason, Governments have a desire to defend the mistakes of long since past Administrations, and they do that to the disadvantage of constituents today. I hope that on this occasion it will not happen, or at least it will not continue to happen.
There is an ability to set it right, and there is an ability for the House to do more. If HMRC is not producing documents, we have things up our sleeves that the House can do to continue to exert pressure—the Backbench Business Committee can allow Humble Address motions to be tabled—but it would be so much better if the Minister at the Dispatch Box, who is one of the most able and intelligent Ministers in this current Administration, were to grasp this and deal with it to save our constituents from further pain—and, frankly, put HMRC in its box.
Nigel Huddleston
I will take a couple more interventions, but I fear that colleagues will ask about the very things I am about to come to, so I may then resist further interventions.
Sir Jacob Rees-Mogg
My hon. Friend refers to the 2017 Supreme Court judgment. As I understand it, that judgment decided that responsibility for the use of an employee benefit trust for tax fell unequivocally on the employer, so it does not necessarily support him in the way he may think.
Nigel Huddleston
There has been debate and disagreement on that, particularly as it relates to section 44 of the Income Tax (Earnings and Pensions) Act 2003 and so on. HMRC has outlined the policy stance on this. Although I understand that there is disagreement, the line is quite clear at the moment.
Autumn Statement
Jacob Rees-Mogg Excerpts(1 year ago)
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Jeremy Hunt
I can confirm that for reserved matters there obviously would not be Barnett consequentials, but where matters are not reserved, there would be consequentials. Our priority in funding for Northern Ireland remains the restoration and return of a locally elected and accountable Executive, but in the meantime we will continue to support the Province in every way we can.
Sir Jacob Rees-Mogg (North East Somerset) (Con)
Has my right hon. Friend given any consideration to, and has the Treasury carried out any analysis of, the effect on economic policy of mistaken forecasts from the Office for Budget Responsibility?
Jeremy Hunt
I thought my right hon. Friend might ask a question of that ilk. I would gently say to him that not just the OBR found that its forecasts were wrong; nearly every commentator as well as the Bank of England and the International Monetary Fund did too. I am pleased to say that, in every single case, they have found the British economy has outperformed their expectations.
Draft Postal Packets (Miscellaneous Amendments) Regulations 2023
Jacob Rees-Mogg Excerpts(1 year, 4 months ago)
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Sir James Duddridge (Rochford and Southend East) (Con)
On a point of order, Mr Pritchard. I was nominated to this Committee and I was prepared to be part of it. I was asked to absent myself from the Committee, and I refused because I had points and queries to make. When I suggested that I might vote against the legislation, I was subsequently removed from the Committee. That is an outrage to the House. I believe that this legislation does require scrutiny. I will listen to the debate but I do not think that 90 minutes will be sufficient time to hear all the contributions, let alone conclude all the issues.
More importantly, if it is the feeling of the Committee, Mr Pritchard, can you go back to Mr Speaker and review the process? Never in my 18 years of Parliament have I known of a single Member who has been removed from a Committee list without asking to be removed. In this case, it happened four or five times. I suspect that there is an element of incompetence rather than an attack on Members’ rights to debate, but this needs to be looked into. I seek your guidance on whether, if we do not finish the debate here, more time can be allocated on the Floor to discuss the principle and the content of this legislation. I am sure it is something that the Chief Whip would want to know more about, alongside fishing interests.
Sir Jacob Rees-Mogg (North East Somerset) (Con)
On a point of order, Mr Pritchard. As the papers for this meeting are not ready and not sufficiently supplied for all the Members who are attending, I suggest that the meeting be adjourned until they can be provided.
Sir Jacob Rees-Mogg
Further to that point of order, Mr Pritchard. I think that point of order is fundamental because without the papers, how can people consider this legislation properly? All that was available when I came in was the explanatory memorandum. The list of members is not available, which seems to be a deeply unsatisfactory state of affairs when the names of the members have changed so rapidly during the course of the day. When we are playing the hokey-cokey with members of the Committee, the House at least ought to be informed of who those members are. I suggest a brief adjournment while the papers are provided, and then we should come to the other points of order.
