Oral Answers to Questions

Jim McMahon Excerpts

Tuesday 6th November 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

In truth, this is very small beans for high street stores. It is correct that some people will benefit, but also correct that many of our town centres and shopping centres have vacancies that this will not even touch, so what more can Government do to address the fundamental unfairness in the system?

[Mel Stride]

The hon. Gentleman is right inasmuch as he points to the fact that high streets need to reinvent themselves—to transition—in order to adjust to the growth in online marketplaces. That is exactly what our future high streets fund is all about, with £675 million going out via local authorities, following competitive bids, to make sure that we reshape those high streets in exactly the way that he would like them to be reshaped, get rid of the shops that are shut down and reinvigorate and rejuvenate the very centres of our communities.

Finance (No. 2) Bill

Jim McMahon Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 19th December 2017 Commons Chamber

[Bim Afolami]

I believe that all policy in this area, or, frankly, in any area, should be set to make sure that we are trying to generate as innovative, dynamic and successful an economy as possible. The hon. Member for Walthamstow (Stella Creasy) mentioned cutting corporation tax in her speech. She thought that that effectively benefited more men than women because men are more likely to be shareholders than women. The way we should deal with that, in my view, is to encourage more women to be entrepreneurs. We should work to make sure that women have access to being shareholders and that women have more ability to reap the benefits of that—

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Bim Afolami]

If I may, I would like to make a bit of progress.

As the evidence has shown, cutting corporation tax increases, rather than decreases, the tax take going to the Exchequer. If that shows this country to be a better and more dynamic place in which to set up and start a business, that will benefit all people in this country. That is the approach that the Government should take. If we want to improve the performance of the British economy and if there happen to be more men than women who are shareholders, it is no answer to say that we should therefore not take action to improve the activity of the British economy.

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[Bim Afolami]

I will conclude my remarks by saying that it is important when we talk about these issues—in this House or outside—always to remember that improving the performance of the health service, the economy or anything relating to Government policy will benefit everybody in this country, if we make the right judgments and the right policy.

[Jim McMahon]

Well, well, well. When it comes to naivety, there is a very fine line; it can often be endearing before it eventually becomes quite offensive. And I did find the speech of the hon. Member for Hitchin and Harpenden (Bim Afolami) offensive. It began in the spirit of naivety. I could see that he was nervous at the beginning of his contribution—quite rightly, it turned out, towards the end—because he did not have the data that was being presented.

The debate went on and Labour Members presented the data, but rather than actually taking account of it, the hon. Gentleman continued, in a very odd way, to try to defend what most reasonable people would say is a quite indefensible position. He was essentially saying, “Listen—if men are doing okay, surely women will eventually do okay too.” I am not sure whether the solution he came up with to the shareholder conundrum was for women to find wealthy husbands who are shareholders, as if that might somehow lift them out of poverty and allow them to be the beneficiaries of the cuts in corporation tax.

[Ian Mearns]

We have discovered a new phenomenon: it is called trickle-down gendernomics. It is going to be the resolution to all the problems of poverty and the disparity in earnings between men and women in all our communities up and down the country—I don’t think so.

[Jim McMahon]

That is a fair point.

[Stella Creasy]

Obviously, having had two women Prime Ministers, that is quite enough women earning a serious level of income—the 33 million other women in this country do not deserve equal care and attention. This data would help us to find out just how much inequality there is and what we could do about it. Does my hon. Friend agree that facts should override fiction?

[Jim McMahon]

I think that where the hon. Gentleman was trying to get to—I will be generous—was that these things are symbolic and that symbolism in politics is quite important. However, to me, it is more symbolic that 46% of women have to skip a meal so that their children can eat. It is quite symbolic that women continue to be underpaid compared with men, and it is symbolic that the decisions the Government are taking disproportionately affect women on low incomes—the people who are trying to keep households together and who are raising the next generation of young people, who, because of this Government, will not have better life chances than the generation that went before them.

[Chris Stephens (Glasgow South West) (SNP)]

Will the hon. Gentleman confirm that it is also important that it was women politicians and women workers who campaigned and argued for the Equal Pay Act 1970? Will he also confirm that outstanding equal pay cases are at an all-time high?

[Jim McMahon]

That is absolutely right, but let us be honest: the Government are not in listening mode. They do not want to take into account what could have been constructive new clauses—new clauses 6 and 7. What they want to do is to maintain their stubbornness and their silence. They think that if they ignore this issue, there is not a problem in society, when we know that there is.

In terms of the pressures on income that many people in our communities face, the new clauses go beyond just gender inequality, and talk about disability and race as well. The Prime Minister has been clear that she wants to address the discrepancy in terms of opportunity, incomes, housing and the criminal justice system with members of the ethnic communities in this country. However, when we look at the way the Government have approached the Budget, the evidence just does not support that. If we look at the public sector, for instance, little effort is being made to widen participation in public sector jobs to members of the ethnic minority communities. In my constituency, a third of residents are predominantly Pakistani and Bangladeshi, but they are nowhere near properly reflected in the make-up of public services. In towns such as Oldham, where industry has, by and large, been hollowed out, the public sector is the place where people go for decent-quality, well-paid and, previously, quite secure employment. If people are restricted from entering those jobs, for different reasons, that has a material impact on their ability to lift themselves out of poverty, to get on in life and to do well.

When the coalition Government came into power, it was interesting that one of their very first acts of many that devastated towns such as Oldham was to cut the funding that went to Remploy. Remploy had a network of factories across this country that used to support people into supported employment. Those were not sympathy jobs, in the way I heard people say they were at the time; they were real jobs, and they produced goods of quality that people wanted to buy. In Bardsley, in my constituency, that meant a full factory employing 114 people making windows that they would sell to industry, housing associations and the private market.

[Sarah Champion]

The reason we want the equality impact assessment is not handouts; we are looking for a level playing field so that everybody can reach their economic potential and Government policies are not hampering that. Does my hon. Friend agree?

[Jim McMahon]

That is absolutely right. This is really odd from my point of view, because I have come from local government. In local government, when people are setting their annual budget, they have a legal responsibility to make sure that these audits are carried out and that proper consideration is given to the impact on protected groups. The Government now seem to believe that legislation passed in this House is good enough for one part of the public sector but not the other, but I am afraid that that just does not hold water. A lot of public bodies—whether it is the NHS, local government, a police force or anywhere else in the public sector—will be looking at the Government and thinking that there is a lot of hypocrisy in the laws passed here, which the Government do not seem to apply to themselves.

[Justin Tomlinson (North Swindon) (Con)]

Specifically on Remploy, yes, there were some great practices there, but the Government made that decision because very few were able to progress into work, and we wanted to create more opportunities so that more people can benefit. That is partly why we have seen an extra 600,000 disabled people find work, which is a great thing.

[Jim McMahon]

How dare the hon. Gentleman suggest that the 114 people working in that factory in Oldham were not in proper employment? They were producing, they were manufacturing, they were selling, and people wanted to buy the goods because they were of a high quality. It was not a handout or a giveaway. They were not sympathy cases: they were people who were working hard in a supported environment to produce something that people wanted to buy.

In some ways, this is the problem that we face. When the problem is so disconnected and not part of the everyday experience of Conservative Members, it is easy for them to ignore it. I cannot ignore it. When I go back to Oldham West and Royton, it is my community. I see the impact of cuts, of austerity, and of suppressed wages. I see the hollowing out of our employment structure. All right, people at the top are doing very well, and there are more jobs at the bottom, but the middle has been completely taken out. People talk about an economy that will support people into better employment, while 8 million adults and children are living in poverty in working households.

