Tax Avoidance and Evasion

Debate between John McDonnell and Maria Caulfield

Wednesday 13th April 2016 Commons Chamber

[John McDonnell]

I gave way earlier to the hon. Gentleman. I will press on because I know that others want to speak and I am sure he will want to speak himself.

This is a world that the super-rich inhabit. They live by different rules and it is an alien world for the majority of the rest of us.

[Maria Caulfield (Lewes) (Con)]

Does the hon. Gentleman agree that his party’s opposition to the removal of the family home from the income tax threshold affects those on the lowest incomes in London and the south-east because it will mean that only the wealthy can afford to stay in London when the family home is sold and they have to pay inheritance tax?

[John McDonnell]

The hon. Lady makes an important point. We have supported the increase in tax thresholds to try to take people out of tax altogether, but the benefits overall have actually accrued to the highest earners rather than the lowest and we need a more sophisticated system than that. With regard to inheritance tax, the cut that was made this time around by the Government benefited the top 5% of the population. There must be a better way of ensuring that people can pass on their wealth to their children, rather than just benefiting the super-rich. We have to look at that again. I am happy to do that and meet her to discuss it.

[Maria Caulfield]

I thank the hon. Gentleman for being extremely generous in giving way, but there are low-income families in London and the south-east whose home’s value has increased beyond recognition. They are now asset rich but income poor. How will the Labour party help them if it does not take them out of inheritance tax?

[John McDonnell]

The important thing now, as my hon. Friend the Member for Bolsover (Mr Skinner) has said, is that we build more homes to house those people. That will be an effective way of reducing prices, too. That will give access to home ownership to thousands more in the capital.

The Economy

Debate between John McDonnell and Maria Caulfield

Wednesday 18th November 2015 Commons Chamber

[John McDonnell]

Of course that is true, but there are false economies. On a cross-party basis, we came to the conclusion that cutting tax credits to working families would be a false economy because it would remove an incentive to work—one of the principles on which many of our budgetary proposals are founded.

[Maria Caulfield (Lewes) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

I will press on with my speech, because Mr Speaker has warned me that a large number of Members want to speak. I will come back to the hon. Lady.

It would be helpful to have an assurance today that no one will lose out. I have said repeatedly that if the Chancellor withdraws the tax credit cuts in full and fairly, he will have our support. On fairness, will Ministers also assure us that if the Chancellor does scrap his tax credit cuts, it will not be paid for by cutting the benefits and support for families elsewhere? I seek that assurance because, unfortunately, the Chancellor has a bit of a reputation for giving with one hand and taking with the other.

[Maria Caulfield]

I appreciate the hon. Gentleman’s wish for cross-party support in reducing the deficit. I take it from his stance that his party wants to control the deficit, so where does he suggest the cuts should be made? Should they be made in the health service, schools, local government or defence? Will he give some suggestions as to how he would reduce the deficit?

[John McDonnell]

We have raised this matter time and again. I think that Members on both sides of the House found it incongruous that, at the same time as the Chancellor was seeking to cut working families’ tax credits, he was reducing inheritance tax for the wealthiest families in our country. People saw that as being basically unfair.

There is much that we hope the Chancellor will address in next week’s statement. We agree that we must continuously bear down on the deficit and debt, but that has to be done with realistic good judgment and fairness. I say that the judgment must be realistic because it will undermine confidence in government if we go through another comprehensive spending review like the one in 2010, when the Chancellor announced that he would eliminate the cyclically adjusted current deficit in the five-year period—that is, by this year—whereas he has cleared only half of it. In the last financial year, the current budget deficit stood at a massive £44 billion. I also remember the Chancellor saying in 2010 that he would reduce the debt to 69% of GDP. It now stands at over 80%.

The mistakes of the last CSR should not be repeated in this one. Our fiscal rules must be realistic, achievable and fair. The Chancellor’s rules, for all the revisions in recent weeks, have been none of those things.

Charter for Budget Responsibility

Debate between John McDonnell and Maria Caulfield

Wednesday 14th October 2015 Commons Chamber

[John McDonnell]

I could not have said it better myself. Can we move on?

The Chancellor may not appreciate these economic points, but I believe many of his advisers do. That is why there is a sizeable get-out clause for the charter rules not to apply outside normal times when there is a significant negative shock to the UK economy. Not only are the social consequences of this programme devastating, but the scale of the cuts we are witnessing represents a false economy. They jeopardise the long-term economic prosperity of our country. It is a false economy to cut adult social care when the burden is shifted on to hospitals and accident and emergency departments. It is a false economy to pursue an ideological sell-off of council housing eventually to put up the rents and eventually increase housing benefit. It is a false economy, ironically, that when this Government came to office there were 70,000 people at HMRC and within the next year that is planned to fall to 52,000—a cut of more than 25% in the number of tax-collecting staff, when HMRC says that tax evasion is as high as £10 billion a year. But the worst—

[Maria Caulfield (Lewes) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

If the hon. Lady does not mind, I have taken a large number of interventions. The debate is time-limited. If she has any points that she would like to raise with me, I am happy to meet her separately or write to her. [Interruption.] I am doing my best to be nice. It is the new politics of the Labour party.

The worst false economy is the failure to invest. This will be a direct result of Government policy embedded in this charter, with its limits on all public sector borrowing. Economists from across the spectrum have written and commented on the need for investment for the future. The World Economic Forum ranks the UK 10th for the quality of our infrastructure, behind Germany, France, the Netherlands and Spain. This Chancellor’s strategy has given us investment as a share of GDP lower than all the other G7 countries, falling even further behind the G7 average in recent years.

That is why business leaders, trade unions and a host of others are calling for investment. It is incomprehensible for the Chancellor to rule out the Government playing a role in building our future. For him to constrain himself from doing so in the future, no matter what the business case for a project, has no basis in economic theory or experience.

We also face an uncertain medium-term future for the global economy. In recent weeks there has been mounting evidence of a decline in global demand, particularly in the emerging markets.