Mr Mark Francois (Rayleigh and Wickford) (Con)
Further to that point of order, Mr Pritchard. I have two quick points.
First, I understand that the knife on the Illegal Migration Bill will fall at 6.26 pm. If you were a cynic, you would believe that the Government deliberately timed this debate for this evening, knowing that it would be ripped up by all those votes, bearing in mind we had 18 votes on the Bill last week. If you are a cynic, it is perfectly obvious to see what the Government have done; they have timed the debate now so it will be interrupted by the votes. However, can you confirm, Mr Pritchard, that if these proceedings are interrupted, there will be injury time so the debate will begin again quite a long while later, after the votes have taken place?
Secondly, for the record, the Committee of Selection nominated Members to this SI Committee last week in the normal way, including my hon. Friends the Members for Windsor, for Rochford and Southend East, for Devizes, for Dudley North and for Don Valley. I understand that some or all of those people indicated to the Whips in conversations over the weekend that they had what theologians might call “doubts” about the Government’s approach. Some even threatened to vote against the legislation, whereupon they were summarily removed from the Committee by the Whips, using a procedure that is normally used only for last-minute substitutions and very special circumstances—for instance, if a family member is ill.
In 22 years in this House, I have never known the Whips, from either side, to do this. This is beyond sixth-form politics. This is manipulating the parliamentary process because the Windsor framework is clearly a failure, and it is such a failure that the Whips have to rig Committees to get it through, so they have found a bunch of other Members, at short notice, who perhaps, shall we say, are not quite as inquisitive as the five who were nobbled. You have been here a long while, Mr Pritchard; have you, in your time in this House, ever known anything quite as shameful as this?
Sir Jacob Rees-Mogg
Further to that point of order, Mr Pritchard, it seems to me that these issues raise serious matters of privilege, which obviously have to be referred to Mr Speaker confidentially and are not a matter for this Committee to consider. However, if Members are obstructed from carrying out their duties as Members, that is a molestation of a Member.
A Member has been appointed to the Committee and summarily removed from it, without the Chairman of the Selection Committee being informed, or indeed the Member concerned being informed. That seems to me to raise, prima facie, matters of privilege, which should referred to Mr Speaker. Therefore, I would again suggest that this Committee be adjourned. We still do not have the papers, so I think that there are now two good reasons for adjourning this Committee.
The Chair
Well, thank you. I would just say that I think, with the Government Whip here, that the strong feelings of some Members of this Committee have been noted by the Government Whips.
On the point on the membership and the paperwork being available, that paperwork is en route. In fairness to the Committee staff, I suspect that they did not anticipate the level of turnout that we have this evening. We could suspend the sitting, but I think that it might be more helpful if we perhaps encouraged the concept of sharing Committee papers, and I am happy to lead by example—exemplo ducemus, as the former Leader of the House might know—and I am very happy for him to have my Committee membership paperwork. I will take that decision; the paperwork is on its way; it will be here shortly, and if the right hon. Gentleman really does need to see the latest list, I am happy to provide it to him personally, or he can share with other Committee Members. I am sure that other comments will be made in a moment, but—
Sir Jacob Rees-Mogg
The Chair does not have the authority to order my right hon. Friend to withdraw in Committee. The Speaker has that authority on the Floor of the House; the Chairman of a Committee does not have that authority. He may ask, but he cannot insist.
Mr Francois
For the avoidance of doubt, I will withdraw it anyway. You and I have known each other for many years, Mr Pritchard; if you think that word was disorderly, out of respect for you and mindful of the point made by my right hon. Friend the Member for North East Somerset, I will withdraw it. I will replace “bent” with “rigged”.
The Chair
It is not a matter of my opinion of what is orderly or disorderly; it is a matter of what the House thinks. I have heard a lot worse over those many years.
Sir Jacob Rees-Mogg
On a point of order, Mr Pritchard. As you know perfectly well, the rules in Committee are very different from the rules of the House. If you as Chairman are not happy with the order, you may suspend the Committee, but my right hon. Friend does not have any obligation to withdraw. You may make a report to Mr Speaker, but the only power you have is to suspend the Committee. That is very important because there is a fundamental difference between Committee and the Floor of the House.