That is the economy we have in this country, because the routes of progression in employment simply do not exist. We are happy to be the bargain basement employment capital of Europe in this new relationship—let us be honest. Providing that the bankers and the insurance services are all right, we really do not care what it means for the rest of the economy as long as there are people working at Costa Coffee to serve the coffee in the morning. That is what the Government really believe. It is okay hon. Members shaking their heads, but where has the investment in our key industries gone? We need investment in manufacturing and engineering, creating jobs that produce things that people want to buy, pay decent wages, and support people into a lifelong career so that at the end of it they have a decent pension.

Speaking of pensions, what did the Government do in the autumn statement for the WASPI women? These women have worked and contributed all their lives, doing everything that was asked of them by Government. At the last minute, planning for their future, they were left cut adrift, and when they came to the Government to ask for support, the Government turned away.

[Bim Afolami]

rose—

[Jim McMahon]

I absolutely give way to the hon. Gentleman if he can justify that.

[Bim Afolami]

Would the hon. Gentleman welcome anything at all in the Government’s recently announced industrial strategy, which was, in many respects, targeted towards some of the poorer communities in this country?

[Jim McMahon]

I am going to give the hon. Gentleman a real answer on this point and not just grandstand, because it is important. I will explain the problem with the industrial strategy as it stands. For a town like Oldham, it is absolutely critical that the UK has an industrial strategy that holds water—that is forward thinking, ambitious, and has a framework of funding to support growth. I would welcome an industrial strategy that did that, and I think that when it started, that is what it tried to do. The problem is that something fairly dramatic has happened in the meantime, and that is Brexit. What I would have expected the Government to do in the context of the referendum result is not just to dominate Parliament’s time with the transitional and transactional relationships with Europe now and when we leave. I would have expected the Government of the day to produce a real, compelling vision of what type of Britain there is going to be when we leave the European Union. That has not taken place. The domestic legislation coming through this place is non-existent. Money is being taken out of vital public services that would be the foundation for the type of industrial strategy that is being talked about. Money is being taken away from our education and skills system, which would be the starting point for any investment strategy in our economy, particularly in manufacturing and engineering.

So would I welcome anything in the industrial strategy? I would simply welcome the principle of an industrial strategy, but it cannot be done on the cheap. We have seen—let us be honest about this; it transcends different Governments—a complete turning away from UK manufacturing and engineering, at the cost of the communities that people in this place represent. In order to replace that with a forward-thinking industrial strategy, the resources then have to follow, and we have not seen that—we have seen the opposite. Money has been taken away from our Sure Start centres and from our schools. Our colleges are chronically underfunded, with many on estates that are crumbling, struggling to keep up even with basic maintenance. Our apprenticeship system is in tatters since the introduction of the apprenticeship levy. All these things matter if we have a forward view about what type of country Britain can be.

The new clauses are important in that context because if we want to create, after Brexit, an inclusive and fair Britain that allows everybody to benefit, we have to make an honest assessment of where Britain is today. We are not in a good place. Our economy is shot. Our job market has been hollowed out, and the good, well-paid jobs in the middle have been taken away. Our housing stock is not fit for purpose and we are investing £9 billion a year into the pockets of private landlords, although we know that 40% of that stock does not even meet the decent homes standard. Those are the really important issues that Members need to think about. If they do not take proper account of what the information tells us, how on earth can we collectively make informed decisions that send us in a different direction?

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[Stella Creasy]

My hon. Friend is making a powerful case. Whether Members on either side of the House agree with the policies, having good data to enable us to understand their impact helps us to make or dispute an argument. I am struggling to understand why any MP would be against having the facts about the impact of policy, which is all that the new clauses will do. If we had that information, Government Members could confidently tell us what great proposals they are making to improve the country’s prosperity, rather than using anecdotes—or two women.

[Jim McMahon]

I believe it comes down to priorities. If the Government were determined to do something about this, having the evidence base would be of great benefit to them. They do not want to do anything about it, so the evidence base is a hindrance because the Opposition can use it to attack the Government about the fact that progress just is not being made. That is the real reason why the Government are not making progress, and why they are determined not to support the new clauses. It would be far better for the country if the Government were to step up, to be honest and to recognise that the country has some really ingrained challenges that we need to face. Understanding the scale of the challenge from day one is important in making sure that we get into a better position.

My challenge is this: why not? If the Government believe that they are doing the right thing, and that by virtue of their second female Prime Minister they are the party of gender equality and the champions of all that is equal, now is the time to prove it. Members have two choices: they can go through one or other of the voting Lobbies. Perhaps they have a third choice, which is to stay away completely. They can get behind the new clauses and support our request for the data set, which will inform decisions; they can shirk responsibility entirely and stay away from both voting Lobbies; or they can keep their heads down and maintain their own position on the Government Benches, and vote against new clause 6 because it happens to have come from the Opposition. I would say that that is not putting the interests of the country first.

[Kirsty Blackman (Aberdeen North) (SNP)]

I would like to start by correcting an omission that I made yesterday. I should have said that our thoughts are with the Chairman of Ways and Means and his family at this time. It sounds like a really horrendous thing for a family to go through, particularly at Christmas time.

I thank the shadow Minister, the hon. Member for Brent Central (Dawn Butler), not just for tabling new clause 6, but for the way in which she engaged with us in advance of the debate. I appreciate the time that she took to speak to us about the new clause so that we could discuss how it looked. I think it is absolutely brilliant; it is one of the best new clauses that we have seen when considering a Finance Bill, and I have tabled a few in my time. I want to speak in favour of the new clause and state our support for it.

I will start by covering why we need the new clause. Although there has been a bit of discussion, we have not talked about what it means in its widest sense. Subsection (2) talks about

“the impact of those provisions on households at different levels of income”,

as well as on protected characteristics, the public sector equality duty and

“equality in different parts of the UK and different regions of England.”

A lot of the debate today has focused on women, which is completely reasonable, but the new clause captures several other things that could have been more fully discussed.

Why do we need an assessment of the impact on various groups, particularly those mentioned in new clause 6? We need it because people in the protected groups or at the lower end of the income spectrum have been disproportionately hit by the actions of this UK Government, as can be seen in a number of ways. It can be seen in the fact that we have young people in jobs on zero-hours contracts. We have those jobs, and the Government say it is wonderful to have so many people in employment, but despite that, we are not seeing an increase in household disposable income because people are not receiving the wages they should receive for such employment. They are in precarious jobs and they are not receiving enough money, and the benefits freeze has been a major added factor. It means that people are earning even less, because the benefits freeze has hit them doubly.

The Government have caused another issue by reducing disability payments. The UN has said that the UK has not done enough to ensure that the UN convention on the rights of persons with disabilities is being met, and no Government in any developed country or nation should seek to be in such a position. We have not had a proper assessment of the impact on disabled people of the changes that this UK Government have made.

The UK Government have also not taken seriously their responsibility to young people in society. We have a living wage that people cannot live on: it is not calculated as something that people can live on; it is a pretendy living wage put forward by the Government. It is not applicable to people younger than 25. Therefore, we have a living wage that people cannot actually live on, but the Government somehow think that the labour of people under 25 is worth less than that of those over 25, even though they may be in exactly the same job and should therefore be earning the same amount.

