Finance (No. 2) Bill

Debate between Jim Shannon and James Murray

2nd reading
Tuesday 13th April 2021 Commons Chamber

[James Murray]

My hon. Friend makes a very important point and exposes again the hypocrisy in the Government’s approach. The fact is that, rather than helping families get through the tough times ahead, this Government are delivering a tax break for tech giants.

We know that Amazon workers have provided vital deliveries to millions of people across the country during lockdown. They need their rights at work to be protected and strengthened, and we all want that company to pay its fair share of tax. I see no one calling for a tax break for Amazon, yet that is exactly what this Government are providing. The Government would do well to learn from the new Biden Administration’s approach. The US Secretary of State has said that, rather than compete on lowering tax rates for corporations, the United States will focus on its

“ability to produce talented workers, cutting-edge research and state-of-the-art infrastructure”.

The new President has also been leading a drive to put in place a global minimum corporate tax rate. A spokesperson for the Treasury here has indicated that the UK might back those plans. Taken along with the Chancellor’s decision to raise corporation tax to 25%, this seems to be an admission by the Government that the last decade of Conservative corporate tax policy making has been totally wrong-headed. If that is the case, we welcome the Government’s admission, and it is vital that the UK plays a leading role in developing and implementing the proposals that President Biden is backing. We have not yet heard from Ministers on this matter in Parliament, however, so I urge the Exchequer Secretary to use her closing speech today as an opportunity to confirm to the House that she and the Chancellor back plans for a global minimum corporate tax rate and that they will do all they can to make this a reality.

While the initiative on international tax is being led by those overseas, closer to home the offer from this Chancellor of such a large tax break to companies will, of course, make people wonder what processes will be in place to prevent Ministers from intervening improperly on behalf of commercial interests in how decisions are made. The Chancellor is still refusing to properly account for his role in the Greensill scandal. To ensure public confidence in who will benefit from this £25 billion tax break, we strongly urge the Exchequer Secretary to today set out what new safeguards will be put in place to make sure that public money is not misused.

[Jim Shannon (Strangford) (DUP)]

Before the debate, I spoke to the shadow Minister about insurance companies. It has come to my attention that some insurance companies are unfairly using business interruption insurance premiums to punish businesses that had the foresight to take out said insurance before the pandemic. Insurance premiums are being increased dramatically. Does the shadow Minister agree that when it comes to supporting small and medium-sized businesses, we need to close the loopholes that insurance companies are notorious for using and ensure that the spirit is legislated for? Perhaps—just perhaps—this Bill might be the way to do that.

[James Murray]

The hon. Gentleman is right to draw attention to the fact that the Bill does everything for the big businesses that need the help most but does not do what is necessary to protect small and medium-sized businesses. I am sure that the Ministers present heard his points, and I hope that the Exchequer Secretary will respond to them in her closing speech.

Aside from all the concerns about the super deduction—from its potential for fraud, abuse and misuse to the fact that it offers to wipe out Amazon’s UK tax bill—the fact that the Government’s only national policy for growth and investment relies almost entirely on this tax break brings us to our third key concern about the Bill and the profound lack of ambition in the Government’s approach. There is simply no plan from the Government to make sure that we invest in what is needed for the future. The Bill follows a Budget of cuts. The OBR has confirmed that the Government will cut departmental resource spending plans by £15 billion a year from 2022-23 onward, and rather than bringing forward capital spending to invest in the green recovery that we need now, the Government have cut capital plans for this year by half a billion pounds.

Far from charting a course for the future, the Bill lacks any mention of a plan to tackle the big problems that we have faced in this country for a decade or more and that have in so many cases been brought into sharp focus by the covid outbreak. It is clear that over the past decade under this Government, our country’s social care system has been underfunded, with its workers chronically underpaid. Our country’s response to climate change has stubbornly lacked the urgency, ambition and scale that it needs. Our country’s answer to the housing crisis has been left to developers and speculators, leaving an entire generation let down and left behind. Investing in better social care, new green infrastructure and the council housing that we need would create jobs, improve lives and finally start to tackle the problems that our country needs to resolve.

The Conservatives have had more than 10 years to stand up to the challenges I have outlined, yet they have failed to do so. With the recent Budget and this Bill, they have proved themselves again unable or unwilling to do so. The Government’s whole approach is being exposed as one of failure rooted in the past and an inability to rise to the future. In fact, Conservative Ministers are continuing on the course that began in 2010—one that brought us a decade in which UK growth was below the average of all major economies and business investment fell to the lowest rate in the G7.

Our country’s economy will be £300 billion smaller in 2026 than was forecast at the start of the previous decade. At times during that decade, Ministers may have benefited from some international cover for their misguided and harmful choice of cuts rather than investing in growth in response to the financial crisis, but no more: a new international consensus has rapidly been gaining strength. As the International Monetary Fund’s head of fiscal policy said, our Government and others should use fiscal policy to beat covid and to stimulate our economies by reducing unemployment and restoring economic growth. That focus on growth, investment and jobs is at the heart of the approach set out by the shadow Chancellor, my hon. Friend the Member for Oxford East (Anneliese Dodds). Our framework will meet the challenges of our times—it is a responsible approach in which a balanced current budget over the economic cycle would never prevent us from protecting people and businesses during a crisis or making critical investments in our future.

As the Bill progresses through the House, we will look at the detail in respect of the points I have outlined so far, as well as on other measures in the Bill such as those relating to freeports. We want to see good jobs and economic growth in every part of the country, irrespective of whether an area has a freeport. We need long-term, locally led investment in every region and nation, and freeports will in no way compensate for Ministers’ inexplicable decision to scrap their industrial strategy and disband their industrial council just when we need a long-term plan to support our critical industries. Furthermore, with freeports elsewhere in the world having become magnets for organised crime, tax evasion and smuggling, we fear that at a time when HMRC is already overstretched Britain is not well placed to manage such risks.

In Committee, we will challenge the Government over their approach to tax avoidance and tax evasion more widely, following up our long-standing concerns that Treasury Ministers continue to drag their feet on tackling these problems. Although the Bill contains measures to tackle the promoters of tax avoidance and change the system of penalties, there is a clear sense that those measures are extremely limited in scope, rather than the comprehensive action that we need. Indeed, those changes are not even included in the Budget report costings, suggesting that their financial impact must be minimal.

We will use the next stage of consideration of the Bill to go through the detail of the measures it contains that seek to address the problem of plastic pollution and to increase the use of recycled content. The principle of a plastic packaging tax is one that we support, and because we want it to be as effective as possible we will ask Ministers to consider the detail of its operation in Committee. Overall, however, we cannot support this Finance Bill. The Bill, and the Budget that it follows, should have seized the opportunity to help people who are struggling now; to invest in good new jobs in every part of the country; and to be ambitious in finally getting to grips with social care, housing and other challenges that our country has faced for so long without solving. In fact, rather than supporting families out of this crisis and setting an ambitious plan for the future, the Government are prioritising tax breaks for tech giants.

If this Bill had been presented by Conservative Ministers 10 years ago, it would have been the wrong solution then; a decade later, their approach has not changed but the rest of the world has moved on. No longer will they find allies for their approach in international institutions, and the politics of the United States shows that the consensus around the world is shifting. The Government are out of step with economic reality. They are taking decisions that will push up taxes for people across our country while helping Amazon to reduce its tax bill. They are choosing to cut NHS workers’ pay while failing to fix our system of social care, and they are deciding to continue a decade of cuts to public services when we urgently need to invest in the future.