The Chair
I am grateful for that point of order, which comes from possibly the master of civility himself. He will recognise that my right hon. Friend the Member for Rayleigh and Wickford has put the record straight, even if he did not have to in the opinion of my right hon. Friend the Member for North East Somerset, and I am grateful for his doing so.
Finance (No. 2) Bill
Jacob Rees-Mogg ExcerptsTuesday 18th April 2023
(1 year, 7 months ago)
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Mr Jacob Rees-Mogg (North East Somerset) (Con)
One has to be a bit careful when talking about the US, because although the President might be in favour of this, the Republicans in the House of Representatives have made it absolutely clear that they are not, and as they have a majority there, that is quite significant.
Victoria Atkins
Yes, of course, but we have to work with the US Administration this week, next week and the year after next. That is why, with the US having its own rules and with its encouragement that these global standards should be applied, we are in lockstep with other countries in implementing this rule. I would just make the point that this is unprecedented; this is new and we have to be realistic. A hundred years ago we did not have multinational groups operating in the way that they do today, or in the way they will in five or 10 years’ time. We as an international community are trying to deal with some of the aggressive tax planning that we have seen multinational groups indulge in. We want to raise the floor, and those economies have signed up to this. They are part of the 135 countries that have committed themselves to this agreement. That is what was so important about the agreement, and these taxes will apply in those jurisdictions even if they have not implemented it.
Mr Rees-Mogg
It is a great pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman), although I must say that there was some irony in a representative of the Scottish nationalist party speaking in favour of following financial rules, which sometimes seems not to happen in that part of the United Kingdom.
Of course, like everyone else here, I am a taxpayer, so we all have to declare some element of interest, and I am a corporate tax payer, under a particular hat, so I have an interest in the subject. Today—perhaps suitably, for what we are discussing—is the eve of the feast of St Alphege. Hon. Members will recall that St Alphege was murdered for refusing to pay higher taxes. He was, in many ways, the first tax martyr, who, reluctant to pay an additional Danegeld, had ox bones thrown at him until he was dead. I fear that, under current circumstances and with the approach taken by those on both Front Benches, we see endlessly higher taxes, and we are having metaphorical ox bones continually flung at us. Let us hope that we do not get martyred through it.
It is appropriate to think of St Alphege, because we are debating the worst bit of the Budget today, turned into law. It is the bit that will be most damaging to the economy, and it is the bit that is least in the interests of the United Kingdom. Let us start with clause 5, which is an historic mistake—it is a major blunder being made by His Majesty’s Government, and it fails politically and economically. It is worth remembering why the then Chancellor, George Osborne, started to reduce corporation tax. He got the Treasury for the first time to do a dynamic assessment of the consequences of cutting a tax. What did that dynamic assessment show? It showed that more revenue would be raised, which is precisely what happened. More revenue came through, both in actual, nominal cash terms and as a percentage of GDP. That cannot just be ascribed to general economic improvement and growth: it was a fundamental change in the level of corporation tax raised at a lower rate. Why was that? Well, it made the country more competitive, it encouraged people to set up businesses, and it created a system where people thought that the United Kingdom was open for business. What we are doing now is the precise opposite.
In her opening remarks, my hon. Friend the Minister referred to our noble Friend the late Lord Lawson—most distinguished Chancellor, most effective Chancellor—but this goes against everything that he did as Chancellor. In every single Budget that he presided over, he managed to abolish one tax. Why? Because he realised that simplification of the tax system was the right way to go, and because he realised—we saw more of this in the United States during the same period—that lower rates with fewer write-offs is a better way to go than higher rates and complex write-offs. Today, His Majesty’s Government are doing the exact opposite, because the Government think that they know how businesses should spend their own money better than businesses do themselves, which is fundamentally wrong.