As has been pretty widely covered, the Budget and successive policies of this UK Government have a disproportionate impact on single parents, the majority of whom are women. We see a disproportionate number of them coming through the doors at our surgeries. Do you know what, Mr Owen? It is absolutely and totally ridiculous that we are seeing a rise in rickets in this country. We are seeing people who cannot afford to eat or to give their children nutritious food because of the decisions of this UK Government.

HMRC Closures

Jim McMahon Excerpts

Thursday 2nd November 2017 Westminster Hall

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

This is a really important debate. To provide some context, the HMRC office in my constituency closed in 2014, with staff relocated to Manchester, so I can give the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) two ends of the perspective: I can tell him about the conversations that took place before the closure and about the impact on the town, after the closure.

If the plans are about value for money, we have to ask ourselves why HMRC head office still occupies some of the most expensive real estate in Europe, at the Treasury. That building would make a fantastic five-star hotel, I am sure. The plans are not about value for money but about a fixed view of government, which is, “To hell with towns!”

If all we do is focus on our city centres, we will not be able to realise the true potential of our country. If all we do is to think that what matters is to have our cities thriving, at the expense of the surrounding towns, this country will not move on and make progress—we will not address that very real anger that I felt during the Brexit campaign. People were saying that they were sick of the settlement they have been given, they are sick of industry and well-paid, decent jobs going, and they are sick of seeing their town centres in decline. Those who are in a position to do something about that seem completely indifferent to the impact on their communities.

[Imran Hussain]

My hon. Friend makes his point, as always, very eloquently. He mentioned Brexit, and another angle of that is that many of the HMRC proposals were decided before the European Union referendum. Does he agree that once the Brexit negotiations reach a settlement—if we ever get one—that will inevitably cause issues for HMRC, not least the customs union and related areas? Is that not enough to put the HMRC proposals on pause at least until we get to that stage?

[Jim McMahon]

That is a good point. One of the biggest gaps in the whole Brexit conversation is not only the transactional relationship with Europe and what our future relationship will be but the biggest deficit in all our debates—what type of United Kingdom will we be at the end of Brexit? What type of Britain do we want? What will our communities look like? How will our economies be framed in the future? It strikes me that there is a complete absence of a direction and a vision for what type of Britain there can be after Brexit. I feel that in Oldham.

The frustrating thing about the HMRC relocation from Oldham to Manchester is that there was no value-for-money assessment. A wider review was done, which said, “If you close x number of offices, you will save money for the public purse”, but no financial assessment was made of the decision to relocate from Oldham to Manchester. That was admitted by the Minister in a February written answer to me.

Let us think about this: if the relocation was meant to be about value for money and about saving money for the taxpayer of this country, why would HMRC relocate from a town where the average office cost is £70 per square metre to a city centre where the average cost is £120 per square metre? Why would HMRC not do an assessment? If we need to rationalise the number of offices in a conurbation, surely we assess the cheapest and most efficient place to put the ultimate office when all the others have been merged into that one. However, that did not take place.

I am pretty sure that part of the reason why that did not take place is the same reason why we have seen the county court closed and relocated from Oldham to Manchester, and why we have seen our magistrates court closed too. It is because the people doing the assessment, or the people who are making the decisions, do not live in Oldham; they do not even live in the north of Greater Manchester. The people making the decisions live in the affluent suburbs, closer to where the offices will ultimately be located when the decision is made. That is fundamental: what voice did staff have in the conversation?

[Chris Stephens]

The hon. Gentleman raises an important point. Does he agree that local knowledge is vital and that in terms of minimum wage compliance, an office in Oldham would know who the rogues were in Oldham, not elsewhere in the country?

[Jim McMahon]

The hon. Gentleman makes a very fair point. The relationships among other local service providers are equally important—the local authority and the local police in Oldham know what is going on in the community. Those localised conversations can no longer take place because the facility is not in the town as it used to be. It is ridiculous that Phoenix House, where HMRC was based in Oldham, is right outside the Oldham Central stop of the Metrolink tram line that takes just 18 minutes to get to Manchester city centre. It would have been very easy to make Phoenix House the new regional hub if there was a desire to do that, but the truth was that it was not even on the list for consideration because it was assumed that the regional hubs had to be in the city centre, at the expense of the town. That is shameless.

The Government tell us that times are hard, austerity bites and we have to live within our means, so surely there is a greater onus on them to maximise every bit of public investment where there is capital or revenue, and to provide proper scrutiny of where the investment goes, to make sure that the money is spent in the most efficient way for the taxpayer. The Government themselves have said that they did not do that. At best, that is approaching bad administration. The very basic things that I would expect a Government to do when spending public money—ensuring that it has the best effect—have not taken place.

What does that mean for a town such as Oldham? The loss of 2,000 staff by the local authority, on top of staff losses at the county court, the magistrates court, the police service and a range of other public institutions in the town, means that there are fewer people going out at lunchtime to buy a sandwich and supporting the local retail environment. There are fewer people going out shopping and using the bars and restaurants after work. There is less footfall in the town generally of people supporting the local economy. None of that was taken into account. We ask what was the local economic impact assessment; the answer is “there wasn’t one”.

If the Government are serious about having a stronger Britain after Brexit, about ensuring that public money is used to the best effect and about ensuring that our towns can be as strong as our cities, it is important to have a new approach. That new approach has to be to ensure that central Government decisions take into account the economic decisions at a local level. We also need to ensure that there is joined-up government. Government Departments that do not talk to one another are doing estate reorganisations in HMRC, the Department for Work and Pensions, local authorities and sub-regional government. No one has asked the basic question, “If we’re being forced to reduce staff and to reconfigure office accommodation, would it make sense to come together in Oldham and share office provision in that town, to support the local economy?” The conversation is not taking place.

It is too late for Oldham. That callous, reckless decision has been made; it has not provided value for money to the taxpayer and it has kicked Oldham when it was already struggling to get up from the ground. But there is still a chance to do the right thing for the towns that have not yet seen their office closed. I urge the Government to do the right thing.

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[Imran Hussain (Bradford East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Davies. May I put on the record my appreciation of your work in this area? You, like me, have made a case for Bradford, and you continue to do so.

I thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald)—I have failed miserably to pronounce that—for securing this important debate. Hon. Members from across the House have made forceful and persuasive arguments, and I hope that the Minister really listens and tries to understand Members’ genuine concerns about these ill-thought-out proposals. I am also grateful to my hon. Friends the Members for Keighley (John Grogan), and for Oldham West and Royton (Jim McMahon), both of whom made very good points, some of which I will try to elaborate on. In particular, the point about value for money that they both made eloquently needs to be looked at much further, certainly in the case of the Bradford district and the negotiations that have led us to where we are.

Let me set out the impact of the proposals for the Bradford district. The closure of the HMRC offices would have huge financial consequences for Bradford. As well as potentially putting 2,300 high-wage jobs at risk, it would mean a £110 million reduction in the district’s gross value added, and the loss of around £10.5 million of district retail spending. The local authority would lose out on £1.2 million in business rate receipts, and there would be a £2.5 million increase in public spending costs. Put together, those things would be disastrous for the Bradford district.

I mentioned fairness and inclusion in an intervention. Two thirds of our civil service jobs come from HMRC. The Bradford district is already at the bottom end of comparable towns up and down the country in terms of high-wage, high-skill Government jobs. It really is unfair to impose this closure on the district. I absolutely accept that Leeds, where it is proposed the regional hub should be, is a great place for business, but my hon. Friend the Member for Keighley made the pertinent point that there is a real danger that putting more civil service jobs in Leeds will overcrowd the private sector there, so this may not be a good thing for Leeds, either.

Let me come back to value for money and the economic case that hon. Members eloquently set out, and use Bradford as an example. The case put forward by Bradford would have saved £30 million, compared with the current proposals. That is a huge figure. As my hon. Friend the Member for Oldham West and Royton pointed out, there would have been lower accommodation costs per square metre, shorter commuting distances and lower redundancy and relocation costs, so why was that case not considered?

[Jim McMahon]

Does my hon. Friend agree that the consistent message that value for money reviews were not carried out when offices were relocated probably warrants a referral to the National Audit Office?

[Imran Hussain]

As always, my hon. Friend is absolutely right. These issues are arising with increasing consistency and, frankly, I believe that more needs to be done about them.

I come on to the workforce. The hon. Member for Ochil and South Perthshire (Luke Graham) made the good point that these decisions have to be about more than just value for money; they have to be about community, too. That point should not be lost. In Bradford, we have one of the most diverse and vibrant workforces, and one of the youngest populations. We have 84,000-plus work-ready people with degrees. We have Bradford University, which is a centre of excellence for MBAs. We have many things to offer, and those frankly have just been ignored.

Much has been made of the argument that Bradford is not the right location and does not have the same connectivity as Leeds. We may not have the same connectivity, but we have suitable connectivity. We have real proximity to the M1 and the M62. Although we may not be where Leeds is, we are certainly not far away from connections, so that argument does not persuade me.

The powerful business case for Bradford was completely rejected. We have heard from hon. Members from across the House that all the cases that have been put forward have fallen on deaf ears. We have shown today that no economic case—no value for money case—has been established for these proposals. That makes me wonder whether they are the result of decisions by individuals sat in ivory towers, who chose places that were better for them to work and live in. That is the real question, and I urge the Minister to answer it.

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[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see you in the Chair, Mr Davies. Like other hon. Members, I thank you for your guidance and support and your interest in this area. First, I refer the House to my entry in the Register of Members’ Financial Interests and my position as chair of the Public and Commercial Services Union parliamentary group. As you are aware, Mr Davies, we have been here debating HMRC office closures many times, and each time I and other Members have asked HMRC to think again and pause for thought.

The debate was opened superbly by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald), who rightly thanked HMRC staff for their contribution. I will give some statistics to back that up. He rightly mentioned the low staff morale in HMRC as a result of the way in which management have handled the issue.

What was most telling in the contributions so far—it is the common thread—was the social and economic impact that the closures will have in towns and cities across the UK. We heard from the hon. Member for Keighley (John Grogan), and my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) talked about East Kilbride being Centre 1 for tax collection services in Scotland and the UK, and the lack of consultation by HMRC with parliamentarians. We also heard from the hon. Members for Oldham West and Royton (Jim McMahon), for Stockton South (Dr Williams) and for Bradford East (Imran Hussain), who continued the theme of the social and economic impact that the closures will have in their communities.

The starting point was 12 November 2015, when HMRC announced plans to close nearly every office—approximately 170 in the HMRC estate—and replace them with 13 regional centres and four specialist sites, mostly based, as we have heard, in major UK cities. The plans were titled “Building our Future” and if implemented in full would involve vast areas of the UK being left with no local HMRC office, including restricting the department to two offices and one specialist site covering the entirety of Scotland; two offices and one specialist site covering the entirety of the midlands; two offices and two specialist sites covering the entirety of London and the south-east of England; two offices covering the entire north-west of England; two offices covering the north-east of England and the great region of Yorkshire, Mr Davies; one office covering the entirety of Northern Ireland; one office covering the entire south-west of England; and one office covering the entirety of Wales. Like many hon. Members, I am gravely concerned that, if the plans are not halted, they will leave vast areas of the country with no nearby HMRC office. I am also concerned that, more than 15 years on from the troubled private finance deal that HMRC entered into with the contractor Mapeley, significant risks remain in the handling of the contract. The Department has learnt nothing. A National Audit Office report draws attention to the fact that HMRC has not negotiated

“any break points in the 25-year leases it has signed so far for regional centres in Bristol and Croydon.”

Of course, there have been some changes to those plans—not all of them for the better. Let us go through them in turn. The original proposals meant there would be no physical presence in East Anglia. HMRC has subsequently decided to retain a presence in Ipswich, first as a specialist site but potentially to include broader work streams. Plans to close the only Welsh-language unit have also been dropped, with staff now co-locating with the Department for Work and Pensions—that is a point I will develop later in my contribution.

The estate negotiations on the location and buildings for the proposed Manchester regional centre are taking longer than HMRC initially anticipated, meaning that the regional centre will now open at least a year late, and possibly even later than that. When it eventually opens, it will do so in two phases. The overall capacity of the regional centre is in a state of flux, forcing the Department to extend the existing leases of three major sites in Manchester.

There have also been problems in Northern Ireland; the opening of the Belfast regional centre has been subject to significant delay. In other areas, closures have been brought forward, including at Blackburn, Bolton, Netherton and St Helens in the north-west; Derby, Worcester and two sites in Solihull in the midlands; and York in the north. Those closures, with point-blank notice, cause significant stress, upset and practical difficulties. That is not an efficient way to run a Department.

As a direct result of staff leaving the Department because of the office closures, HMRC is losing a vast amount of irreplaceable experience. Based on data provided to the Public and Commercial Services union by HMRC, in 2017 alone the Department will lose the equivalent of more than 17,000 years of staff experience, and the vast majority of that comes from customer compliance work.

We believe that the “Building our Future” proposals are completely driven by the deadlines within the STEPS contract of 2021 and that those are flawed. The existing proposals should be put on hold until appropriate parliamentary scrutiny, public consultation and socio- economic impact assessments are carried out.

[Jim McMahon]

Does the hon. Gentleman agree with my suspicion that the end was decided before the criteria that support it?

[Chris Stephens]

I do, and I think it has been driven by cost. One other area is that while I and my hon. Friends were campaigning in our constituencies to get re-elected, HMRC, during purdah, was signing contracts, and it did not wait until after the election to inform the House of those changes. I sympathise with the point that the hon. Gentleman made. Of course, during the process, we had the Concentrix disaster. HMRC had to terminate its contract early because Members of Parliament from right across the House had major complaints about how Concentrix was dealing with its business.

In the National Audit Office’s report, the key findings stated that:

“it will be longer until HMRC starts to realise savings. In the long term, it still expects its new estate to reduce its running costs. It now estimates cumulative efficiency savings by 2025-26 of £212 million, reduced from the £499 million estimated in its strategic outline case in November 2015. By 2025-26, HMRC expects its annual running costs to be £83 million lower than they are now”.

Whether it is £83 million, £212 million or even £499 million, those are drops in the ocean compared with the Government’s own accepted figure for the tax gap of £36 billion. The figure researched by the Tax Justice Network and PCS puts the tax gap at £119 billion. A major reorganisation and rationalisation of the most vital Government Department, putting at risk the very ability to carry out the tax collecting function for savings that are not properly costed, is irresponsible management and governance.

The Scottish Government are consulting today on the Scottish approach to taxation, to accompany gradual increases in its taxation powers. HMRC’s plans could well result in the severe limiting of HMRC expertise based in Scotland, which will become even more important as the Scottish Parliament debates increases in taxation.

--- Later in debate ---

[Peter Dowd]

The hon. Gentleman is absolutely right. Some of them cost an arm and a leg. The Minister should take on board the question of perception. In a democracy, when we are in the middle of an election, it might be technically, legally and administratively okay to do this, that and the other.