As such, we get a raise in the basic rate, which will hit small businesses. It actually hits them at a higher marginal rate, because between £50,000 and £250,000, it has to make up the 19% to the 25%. As people get their business out of the foothills and begin to climb the mountain, we start hitting them with a high marginal rate, which is not particularly clever. Then we say, “You, dear business, do not know how to spend money—you are far too stupid—so we will tell you how”, which fundamentally misunderstands the British economy. It may be that we were a wonderful manufacturing economy in the 19th century. I love the 19th century; I have great affection for the 19th century. Some people accuse me of being the hon. Member for the 19th century—I would point out that it is the right hon. Member, and it may be earlier than that, but never mind. However, that is not the economy we have now. Our economy is primarily a service economy, and providing complex write-offs for investment that benefit manufacturing but hit services does not understand where our economy is based.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
I agree with my right hon. Friend. I would add that, even for the manufacturing sector, we are obviously facing an extremely concerning tax situation—I refer him to AstraZeneca’s recent decision to locate in the Republic of Ireland rather than the UK. It is absolutely imperative that we lower our corporation tax rather than raise it, because that is ultimately the key test of our competitiveness.
Mr Rees-Mogg
My right hon. Friend is right, and for once, those on the Opposition Front Bench were right as well. Part of the problem with the write-offs is that they are temporary, but why are they temporary? Not because that is what the Government want to do, but because the Government are in hock to the OBR, which gets all its forecasts wrong. All the OBR has managed to say about the write-offs is that they will bring forward investment. That is not a bad thing in and of itself, but the long-term benefit is not being achieved because we insist on following what a bad forecaster tells us will happen. Actually, to the credit of the bad forecaster, it admits that what it says will happen will not happen, so we are doing something on the basis of something that even the forecaster says will not be the case when the years have passed. That cannot possibly make sense. We are making it more difficult to do business in this country, and our aim should be lower rates and fewer write-offs. That is the way to encourage business, and it is the way to grow the economy. If we grow the economy, we can afford the public services that we want. At the moment, we are risking shrinking the economy, encouraging business to leave and set up elsewhere and not having the money we need for public services. Clause 5 is a bad clause; it is a bad thing to be doing, and it is a bad thing for the British economy.
I would go further, because this idea that attacking corporations is a free lunch for Governments is a mistake. Corporation tax is of itself a bad tax, because it is not a tax that falls on nobody; it actually falls directly on consumers. It comes through to consumers, because businesses thinking of operating in this country do not care about their gross margin; they care about their net margin. When the corporation tax rate goes up, what do they do? They say, “We either have to increase prices or reduce employment to maintain the net margin.” Increasing corporation tax from 19% to 25% in a period when there is already inflation in the system will be more inflationary, as multinationals will raise their prices to compensate and maintain the net margin, or they will reduce employment, which makes the cost of living crisis worse for people, because people’s incomes then fall when they are trying to deal with rising prices.
I fear that there is a view among politicians that we tax corporations because they do not vote, and it is therefore an easy raid to make and therefore it does not matter. It is the old saw about plucking the goose with the least amount of hissing. Unfortunately, the hissing on corporation tax is delayed, but all taxation ultimately falls on individuals, and that is true of corporation tax. That is why it is a bad tax and why increasing it is a mistake in these current circumstances—indeed, it is a mistake in almost all circumstances.
The multinational minimum tax is also a mistake, and it is a mistake in terms of diplomacy and foreign policy. It was a daft thing to agree at the G7. We had no interest in doing it, and my hon. Friend the Minister said that they have all done it in the EU, as if that was meant to be any salve or balm in Gilead for us anyway. The fact that the high-tax, highly inefficient, highly regulatory EU is keen on it is enough to make most people reach for the smelling salts, rather than to think it is some glorious success of His Majesty’s Government. Why is it a bad idea? It is a bad idea because it deprives us of ambition. My right hon. Friend the Chancellor himself called for corporation tax to come down to 12.5%, and we are now legislating to make his ambition impossible. That is not something that Governments usually do; they normally try to ease their way through to something that they have set out, even if they recognise that the circumstances are not immediately possible in which to do it.