[Jim McMahon]

I am afraid that I do not buy the Minister’s explanation at all. The delays to the lease being confirmed for the Manchester office meant that additional costs were already being incurred. The incurred costs for one scheme were because of commercial and development reasons. The Government say that they could not wait for purdah to complete, but that would have given a new, incoming Government the freedom to change that decision. The situation is very odd.

[Peter Dowd]

My hon. Friend makes an excellent and valid point. The Government should think those sorts of things through.

As I was saying, there is, at the very least, an issue of perception about whether this is all above board. Even if it is above board, it has to be seen to be above board. The issue is that people do not feel that that is the case. We all feel that something is not quite right. In a democracy, we have to be seen to be above board. That feeds into the concern that some of us have that Parliament is being ridden over roughshod on a whole range of issues. For example, we did not have Opposition day debates for months on end. When we did get them, the Government virtually did not turn up to respond, and they continue to take that approach. It feeds into the perception that they are developing contempt for the views of Members in this Chamber and, specifically, the main Chamber.

There is a perception—and in this case, it is a reality—that the Government treat people with contempt. A briefing on the civil service compensation scheme feeds into that narrative:

“On 18 July 2017 the High Court held that the Government had failed to comply with the duty to consult prior to amending the CSCS, in that it had imposed conditions on union participation in the consultation process.”

That seems to be saying, “You either agree with us in advance what we want you to discuss, or you’re going to be brushed aside and not considered.” The briefing continues:

“As such, the 2016 amendments were unlawful.”

There is getting to be a pattern of unlawfulness with the Government—for example, the issues on tribunal fees and in relation to social security. It goes on:

“The Court’s decision is at the time of writing subject to appeal to the Court of Appeal.”

I have no doubt that the Government will do that. That is dated 26 October—just a few days ago.

We are not the only ones making this argument. The Public Accounts Committee said:

“We do not believe that it will save as much money as HMRC has predicted”—

that is the understatement of the decade—

“and we are concerned that it has not thought through all the negative costs to the wider economy of its approach and the impact on local employment”.

That is another understatement, if ever there was one. Many people and communities will be dreadfully affected by this.

Let us talk about service issues. The Institute of Chartered Accountants in England and Wales said:

“Service standards are deteriorating with taxpayers having to spend longer and longer on the phone trying to get through or waiting for their letters to be answered.”

My hon. Friend the Member for Stockton South (Dr Williams) alluded to that. To boot, the National Audit Office says that this has cost £600 million more than first thought. That is the situation we are in. Why the Government are persisting with this dog’s dinner is absolutely beyond me.

Members today have made fantastic contributions that were forensic, surgical, factual, objective and mixed with a bit of humanity, which seems to be completely missing from the Government’s approach. I ask the Government to take these proposals back, give them further consideration and think about the communities and people affected.

--- Later in debate ---

[Mel Stride]

The hon. Gentleman makes two points. One is a general point about the economic sense, or otherwise, of locating the services in larger hubs. The arguments on that are, broadly, extremely strong. They are that we can have larger groups of people and more collaborative working and can ensure that the infrastructure and technology are there. HRMC operates very differently today from how it operated some decades ago. We take a risk-based approach to chasing down tax that should be paid and is not being paid. That involves a lot of data and analysis. Frankly, the idea—if anyone here is entertaining it—that for the last few years people have been able to walk into their local tax office or have appointments there is just not correct. We need centres of excellence that can work in the manner that I have described.

The hon. Member for Easington (Grahame Morris) raises the issue of long-term leases, and he is right to say that in some cases there are no break clauses. I make three points on that. First, we get a much more competitive rate if that is the basis on which we enter into a lease. Secondly, that of course does not mean that leases cannot be broken at some future point by way of negotiation. That is quite typical in the commercial property market. Thirdly, we have flexibility within those leases, such that other Government Departments and employees would be able to use the buildings as well. There are therefore at least three very good reasons why that approach has been taken.

Let me now make some progress. We need a tax system that offers digital services in an age in which people increasingly expect and rely on them, that makes use of technological developments to deliver as efficient a service as possible, and that is suited to the dynamic and fast economy of today.

[Graham Stringer in the Chair]

I hope that the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East would agree that just dispersing employees across a wide area is not an efficient way to run any organisation, let alone one with responsibility to the taxpayer.

[Jim McMahon]

I am not sure whether the Minister’s tactic is to talk at length about matters on which there is agreement. There is agreement on the move to digital services, the need for those to be fit for purpose, and the need to take as much tax as possible to fund decent public services, but the majority of today’s debate has been about the financial assessments of the deals done and the decisions on the locations of the head office and the regional hubs. I would appreciate it if the Minister would focus on that, because as far as I can see, the evidence base to support those decisions is at best very weak.

[Mel Stride]

The hon. Gentleman is right: much of the debate has focused on the matters to which he refers. I am not seeking to avoid those other elements of the debate at all and was coming on to them, but I shall deal with them now, as he has raised them. HMRC has had eight very sensible criteria by which to judge where to locate the new hubs. He will know that we are looking at sustainable large sites, with the capacity to hold all HMRC’s requirements for the region in a single building. The talent pipeline, which has been mentioned, is extremely important.

--- Later in debate ---

[Mel Stride]

We are not publishing the kind of impact assessment that the hon. Gentleman suggests, but my point is that it is not the case that HMRC has not very carefully looked at those individuals who will be affected—at where they live, the travelling issues and so on—to ensure that it is as helpful as it possibly can be to all the employees in those circumstances. We heard in the debate about providing assistance with travel costs, for example. There is also relocation assistance. All that is being very carefully looked at and engaged with by HMRC.

[Jim McMahon]

Is the Minister seriously suggesting that Manchester city centre, 7 miles away from Oldham town centre, meets the criteria relating to the talent pool, throughput of staff and the economic case any better than Oldham town centre would have done? If it does, why do the Government refuse to publish the internal documents that would make the case?

[Mel Stride]

The hon. Gentleman will appreciate that I have not come here prepared with all the precise details of exactly how that decision was arrived at, but I am confident that HMRC has, with due diligence and in a very objective and dispassionate—no, objective—way, looked at which locations meet the eight criteria, and made a balanced decision at the end of that. I am very confident that it has come to the right conclusions.

--- Later in debate ---

[Jim McMahon]

On that basis, can the Minister confirm today that the Department will release that location assessment?

[Mel Stride]

No. I am not going to commit to bringing forward all sorts of reports and things that various hon. Members may or may not call for. I understand why the hon. Gentleman may call for those things, but I can reassure him that we have published the criteria on which the decisions were made. They are in the public domain. There are eight criteria, and they are very clearly available.

--- Later in debate ---

[Mel Stride]

If it is a specific department—I am sure it is—I am happy to get back to him on that point. I will move to another point relating to what the hon. Gentleman said earlier in his speech. When he talked about clamping down on tax avoidance, he very much started to drift into—understandably so—complex tax avoidance. He mentioned the Cayman Islands. I do not think he mentioned trusts specifically, but I suspect that would be a part of the mix of his thinking, which is exactly my point. If we are going to start targeting that kind of tax avoidance, it is far better to be in a well-resourced hub, the nature of which I have described already, rather than to have myriad other offices around the place. That is the nature of the tax challenge, so we have to have a configuration that is appropriate to meet it.

[Jim McMahon]

I thank the Minister for giving way. According to my time, we have an hour and 10 minutes of interventions if Members have questions to ask. The Minister is being generous with his time. Let us stop this dance that we are taking part in here. The truth is that no assessment was made of the suitability of sites for the relocation. Oldham was not considered as a site for the relocation, but Manchester was. That is the truth. If I am wrong, simply publish the assessment of sites that shows that Oldham was considered at the same time as Manchester. Ultimately, it is not protected under any of the exemptions in the freedom of information legislation. Let us cut out the time delay that would be initiated by our making that request under the Freedom of Information Act 2000 and let us have it here today.

--- Later in debate ---

[Mel Stride]

Thank you, Mr Stringer. I should agree with the hon. Member for Bootle if the premise of his assertion were true. In reality there has been an assessment. Of course, in each and every case, HMRC looked at the criteria and applied them to the various options in the various regions, and came to a conclusion as a result of the assessment. That is the logical and sensible way in which such matters move.

[Jim McMahon]

On a point of order, Mr Stringer. The Minister has said a number of times that an assessment has been made of the various sites and location options. If it transpired that the assessment had not been carried out, what remedy would the House have?

[Graham Stringer (in the Chair)]

That is a matter of fact, not a point of order relating to the debate.

Finance Bill

Jim McMahon Excerpts

Tuesday 31st October 2017 Commons Chamber

[Mel Stride]

Of course there are a number of HMRC-led IT programmes; Making Tax Digital is but one of them. A new system for customs, the customs declaration service system, will replace CHIEF—the customs handling of import and export freight system—and that has very high priority. We are on target for full roll-out in January 2019; we will begin the CDS pilot in August next year. I am satisfied that the balance is correct at the moment.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Has the Minister spoken to his colleagues in the Department for Work and Pensions, who are embarking on a £13 billion IT contract for universal credit, on the lessons to be learned and the impact on people who are trying to use a system that is evidently not fit for purpose?

[Mel Stride]

As that programme relates to DWP, the question would be best directed in that direction, but I assure the hon. Gentleman that, to the extent that the Treasury and HMRC impinge on the programme, it is for us a very high priority.

I turn to new clause 2, which, although not debated, was tabled by the hon. Member for Walthamstow (Stella Creasy). I would like to deal with it, because I know that from her perspective it was a very important new clause. I understand why she suggests extending the rules on the taxation of capital gains from commercial property disposals by UK taxpayers with a foreign domicile, but I fear that the new clause and the discussion it has prompted have fallen foul of the complexity inherent in this area. I would like to clarify some of the issues.

First, contrary to the new clause, it is residence and not domicile that determines whether the disposal of an asset in the UK is within the charge of capital gains tax. UK residents, including non-doms, will always be liable for CGT on the profits from selling UK land, whether that land is residential or commercial. Also, it does not appear that the change that the hon. Lady proposes would apply to foreign companies owning UK commercial property, as domicile does not apply to companies.

These elements of confusion mean that it is far from clear that the review proposed would work. I remind the hon. Lady that this Government in 2015 started taxing non-residents on their gains from UK real estate—something that previous Governments had ducked. Those changes give a sense of the amount of revenue that an extension of them to the commercial property market would raise. The Office for Budget Responsibility certified that the 2015 changes will raise £40 million this financial year and £70 million in the next. That gives a more realistic sense of the order of magnitude of the amount that this change could raise than the figures suggested in previous debates.

The hon. Lady has also suggested that taxpayers are designating residential property as commercial property to avoid paying the residential charge. Let me be clear: if residential property is being designated as commercial property, that is a matter of tax avoidance or evasion, not of the scope of CGT. HMRC has not seen any evidence of this practice.

The hon. Lady has provoked a good debate on this issue. Although I urge the House to reject new clause 2, which confuses too many of the issues at stake, I recognise that a number of points in this area are worth consideration, and we will certainly continue to look closely at the issue of non-residence and CGT on commercial property.

New clause 3 seeks to commit the Government to carrying out and publishing a review of the tax treatment of income provided through third parties, in particular in relation to sports image rights. Image rights payments have long been taxable. There have been cases where employers have tried to inflate payments for image rights and to reduce salaries accordingly, to deliver a tax saving to both employers and employees. I thank my hon. Friend the Member for Dover (Charlie Elphicke), whom I see in his place, for the insights, advice and support that he has given me on this issue.

The courts have ruled that genuine image rights payments to an employee are not taxable as earnings. It is therefore for HMRC to ensure that image rights payments are genuine and taxed in the right way. At spring Budget 2017, this Government committed HMRC to publishing clear guidelines for employers who make image rights payments for the use of an employee’s image, and HMRC has done that. HMRC undertakes extensive compliance activity to ensure that employers play by the rules and image rights payments are taxed in the right way. The new clause is not necessary, so I urge the House to reject it.

New clause 5 asks for a review of the conditions of registration for third country goods fulfilment businesses. The review would also need to consider the case for imposing either joint and several liability or direct liability on third country goods fulfilment businesses for the unpaid VAT of their overseas clients.

The Government are proud of their record in tackling online VAT fraud, a complex international problem. The UK has led the way with a package of measures that Government first announced at Budget 2016. It includes the fulfilment house due diligence scheme provided for in the Bill and powers for HMRC to hold online marketplaces jointly and severally liable for the unpaid VAT of overseas traders.

The Government have already undertaken extensive consultation on the scheme in the past 18 months. I assure hon. Members that we will continue to monitor the impact of the legislation. I therefore urge the House to reject new clause 5.

--- Later in debate ---

[Stella Creasy (Walthamstow) (Lab/Co-op)]

As it is Halloween, I rise to give the Minister a fright, because if he thinks he is going to get away without properly examining new clause 2 and the benefits that it could bring to our country and British business, he is in for a trick-or-treat moment. There are certainly ghosts that haunt our politics—[Interruption.] I am disappointed to see you being so slow, Mr Deputy Speaker—[Interruption.] That is certainly very spooky.

As I said, there are ghosts that haunt our politics, so I start my speech by putting on record my thanks to the former Member for Tatton, George Osborne, for inspiring new clause 2. Indeed, I noted that the Minister referred to his work, too. These were the words of the former Member for Tatton in 2015 when the then Government brought in the first rules around tax and non-doms:

“It is not fair that non-doms with residential property here in the UK can put it in an offshore company and avoid inheritance tax.”—[Official Report, 8 July 2015; Vol. 598, c. 325.]

By using those words, the former Chancellor raised two important issues: first, the fairness of our taxation system and, secondly, how it extends to foreign ownership. He was absolutely right to introduce those measures, but what we are talking about today is the necessary and inevitable conclusion of that debate: what we do when people raise issues about fairness and foreign ownership. The new clause answers that call because, frankly, it is not fair that British businesses have to pay corporation tax on their capital gains when they sell commercial properties, but overseas businesses trading in the UK in UK-based property do not.

It is not fair that we are one of the few countries in the world to treat its businesses in this way and let foreign companies off the hook—all those real estate investors who some might feel donate so much else to some in this country, but who do not pay their taxes. As the previous Chancellor argued, people can put property into an offshore company to avoid tax.

If the Minister’s main objection to the new clause is the way in which I have described the domicile of these people, he ought to think again. Certainly, he ought to do as I did today and google the term “tax efficient Jersey UK real estate”, because when he does and he sees the advice being offered to non-resident companies, I suspect he will find it galling. He will find companies including BNP Paribas Real Estate, Ogier, Bedell Cristin and Hawksford boasting about how UK real estate investment trusts based in Jersey but listed on the international stock exchange do not pay the same rates of stamp duty as those resident in the UK, and do not pay capital gains tax. Indeed, the International Stock Exchange itself states:

“we have pragmatic listing requirements for this product”.