The other reason that the tax is wrong and deprives us of ambition is that it is about settling for a high-tax, inefficient world. I think Angela Merkel, the former German Chancellor, said, “We have a system where we have all this welfare, and other countries do not. How are we going to carry on paying for it when they are so competitive?” That is a quotation from her from a few years ago. We are trying to make the whole of the rest of the world as uncompetitive as we have allowed ourselves to become. That is surely not the answer; the answer is to make ourselves more competitive and therefore to have and to be able to afford lower taxation. Instead of looking at those countries that have low-tax regimes as pariahs, we should look at them as models. Instead of saying that Ireland with its low tax rate is doing something scandalous and should be punished, we should say, “No, Ireland has got more from corporation tax than it gets from value added tax.” We do not get a fraction of the money from VAT and corporation tax, because we have a much higher rate, and we have not attracted the businesses that Ireland has attracted.
Richard Fuller
I am somewhat sorry to interrupt my right hon. Friend, but I am interested in his views on international competitiveness. One of the issues that the Minister mentioned in relation to the application of global minimum tax is that it will affect companies that have a large amount of their asset base in intangible assets. Those are primarily in the more advanced countries—western democratic countries—which will find it much harder to justify some of the deductions they can make from the amount of tax they will be subject to under that global minimum tax. What is his consideration of the global political impact of that on the competitiveness of our advanced economies versus China, and of the other implication about the valuation of pensions, many of which are invested in companies that will be disproportionately affected by this legislation?
Mr Rees-Mogg
My hon. Friend is absolutely spot-on that intellectual property rights are, of their nature, much harder to tax, but they clearly belong in the country that invented them or that owns the intellectual right, which is a saleable asset. If that is in a low-tax jurisdiction, why should it be taxed at a falsely high rate? If Disney makes a plastic toy in China, where is the value? It is not actually in the plastic toy being created; it is in the fact that millions of people like watching Disney characters. Trying to locate where that tax ought to be paid is therefore an extremely complex issue, and not one that is solved by a minimum tax. All that does is make it less efficient for companies to invest, develop and do things here, and they might as well do that somewhere else. They might as well do it in China, actually, because China does not seem to be very enthusiastic about this minimum tax anyway.
I do not think this will succeed in stopping complexity. Indeed, it adds to the complexity of the system, and we need only look at this Finance Bill to see by quite how much. The Minister, to her credit, did admit this, and said it was so important that we debated it, with which I thoroughly agree, but the dozens of pages of clauses and schedules on this are making our system fundamentally more complex.
My right hon. Friend the Member for Witham (Priti Patel) raised the issue of tax sovereignty. We got into a terrible muddle by signing up, in the European Union, to a minimum rate for VAT. We thought at the time it was a success, because the EU wanted to be able to set a unified rate, and we got just a minimum rate agreed. However, that led to suddenly finding that it was impossible to lower VAT rates, as we discussed during the Brexit debate, and as we still cannot do in Northern Ireland, where we are stuck with VAT rates still being set according to the minimum agreed in the European Union. So we remove flexibility, remove sovereignty, increase complexity and make it less competitive for business, and we are selling the pass on becoming a tax-efficient, tax-competitive country.
Tax competition is a good thing for those of us on this side of the House, who are meant to be capitalists. I accept that the socialists do not want it, and that is fair enough—that is what they believe in—but we believe in growing economies through free-market solutions. Therefore, we believe that if we have a lower tax rate than Germany, that is a good thing because it makes our economy more competitive and makes the British people richer than the Germans. That is not something we are achieving currently, but that I would like to achieve, Mr Evans—the independent Chairman seemed to be nodding at that, but I am sure that Hansard will take no notice of his agreement that we ought to be richer than the Germans.
This is about a failed economic orthodoxy of an undynamic kind that is leading to the increase in corporation tax, when the evidence from George Osborne showed that that is not true, so clause 5 is a mistake. Then the multinational minimum tax is about making globally the rest of the world as inefficient as the European behemoth has become, and that is the wrong approach to be taking. Where is our ambition, where is our vision and where is our free-market approach?
Several hon. Members rose—