That simply means that the businesses involved get to avoid the same charges that our British businesses have to pay. We as British taxpayers should be asking why any company is using such a model—why such companies are given these listings and are able to buy and sell UK property in this way—because it is very hard to see what the justification is, and why we make it so easy to exploit this loophole when there is tax on residential property sales, but not on commercial properties.

The former Chancellor boasted in 2015 that making non-UK-based people pay capital gains tax on their residential property sales would raise £1.5 billion over the course of this Parliament. The purpose of the new clause is to tell us just how much closing this loophole would raise, and just how much these companies are making through such behaviour.

Sadly, because the Minister was so determined to get through his speech so quickly, I did not hear the number he came up with. I certainly find it striking that HMRC does not know how much money is missing, but in the spirit of this cross-party measure, let me offer the House some of my own figures.

The British Property Federation says that there is about £871 billion of commercial real estate in the UK, which represents 10% of our nation’s entire wealth. That is a hugely important market in its own right, but how we buy and sell commercial property also affects our residential property market, as it has an impact on the price of land. For those of us who represent constituencies where house prices are exorbitant, to say the least, tackling the overheating in our property market would be a very noble thing to do. I believe that we would get support for that from both sides of the House.

We know that about 20% of commercial real estate is sold every year, and that it was worth an eye-watering £115 billion in 2015—that is the figure the taxman knows about. We also know that about 30% of commercial property in the UK is held in these offshore trusts and companies. For those who are fans of “Countdown” and want to see how I have done my homework, I have done my sums assuming an 8% increase as the long-term trend rate for commercial property prices. Working on that assumption, if about 20% of that property is sold and the current 19% rate of corporation tax is used, there would be about £11 billion of taxable gains every year. It is therefore not unrealistic to expect that around £6 billion of taxation could be collected.

[Jim McMahon]

We are told time after time that we should live within our means and that our public services will pay the price if we do not, so is it not the case that the first thing we should do is to maximise our means?

[Stella Creasy]

Spoken like a true former local authority leader who has had to deal with the consequences of Government cuts!

This is about the question of fairness that was put forward by the former Chancellor. None of this is illegal. We might consider it immoral, but it is certainly not illegal, and none of it is captured by UK anti-avoidance rules. The Minister is not being open about companies that might include UK residents who have their properties held offshore. This is unfair to UK businesses. I understand that at present there is concern about economic policies and a dangerous air of radicalism in British politics. Let me reassure Conservative Members who might feel frightened about supporting this measure to close the loophole, and fear that it could be a radical socialist policy—I happen to think that it could be—that this is simply a question of fairness.

This is also something that most other countries do. Canada, Australia and the rest of Europe do it, so the new clause would bring us into line with them. Indeed, the OECD model double tax treaty explicitly preserves the right of countries to tax non-residents on their capital gains from the disposal of local real estate.

The Bill itself brings in anti-avoidance measures relating to inheritance tax and to holding property through non-UK companies. That is why it is difficult, having listened to the Minister in Committee, to understand why this particular proposal has been put into the “too complex” category. In Committee, he voted against a similar provision because he argued that it was just too complex, while admitting that the rules introduced in 2015 were designed to catch individuals holding a title over a dwelling in a trust or a closely held company. He argued against the proposal because he said that it would require what he considered to be a whole tax code. My problem with the Minister’s saying that this is too complicated is that it places him and the British Government in a special category. If most other countries can get their heads around how to tax non-resident companies’ capital gains on commercial properties, I simply fail to understand why it is beyond the wit and wisdom of the UK Treasury to do so.

My hon. Friend the Member for Oldham West and Royton (Jim McMahon) has mentioned the human impact of this situation. The Institute for Fiscal Studies tells us that the Chancellor has black hole in his budget of £20 billion and rising, and that is before we even consider the cost and impact of Brexit. If my estimate is right that closing the loophole would raise £6 billion every year, that money would pay for the entire public health budget helping people with diabetes and heart disease. It would cover restoring nursing bursaries and keeping open our police stations that are currently destined for closure. It would entirely cover the cost of a public sector pay rise in line with inflation—that is according to the IFS’s figures, not mine. When reports tell us that the Government are so short of money at a time when a Budget is coming up, “Is it fair?” and “Can we afford not to do this?” are two important questions for British taxpayers.

I disagree with the Minister, but if he is worried about the drafting of new clause 2, I would support his tabling an amendment to address the use of the term “domicile”. Even if Government Members are worried about the detail, new clause 2 simply looks at the numbers, so it would give us some information. HMRC does not know the amount that we are missing out on as a result of this loophole. The Minister mumbled something about OBR figures, but I have done my own calculations and we are not talking about small change. This money could have a tangible impact on our public finances now.

I am sad that the hon. Member for Dover (Charlie Elphicke) is not in the Chamber because he chided my hon. Friend the Member for High Peak (Ruth George) in September about a lack of action on loopholes. This proposal has cross-party support, so I would love Members from both sides of the House to recognise that when we see something that is unfair and costs us billions of pounds, we can act quickly. I am sure that the Minister will be given an opportunity to respond to the debate, so if other countries can do this, if British businesses are suffering unfairness, and if our public services desperately need the cash, will he think again? He says that he keeps the tax situation under review, so if he will pledge to publish a specific review of capital gains tax on commercial properties, I will happily not press the new clause to a Division.

British taxpayers have a right to know how much money is leaking out of our system as a result of the loophole. I would wager that many MPs will be lobbied by their constituents about closures in their community, public service cuts and struggling businesses, and by people who cannot afford their own home due to the overheated property market. Those people will want answers, so I look forward to what the Minister has to say. When we were young, we were all told that money does not grow on trees, but in this instance the roots are overseas, and it is up to the Minister to pull them up.

--- Later in debate ---

[Mel Stride]

I have already conceded that point. We are looking at this, which rather trumps any questions about why we are not. We are considering it very seriously, and I said earlier that we are looking closely at the issue of non-residents and capital gains tax on commercial property.

[Jim McMahon]

I am pleased to hear that the Government are looking at this important issue, and I congratulate my hon. Friend the Member for Walthamstow (Stella Creasy) on her significant work. When will the Government publish their findings?

[Mel Stride]

It is not a question of publishing information on every area we look into, but I have made it clear that we are seriously considering the issues that have been raised. I have also made it clear that new clause 2 would not do what the hon. Member for Walthamstow describes.

Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Jim McMahon Excerpts

3rd reading: House of Commons & Committee: 1st sitting: House of Commons & Report stage: House of Commons
Tuesday 5th September 2017 Commons Chamber

[Mr Jones]

I am sure that my right hon. Friend the Minister will be very happy to talk to my hon. Friend about this issue.

As I have said, through our work with the sector and the Valuation Office Agency, we believe that we have found a clear way to capture the concept of new fibre. We have set this out in our draft regulations and the consultation document that we published last week. However, this is a technical and fast-moving sector, so we will keep the operation of the relief under review to ensure that it is working as planned and that the regulations keep pace with the continuing technical advances and changes in the industry. Accordingly, it will remain important that we have the powers available to amend the operation of the relief scheme over time. The powers in the clauses will also allow the Secretary of State to determine the level of relief to be awarded. As I have said, the Government intend to allow telecoms operators 100% relief, but only for new fibre. That new fibre will of course form part of existing telecom networks with existing ratings assessments.

Through the operation of this scheme, we intend to ensure that the relief is awarded only in respect of new fibre and not existing fibre. To achieve this, the powers in the clauses will allow us to set, by a formula contained in regulations, the correct level of relief for each property, reflecting the amount of their network that qualifies for the relief. This will be based on a certificate of the amount of rateable value that it appears to the valuation officer is attributable to the new fibre. The consultation document we published last week explains how, when taken together, the formula in the Bill and the formula in the draft regulations will deliver the correct relief for a property.

As I have said, these provisions are mirrored in the first three clauses of the Bill. Sometimes the letters in the formula differ, but that is merely to conform to existing lettering in the sections into which the formula will be introduced. Hon. Members will have noticed that clause 1 includes a table referring to different subsections. In theory, there will be instances where a property could be eligible for the new fibre relief but also for another such as charitable relief, although we believe this to be extremely unlikely. However, for completeness, the table in clause 1 makes it clear which relief should apply. No such conflict can arise for unoccupied properties or properties on the central list, so the table appears only in clause 1. The rules we have adopted here are consistent with the existing hierarchy of reliefs in the business rates system. Charity relief will apply above all others, and then reliefs such as small business rate relief. The relief for new fibre will apply only where no other relief applies.

Clause 4 gives effect to the schedule to the Bill. As I have described, the Bill makes a number of amendments to different sections of the Local Government Finance Act 1988. Most of the amendments in the schedule are to that Act, and are necessary merely to ensure that those provisions continue to make sense and operate as intended. We are also in the schedule making consequential changes to the Business Rate Supplements Act 2009. Ratepayers entitled to mandatory reliefs in the main business rates system are also entitled to the same relief against the business rate supplement currently applied to larger properties in London. The Bill ensures that that continues to apply for the new fibre relief through these consequential amendments.

Clause 4 also includes the normal power to make regulations for other consequential provisions. We intend to use these powers to make consequential changes to the regulations that govern the transitional relief scheme. This will ensure that the relief is also available for those ratepayers who are either receiving transitional relief or whose reductions from the revaluation are being capped to fund the transitional relief.

Clause 5 provides the normal authority from Parliament that is necessary when making provisions that create a charge on public funds.

Clause 6 provides that the Bill applies to England and Wales. Business rates policy is devolved, so it will be for the Welsh Government to consider whether to introduce a similar relief. The Welsh Assembly Government have asked for the powers in this Bill to apply to Wales, although it will of course be a matter for Welsh Ministers to exercise those powers in relation to Wales. In Scotland and Northern Ireland, business rates legislation is made in their own Parliaments, so again it will be a matter for them whether to proceed with this measure. However, under the Barnett formula, Wales, Scotland and Northern Ireland will receive their share of the funding of the relief. As we have discussed, the relief for new fibre will apply from 1 April 2017, so clause 6 also provides that the amendments and powers in the Bill can take effect retrospectively for the financial year commencing 1 April 2017.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

We have just had a run-through of what the Bill contains, and by and large we welcome it. It is one of the remnants of the Local Government Finance Bill, which fell when the general election was called, and which contained things that industry and local government leaders wanted to see introduced. This could well be the first of several proposals, and I would welcome a conversation about that.

--- Later in debate ---

[Jim McMahon]

I share the vote of thanks to the range of people who have assisted the Bill. A great deal of work went on in the background to ensure the support of Members and the passage of the Bill. I would like to thank the Public Bill Office for the support it gave to the Opposition during the Committee stage, which was a great help.

The Opposition welcome this infrastructure, which aims to improve our connectivity. We know that improved connectivity is important for economic growth, more jobs and improved links between business hubs and individuals alike. One slight regret, which is a major regret for the people affected, is that nothing in the Bill addresses the divide between urban areas and our rural communities. With 95% of people connected, it is a bitter pill for the 5% who live in areas that are not connected. People in those areas do not want warm words about the amounts of money being given away, but a plan in place to say when high-speed will reach them. Self-employment is on the rise, so access to decent IT in rural communities is essential. It is not in the Bill, but I urge the Government to give more detail on what they are going to do to encourage that roll-out, either in terms of allocation or through the soft relationship they are developing with providers.

The Labour party is committed to focusing on improvements to connectivity and infrastructure in rural communities, many of which feel they have been taken for granted by the Government. They have suffered chronic underinvestment for far too long. We know there are different demands, different drivers and different pressures on our communities, but the decisions we make today should not be just about catching up with infrastructure developed five or 10 years ago; it ought to be about preparing the country for the next 10, 20 or 30 years ahead and for the next century. Many communities do not feel that they are a part of such consideration.

The Prime Minister previously called for co-operation across political parties. Over the summer, I reflected on 18 months of being an MP, after previously being a councillor and council leader for 13 years. To make a council and a place work, people need a common vision of what an area can be and they need to know what part they can play in taking it forward. I do not see that taking place nationally. It seems as though party politics is far more important than the people we all, collectively, represent. Getting one up on the Opposition or the Member sat across the Benches seems to be worth more than delivering investment on the ground for the very diverse communities we represent.

I should say that that is not my personal style at all. I am always more than happy to work across political parties if it means, ultimately, that we have better government for all the communities we represent. That is an offer. I do not intend to do the Government’s job for them—I am not a taxi for hire in that sense—but I am keen to ensure that the voice of industry, local government and our many diverse communities really feature in policy as it comes through.

There is one area that we need to address. This is not party political, although I do have a view about what the Local Government Finance Bill included and did not include in terms of some of the safety nets and safeguards required. Our local councils cannot continue with their current funding settlement. We know that demand for adult social care is outstripping the money that they have, we know that they are stripping away frontline services just to keep their heads above water, and we know that that is just not sustainable. People are being expected to pay more and more council tax for what they perceive to be fewer and fewer of the services on which they rely, and which they consider to be vital and the foundation of their communities. Surely, if we believe in a decent country in which people can get on and public service is the foundation stone, we must not stand by and watch those people fall over.

This is, in effect, a plea. We have seen the presentation of one element of the Local Government Finance Bill; let us now see the presentation of a scheduled series of Bills that will really address chronic underfunding and the short-term nature of local government finance.

Public Sector Pay Cap

Jim McMahon Excerpts

Wednesday 5th July 2017 Commons Chamber

[Elizabeth Truss]

We need to ensure a continual balance in being fair to the people working in public services—giving them the training and opportunities they deserve, and paying them fairly—while at the same time making sure that they will be able to continue to work in those public services in the future. If we look at what happened in Greece when the deficit got out of control, we can see that there was a 36% reduction in spending on the health service. [Interruption.] Members on the Opposition Front Bench may groan, but they should look at the facts about what happens when unfunded spending commitments are made. Let us be clear: the Institute for Fiscal Studies has said that Labour’s spending plans would lead to the highest levels of taxation we have ever seen in peacetime Britain. Theirs are not moderate but extreme proposals that would lead to people losing their jobs.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

The Chief Secretary quite rightly outlined that there is more to the package offered to public sector workers, including pensions, but will she confirm that the average pension for a local government worker is less than £80 week? What message does it send when, on top of that, their wages are supressed and their workloads have increased twofold? Is not the truth that this Government know the cost of everything and the value of absolutely nothing?

[Elizabeth Truss]

We care about how well our public services are serving the public, and we want to have highly motivated people working in our public services who feel valued and properly remunerated. That is why such decisions are made by independent bodies.